Name of the Project
Lake Charles Chemicals Project (LCCP).
Location
Louisiana, US.
Project Owner/s
Sasol.
Project Description
The LCCP comprises a world-scale 1.54-million-ton-a-year ethane cracker and derivatives complex near Lake Charles, in the southern US state of Louisiana.
The project also includes six downstream chemicals projects.
Two large polymer plants – a low-density and linear low-density polyethylene (LDPE) plant, and an ethylene oxide/ethylene glycol (EO/EG) plant – will use about two-thirds of the ethylene produced, while three smaller, higher-value derivative plants will use the balance to produce speciality alcohols, ethoxylates (ETO) and other products.
The ETO has a nameplate capacity of 100 000 t/y and completes the ethylene oxide value chain, which forms part of the performance chemicals product range.
The LCCP will use about 100 000 bbl/d of ethane, sourced from suppliers that feed ethane into Mont Belvieu, Texas. While Sasol expects ethane prices to rise, it remains confident of feed-stock availability, having contracted 70% of its supply and buying the balance opportunistically on the spot market.
The petrochemicals complex is expected to almost triple Sasol’s chemical production capacity in the US.
Potential Job Creation
In August 2019, Sasol stated that the project had generated more than 800 full-time quality manufacturing jobs, with up to 6 500 people on site during construction, $4-billion spent on Louisiana businesses and nearly $200-million on local and state taxes.
Capital Expenditure
The cost of the LCCP has been revised from between $11.6-billion and $11.8-billion, announced in February 2019, to between $12.6-billion and $12.9-billion, announced in May 2019.
Planned Start/End Date
The new EO/EG production facility at the LCCP reached beneficial operation in June 2019. The ethane cracker reached beneficial operation in August 2019.
The ETO unit – the fourth of seven units – at the LCCP achieved beneficial operation in January 2020.
Latest Developments
Sasol has announced a $2-billion joint venture (JV) agreement with LyondellBasell for its base chemicals business in LCCP.
Under the agreement, LyondellBasell will acquire 50% of Sasol’s 1.5-million-ton ethane cracker, as well as its 900-million-ton low and linear-low density polyethylene plants and associated infrastructure at Lake Charles.
LyondellBasell will operate the assets on behalf of the JV, which will operate under the name Louisiana Integrated PolyEthylene JV.
Under the terms of the transaction agreements, each JV partner will provide pro rata shares of ethane feedstocks and will offtake pro rata shares of cracker and polyethylene products at cost.
The deal, which still requires regulatory and shareholder approvals, is expected to close by the end of 2020. Once concluded, some of Sasol’s US employees will become employees of LyondellBasell.
Sasol will retain full ownership of the performance chemicals business in the US, which it has indicated to be core to its so-called ‘Future Sasol’ strategy.
The assets remaining under Sasol’s full ownership and operational control include the Lake Charles Research and Development complex; and the Lake Charles East Plant ethane cracker and US Performance Chemicals Business assets in Lake Charles, which produce Ziegler alcohols and alumina, ethoxylates, Guerbet alcohols, paraffins, comonomers, linear alkyl benzene, ethylene oxide and ethylene glycol.
Sasol has said the transaction represents a “significant step” in achieving its financial and strategic objectives by reducing net debt and rapidly shifting the company’s portfolio towards specialty chemicals.
Sasol has been pursuing an accelerated asset-disposal programme as part of a broader effort to reduce its $10-billion debt burden by between $4-billion and $6-billion by mid-2021.
Sasol has set a target of realising at least $2-billion from the sale of assets and has indicated that the success of its disposal programme, as well as its cost-reduction initiative, will determine the size of a possible rights issue, which had been capped at $2-billion.
Sasol president and CEO Fleetwood Grobler described LyondellBasell as an ideal partner, owing to its comprehensive expertise in commodity chemicals.
Key Contracts, Suppliers and Consultants
Fluor Corporation and Technip joint venture (engineering, procurement and construction management contract).
Contact Details for Project Information
Sasol director of public affairs (US) Russell Johnson, tel +1 281 588 3027 or email media@us.sasol.com.
Sasol (South Africa) group media relations head Alex Anderson, tel +27 11 441 3295 or email alex.anderson@sasol.com.