HOUSTON — Leaders of the energy and chemical company Sasol Limited approved plans for a new $8.1 billion ethane cracker and chemical complex in Lake Charles, La., the South-Africa based business announced Monday morning.
Ethane crackers are used to convert ethane, a natural gas liquid, into ethylene, a main component of plastics and chemicals. The cracker will be able to produce 1.5 million tons of ethylene annually.
“Sasol’s decision to move forward with this project is a defining moment in our company’s history, and an important milestone in the execution of our growth strategy,” said Sasol chief executive David Constable.
The project is driven by the abundance of low-cost ethane and natural gas in the U.S., which has prompted Sasol — and many other chemical makers — to beef up their U.S. facilities.
An analysis by the American Chemistry Council last month identified $125 billion in chemical plant projects slated for the U.S. as of September, driven largely by low natural gas prices and the availability of ethane.
Constable said the project would triple Sasol’s chemical production capacity in the U.S.
“The U.S. Gulf Coast’s robust infrastructure for transporting and storing abundant, low-cost ethane was a key driver in our decision to invest in America,” Constable said.
The company is already preparing the site for construction, and it expects the facility to be running in 2018.
In addition to the cracker, the complex will house six chemical manufacturing plants.
The company selected a joint venture between Fluor and Technip to provide the engineering, procurement and construction manager on the project. Fluor already provided the front-end engineering and design for the complex.
In addition to the $8.1 billion in the plant itself, Sasol says it’s putting another $800 million into infrastructure and utility improvements, as well as land acquisition, associated with the Lake Charles site.
The company’s existing 400-acre facility near Lake Charles primarily makes products that are used as ingredients for soaps, cosmetics and shampoos. The new facility will be adjacent to the existing one.
The company is also considering whether to make a final investment decision on a gas-to-liquids facility, which would also be located near those facilities.
It announced plans for the GTL facility in 2012 and has said it expects to reach a final investment decision for that project in 2016. That project would cost an additional $11 billion to $14 billion, the company said last year.
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