South African energy and chemicals group has secured investment incentives collectively valued at around $1-billion from the state of Louisiana, in the US, to support its proposed development of an ethane cracker and a gas to liquids (GTL) facility in the Lake Charles area.
The JSE-listed group is considering investments valued at between $16-billion and $21-billion in Louisiana, which could be pursued between 2014 and 2020.
It expects to make a final investment decision on a 1.5-million-ton-a-year ethane cracker, which could involve an investment of between $5-billion and $7-billion, during 2014 and for the project to be operational by the end of 2017.
It is also likely to move into the front-end engineering-design (FEED) phase for a 96 000 bl/d GTL facility later this year. The GTL project, which would be developed in two phases, could involve an investment of between $11-billion to $14-billion.
Both projects are premised on the availability of low-priced gas, which has become available in the US, owing primarily to the large-scale adoption of hydraulic fracturing to exploit shale gas reserves.
Head of global chemicals and North American operations André de Ruyter tells Engineering News Online that the incentives have been negotiated with Louisiana Economic Development, the agency responsible for facilitating investment into the state.
The incentives offer payroll and industrial land tax relief. In addition, The state is collaborating with Sasol to support the construction of a training centre and is working with the company to facilitate the permitting process, without altering any of the requirements.
The schemes are conditional on Sasol meeting specific employment thresholds and investment schedules. “So it’s an overall package and it is dependent on Sasol meeting all of its investment commitments,” De Ruyter outlines.
“We have estimated that [the incentives] are north of $1-billion in total value – so not net present value – over the life of the project.”
Sasol has also confirmed that, following a review of its project portfolio, the US projects should proceed to the FEED stage, and will be prioritised ahead of its initial plans for a GTL plant in Canada.