Lake Charles Lands Sasol Chemical Plant
From a release out of Gov. Jindal’s office, a little good economic news. They’re going to make tetramers in Lake Charles.
What are tetramers? Not a freakin’ clue. But this is $175 million in capital investment and a few dozen direct – and a couple hundred indirect – jobs.
Today, Governor Bobby Jindal joined Sasol North America President Mike Thomas and Sasol Managing Director, Olefins & Surfactants, Fleetwood Grobler to announce Sasol Ltd.’s plans to construct the world’s first commercial ethylene tetramerization unit, capable of producing over 100,000 metric tons per year of combined 1-octene and 1-hexene, at its production site in Lake Charles. The tetramerization unit will result in $175 million of capital investment, 36 new direct jobs at an average salary of $62,000, and the retention of 350 existing jobs.
LED estimates the 36 new, direct jobs will also result in approximately 240 new, indirect jobs and will generate $12.0 million in new, state tax revenue and $8.5 million in new, local tax revenue over the next 10 years.
Governor Jindal said, “Sasol selected Lake Charles over sites in Africa, Asia, Europe and the Middle East – sending a strong signal that Louisiana continues to successfully compete for economic investment on a national and global stage. Because of the national economic downturn, business investment has decreased both internationally and in the U.S., but since 2008, Louisiana has bucked this trend by attracting investment and business development projects that will strengthen and diversify our economy for years to come. In fact, since 2008, our economy has outperformed the South and the nation.”
Construction on the project will commence in 2011, and the plant will reach beneficial operation in mid-2013. During peak construction periods, the project will create up to 500 contract jobs.
The unit will use Sasol’s proprietary technology to convert ethylene to 1-octene and 1-hexene. This unique process was developed in Sasol’s R&D laboratories in South Africa, and selectively produces alpha olefins required for the high-growth polymer markets. Engineers and scientists from Sasol North America worked with an international team to design the ethylene tetramerization unit.
“Our top economic development priority has been and will continue to be expanding and retaining Louisiana’s existing businesses,” said LED Secretary Stephen Moret. “In Lake Charles and Southwest Louisiana, this commitment is certainly paying off. The Shaw Group, Aeroframe, Northrop Grumman Technical Services and Sasol are part of a growing list of companies that have announced major expansions in the region over the last three years.”
“We’re pleased to be selected to construct and operate this unique tetramerization process,” said Thomas. “Sasol’s willingness to expand operations in Southwest Louisiana is a vote of confidence for our local employees, service providers and our state. We are particularly thankful to our local legislative delegation, Louisiana Economic Development and Gov. Bobby Jindal for the support they have provided to help make this opportunity a reality.”
“This tetramerization unit at our Lake Charles complex is supporting our strategy to further beneficiate our ethylene produced at the site and is in line with our view to develop our integrated multi asset sites,” said Grobler.
To secure the expansion, LED provided an incentive package that includes customized workforce training from LED FastStart, the Retention and Modernization Tax Credit program, Quality Jobs program and Industrial Tax Exemption program.
With current production of more than 350,000 metric tons per year, Sasol is a major producer of comonomer range alpha olefins. According to Alan Field, managing director of Sasol Solvents, “The additional capacity to be built at the Lake Charles complex will help Sasol’s global customer base achieve its long-term polymer and elastomer growth prospects, and the investment reflects our confidence in the competiveness of the U.S. petrochemicals industry.”
1-octene and 1-hexene are used as comonomers in the manufacture of linear low density polyethylene (LLDPE), high density polyethylene (HDPE) and elastomers. The products impart special characteristics of elasticity and strength in plastic used in consumer products, such as food packaging, bags, toys, automotive interiors, power cable coatings and more.
Based in South Africa and operating worldwide, Sasol Ltd. is an energy and chemicals company listed on the NYSE and JSE stock exchanges. It is a leading provider of liquid fuels in South Africa and a major international producer of chemicals. Sasol North America Inc. is a holding of Sasol Olefins & Surfactants (O&S), a main chemical business of Sasol Ltd. Sasol O&S manufactures and markets a broad range of organic and inorganic products used in detergents, cleaners, paint and coatings, personal care products as well as in catalysts, high performance abrasives and polymer additives. Production sites are located in the U.S., Germany, Italy, Slovakia, Dubai, South Africa and China.
It is a new process to obtain certain chemicals out of ethylene called tetramerization.
Here are a few facts that need to be considered before anyone here is lauded for “landing” these jobs.
A. Sasol has been here for a few years. The site is the former Conoco Chemicals adjacent to the present day ConocoPhillips refinery in Westlake, LA.
B. Sasol may well have other facilities but no other location where this process fits so nicely. It has the supplies of required feedstock, ethylene. This fits in quite nicely with their existing alpha olefins business (similar to Shell Chemicals in Geismar). There is a coastal ethylene pipeline which runs from Corpus Christi (the section to Brownsville was abandoned long ago) to Mobile, AL.
C. 90% of all ethylene cracking units in the U.S. are located along the Gulf Coast in Texas and Louisiana. Ethylene is THE basic chemical for most plastic, chemical & pharmaceutical production. It is THE building block for almost anything synthetic.
D. This is a win over Dubai and China more than anything else. Sasol does really make any chemicals in most of their locations. These are usually sales offices and terminals/warehouses.
Sasol must think that the de facto moratorium is going to lift soon. Those large new deposits of natural gas are a MUST for ethylene crackers to operate. It takes a lot of it for them as fuel and a great many new ethylene furnaces not only use naphtha (petroleum product for gasoline/diesel) but also natural gas liquids as its feedstock to reform those molecules into ethylene, propylene and acetylene (but mostly ethylene).