New investment opportunities emerge as natural gas prices fall
As new technologies expanded production of natural gas in the U.S., market rates for this resource fell to historically low levels. The abundance of low-cost natural gas and its components, including ethane, created attractive opportunities for Sasol’s continued growth and investment in the U.S. market.
Sasol – a global energy and chemicals company headquartered in South Africa – already had significant chemical manufacturing operations in Calcasieu Parish at the time of the drop in market rates for natural gas. The company identified the abundance of low-cost natural gas and ethane in the U.S. as an opportunity for growth. The company was eager to expand its operations in the U.S. and increase its capacity for chemicals production.
Sasol executives and engineers developed plans for a world-scale petrochemical complex that would roughly triple Sasol’s chemical production in the United States, and establish the nation’s first commercial-scale gas-to-liquids, or GTL, facility. To successfully pursue these investments, the company required several critical resources. The operation needed a solid petrochemicals infrastructure, access to interstates and highways, port facilities and several hundred acres to support such a large undertaking. The company also required a skilled and highly capable workforce and an investment-friendly business environment.
Sasol finds the right location in Louisiana
In early 2011, LED’s Business Expansion and Retention Group, or BERG, partnered with the Southwest Louisiana Economic Development Alliance and the Port of Lake Charles to identify potential sites for a new investment by Sasol in Southwest Louisiana.
In their search for potential locations, LED officials and their partners gathered site data for the region. They leveraged that data with geographic information system, or GIS, mapping technology to complete site-suitability analyses of multiple properties in the region. They ultimately located a 650-acre site that would meet the proposed project’s needs. By utilizing the assistance of the Port of Lake Charles in identifying this location and supporting the required infrastructure upgrades, LED saved the company at least six months of time developing the property.
In September 2011, Sasol officials announced a final feasibility study of the location for the company’s new petrochemical complex, with plans for a GTL facility and an ethane cracker.
Manufacturing training facility targeted to Sasol’s needs
As the feasibility study took place over the next year, LED and its partners continued to collaborate with Sasol representatives. Together, they developed solutions to support the petrochemical complex.
To secure both the ethane cracker and GTL projects, Louisiana offered Sasol a performance-based grant of $115 million for land acquisition and infrastructure costs associated with the two projects, pending a final investment for both projects.
To support the company’s needs for a skilled workforce, the state is funding a $20 million manufacturing training facility. The primary focus of the facility is to provide industrial technology training to potential Sasol employees. The facility is located at the SOWELA Technical Community College in Lake Charles, where it is meeting the training needs of Sasol, as well as the broader needs of manufacturers throughout the region.
In addition, the GTL project qualifies for Louisiana’s new Competitive Projects Payroll Incentive while the ethane cracker and derivatives project will qualify for the Quality Jobs Program, with the payroll incentives applied for up to 10 years. The state also offered the services of LED FastStart®, the nation’s No. 1 state workforce training program, for both projects. Finally, Sasol could make use of the state’s Industrial Tax Exemption Program for both the petrochemical complex and GTL facility.
“In our experience Louisiana is a state that understands the challenges of modern business, particularly those challenges encountered by the energy and chemical sectors. As a result of this understanding LED has created an environment which it attracts new business and provides the private sector with the opportunity to expand and flourish.”
Sasol announces final investment for ethane cracker complex
In December 2012, Sasol executives announced the selection of Louisiana for a massive petrochemical complex, with a final investment decision to come at a later date. Then, in October 2014, Sasol announced the final investment decision for its ethane cracker and derivatives project of $8.1 billion. Soon after, the company announced it would it would continue to study the GTL facility as it evaluates the possibility of phasing it in, reaching a final investment decision on this phase of the project at a later date.
At the heart of the giant petrochemical complex is a world-scale ethane cracker, a basic building block of the petrochemical industry. The complex includes six chemical manufacturing plants that will convert approximately 90 percent of the complex’s ethylene output into a broad range of chemicals used to make everyday products, such as detergents, lotions, cleaners, packaging, paints and adhesives.
Construction on the ethane cracker began in late 2014, and by mid-2016, Sasol hired more than 350 workers, including operators, processors, engineers, laboratory analysts, chemists and operations and maintenance personnel. The company also anticipates hiring more than 5,000 temporary construction workers on the site, 3,800 of which were hired by mid-2016 by eight major Sasol-appointed Louisiana subcontractors. The company also announced an updated estimated capital investment in the ethane cracker complex of $11 billion, up from the initial $8.1 billion investment.
"Louisiana understands the challenges of modern business, particularly those encountered by the energy and chemical sectors,” said Stephen Cornell, joint chief executive officer of Sasol. “As a result of this understanding, LED has created an environment which attracts new business and provides the private sector with the opportunity to expand and flourish. The support we received from LED was a major factor in our decision to expand our operations here. Louisiana’s positive business climate, skilled workforce and robust energy infrastructure were also key to our ability to extend our deep roots in Southwest Louisiana.”
“The support we received from the local community and the State of Louisiana – particularly Governor Jindal and Louisiana Economic Development – was a major factor in our decision to expand our operations here. Louisiana’s positive business climate, skilled workforce and robust energy infrastructure were also key in our ability to put down deep roots in Southwest Louisiana.”