This article was updated Dec. 4 with additional infomation.
Sasol will proceed with front-end engineering and design for an integrated gas-to-liquids plant and ethane cracker with downstream derivatives at the company’s site near Lake Charles, La.
The GTL plant will be the first of its kind in the US and produce 4 million tonnes/year (tpy; 96,000 b/d) of transportation fuel, including GTL diesel and other chemicals. Sasol’s own feasibility study proposed the Louisiana plant produce GTL diesel, GTL naphtha, LPG, GTL base oils, paraffin, linear alkyl benzene, and medium and hard wax.
Sasol estimates current project costs for the plant at $11-14 billion. The project will be delivered in two phases, each consisting of 48,000 b/d. The first phase is to begin operations in 2018, the second in 2019.
In September and November 2011, respectively, Sasol had announced it would conduct feasibility studies to evaluate the GTL and the ethylene cracker (OGJ, Sept. 19, 2011, Newsletter; OGJ Online, Nov. 30, 2011).
The ethane cracker, said Sasol, will allow it to expand its differentiated ethylene derivatives business in the US and benefit from current low US natural gas prices and abundance of ethane.
Current cracker project costs are $5-7 billion, it said. Sasol expects operation to be achieved during 2017 and estimates the plant will produce 1.5 million tpy of ethylene with downstream derivative plants.
Andre de Ruyter, Sasol senior group executive, said in a phone press conference that the company expects the current expanded ratio between oil and natural gas prices to continue, even in the face of increased natural gas demand from expanding chemical capacity along the US Gulf Coast and from proposed LNG export projects from the area.
“We don’t think the competition [from LNG export] will be of sufficient scale to alter the supply-demand economics” of Sasol’s project. “We think the best use for [US-produced] natural gas is local rather than export,” said de Ruyter.
He also cited the highly backward integration of Sasol’s natural gas supply options, especially its holdings in Canada, as a reason to feel confident in natural gas prices remaining where they can continue to support the GTL plant’s economics.
Horace O. Hobbs, managing director for the Houston office of Muse, Stancil & Co., told OGJ the consultancy’s analysis continues to support projects like Sasol’s. “The southwestern Louisiana location should provide an excellent combination of natural gas availability, access to product markets, and relatively low cost construction,” Hobbs said.
Also in its announcement, Sasol said it will phase in the next stage of its planned GTL plant in Western Canada. The company completed a feasibility study in 2012 and has started the required regulatory application and land procurement processes.
This investment, however, will be phased after the integrated Lake Charles GTL and cracker projects, it said. Sasol will consider a decision to proceed with FEED later.
Contact Warren R. True at email@example.com.