What follows is a release out of Gov. Bobby Jindal’s office from this morning on a colossal economic development win that has been coming for some time – namely, Sasol’s announcement of the construction of a gas-to-liquids plant which will turn natural gas into vehicle fuels.
We’ve discussed the coming gas-to-liquids revolution in a couple of posts earlier this year. In the next 3-4 years, the amount of money being invested in this technology in Louisiana offers the promise of an economic boom all by itself. We’re talking about anywhere from $25-50 billion dollars in capital, tens of thousands of construction jobs and probably nearly as many permanent industrial/blue collar jobs.
It’s a big deal. Jindal is taking credit for it, as he should – mostly because unlike previous governors he isn’t mucking up the process of these investments. But these are not government-driven economic development wins; the Sasol plant and the Shell GTL plant in either Ascension or St. James Parish the announcement of which could come at any time are happening mostly because Louisiana has the finest natural gas infrastructure and best supply of “dry” gas in the Haynesville Shale anywhere around, and between those factors and the availability of refinery workers and the relative comfort of the population with the petrochemical industry operating nearby, Louisiana can’t be beat as a North American location for GTL facilities.
Today’s Sasol announcement is revolutionary stuff for the Lake Charles area. It could touch off an economic boom there.
Today, Governor Bobby Jindal and Sasol Ltd. CEO David Constable announced the company plans to invest between $16 billion and $21 billion in an integrated GTL and ethane cracker complex in Westlake that is expected to create 1,253 direct jobs paying an average salary, at full employment, of nearly $88,000, plus benefits, and resulting in an additional 5,886 new, indirect jobs, for a total of more than 7,000 direct and indirect jobs. Sasol also will retain 435 existing direct jobs in Westlake as a result of the project.
Sasol’s board recently approved proceeding with front-end engineering and design (FEED) for this historic project, following successful feasibility studies for both the GTL and ethane cracker. The expanded project is roughly double the size of the capital investment originally announced by Governor Jindal and Sasol in September 2011.
Including direct and indirect effects, the Sasol project will produce a total economic impact over the next 20 years of $46.2 billion, according to an economic impact study commissioned by LED and completed by the LSU Division of Economic Development. The project is also expected to create roughly 7,000 construction jobs.
According to fDi Intelligence, a division of The Financial Times Ltd., Sasol’s planned facility will be one of the largest FDI manufacturing projects in the history of the United States. Once the project is completed, the facility also will become the largest economic driver in Southwest Louisiana, and Sasol will become one of the top 10 economic-driver companies in the entire state of Louisiana. According to Dr. Loren Scott, Professor Emeritus of Economics at LSU, Sasol’s planned facility will be the largest single manufacturing investment in Louisiana history.
Governor Jindal said, “Today is a great day for Westlake, Calcasieu Parish and our entire state. Today’s announcement is not only one of the most exciting announcements in the history of Southwest Louisiana, but one of the most significant economic development wins our state – and our nation – has ever recorded. Sasol is one of many energy companies that is expanding in Louisiana because of our world class energy infrastructure, strong business climate, and incomparable workforce.
“Never before in our nation’s history has there been a greater call for energy independence, but that independence will only result from a meaningful application of innovative and practical solutions for new sources of energy. This project is a giant step forward to help our country become more energy independent and less reliant on foreign sources of energy.
“This project will be the largest single manufacturing investment in the history of Louisiana and it also represents one of the largest foreign direct investment manufacturing projects in the history of the entire United States. Despite a national economic downturn, this historic economic development win is happening in Louisiana because we have been laser focused on job creation by creating an environment where businesses want to invest and create jobs for our people.”
The GTL facility, the first of its kind in the U.S., will produce high quality transportation fuels, including GTL diesel, as well as other value-adding chemical products. GTL diesel is a cleaner-burning, high-performance fuel with significant emission reduction benefits. GTL diesel can be used in existing vehicles and fuel delivery infrastructure without modifications.
The project will consist of an integrated, 96,000 barrels-per-day (bb/d) GTL facility representing a capital investment of between $11 billion and $14 billion, as well as an ethane cracker representing a capital investment of $5 billion to $7 billion. The GTL project will be delivered in a phased approach, with phase one delivering the first 48,000 bb/d and phase two delivering the remaining production capacity. The ethane cracker will produce 1.5 million tons per annum of ethylene, one of the chemical industry’s key buildings blocks for alcohol- and plastics-based products, including solvents, surfactants and polymers.
Based in Johannesburg, South Africa, Sasol has been an innovator in coals-to-liquids and gas-to-liquids processes since the 1950s. Through its Sasol North America Inc. subsidiary, the company supports more than 550 existing direct and contract jobs at its Westlake Chemical Complex, where Sasol is completing a $175 million capital investment to build the world’s first ethylene tetramerization unit.
“Utilizing Sasol’s innovative energy and chemicals technologies, these planned projects will unlock the potential of the continent’s abundant natural gas resources,” Constable said. “By incorporating GTL technology into the USA’s energy mix, states such as Louisiana will be able to advance the country’s energy independence, through a diversification of supply. We greatly appreciate the support we have received from the State of Louisiana and Governor Jindal, along with the people of Calcasieu Parish, in reaching these significant project milestones. We look forward to furthering our interests in the region, and continuing our engagement with all our stakeholders.”
For the past three years, Louisiana has actively cultivated GTL projects with Sasol and other leading energy companies around the world. In early 2011, LED’s Business Expansion and Retention Group, or BERG, joined the Southwest Louisiana Economic Development Alliance and the Port of Lake Charles to identify potential sites in Southwest Louisiana using GIS mapping technology. Ultimately, a 650-acre site near Sasol’s existing facilities was identified that would meet the project’s needs, and a September 2011 announcement identified the company’s site selection and its decision to move forward with a final feasibility study for the GTL facility.
“As one of the largest development projects in the nation and the largest in our region, the Sasol expansion confirms that Southwest Louisiana is a great place to do business,” said President and CEO George Swift of the Southwest Louisiana Economic Development Alliance. “This project will provide many well-paying careers and opportunities for various ancillary businesses in Southwest Louisiana. For many years, Sasol has been a valued partner with the Southwest Louisiana Economic Development Alliance and we look forward to many years of working together to improve the economic outlook of our region.”
To secure the project, Louisiana offered Sasol a custom incentive package that includes a performance-based grant of $115 million for land acquisition and infrastructure costs associated with the facility. Sasol also will receive the services of LED FastStart™, the nation’s No. 1 state workforce training program. In addition, the company will qualify for Louisiana’s new Competitive Projects Payroll Incentive (up to 15 percent payroll rebate for each GTL job) and Quality Jobs Program (up to 6 percent payroll rebate for each ethane cracker job). To support the project’s workforce needs during construction and operations, the state will be investing $20 million for a new training facility and associated equipment focused on industrial technology at SOWELA Technical Community College in Lake Charles. Finally, Sasol is expected to utilize the Industrial Tax Exemption Program for both the GTL and the ethylene facilities.
The new training center initially will focus primarily on meeting the training needs of Sasol; once Sasol’s initial needs have been met, the facility will serve the broader needs of growing manufacturers throughout the region.
Dr. Neil Aspinwall, Chancellor of SOWELA, said, “Southwest Louisiana is going to be the epicenter of approximately $25-30 billion of industry expansion within the next few years. Along with these expansions comes the need for specific training programs and services to address the industry specific occupations that will be needed as a result of this growth. This new facility will provide the means to plan, design, and deliver the training programs and services to help ensure that our business and industry partners are successful. Projects such as this prove that Louisiana is very proactive, business friendly, and committed to providing for the economic growth and overall well being of the state as a whole.”
Hiring for the GTL and ethane cracker facilities will begin in 2014. Operations of the first plant are expected to start in 2017, with full employment reached within two years after commercial operations begin.
“I am very proud that Westlake is right next door to Sasol, a good corporate citizen,” Westlake Mayor Dan Cupit said. “We are excited about the growth of the facility and what it will mean not only for Westlake but all of Southwest Louisiana. We will continue working with Sasol to make this growth opportunity a success.”
The Port of Lake Charles, one of the Top 15 seaports in the U.S., played a role in the Sasol project by helping to locate the 650-acre site within the 203-square-mile Lake Charles Harbor & Terminal District. Port officials also provided key assistance in helping Sasol secure options to buy the property that will make the project possible.
“Sasol’s expansion in Lake Charles is a significant and welcomed addition to Southwest Louisiana’s energy corridor,” said Executive Director Bill Rase of the Port of Lake Charles. “Not only will it produce clean energy products, but it will also energize Louisiana’s economy and specifically the economic development of Southwest Louisiana. The Port of Lake Charles Commissioners and Port Staff appreciate the opportunity to have been involved in the securing of this project and look forward to any future role asked by the State or Sasol of the Port.”
“The announcement of this project by Sasol for its Calcasieu Parish complex is wonderful news for our area,” said Parish President Les Farnum of the Calcasieu Parish Police Jury. “An investment of this magnitude reflects the continued confidence the company has in our people and our approach to business growth. We look forward to working with Sasol in this endeavor.”
Sasol is an international integrated energy and chemicals company that leverages the talent and expertise of more than 34 000 people working in 38 countries. Sasol develops and commercializes technologies, and builds and operates world-scale facilities, to produce a range of product streams, including liquid fuels, chemicals and electricity. While continuing to support its home-base in South Africa, Sasol is expanding internationally based on the company’s unique value proposition, which links its diverse businesses into an integrated value chain supported by top-class functions. Sasol is listed on the stock exchanges of Johannesburg and New York (JSE and NYSE Euronext). For more information about Sasol, visit www.sasol.com