Name of the Project
Lake Charles Chemicals Project (LCCP).

Location
Louisiana, US.

Client
Sasol.

Project Description
The project proposes the development of a world-scale 1.5-million-ton-a-year ethane cracker and derivatives complex near Lake Charles, in the southern US state of Louisiana.

Besides the ethane cracker, the project includes six downstream chemical projects. Two large polymer plants – low-density and linear low-density polyethylene (LLDPE), and an ethylene oxide/ethylene glycol 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 and other products.

The LCCP will consume 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 feedstock availability, having contracted 70% of its supply and buying the balance opportunistically on the spot market.

Once commissioned, the petrochemicals complex will almost triple Sasol’s chemical production capacity in the US.

Potential Job Creation
Not stated.

Value
The cost of the LCCP has been revised from $11.13-billion to a range from $11.6-billion to $11.8-billion.

Duration
Not stated.

Latest Developments
As of the end of December, engineering and procurement activities at its LCCP were substantially complete and construction progress was at 84% and capital expenditure amounted to $10.9-billion.

The first derivative LLDPE unit produced its first product in January 2019 and officially achieved beneficial operations on February 13.

This is the first of the seven Lake Charles chemicals project (LCCP) production units to come on line.

The milestone follows the safe and successful commissioning of the steam system, which produced first steam on August 1, 2018, a few weeks earlier than planned, Sasol has said.

All utilities to support the early process units at LCCP were fully operational by the end of November 2018.

These utilities, together with LLDPE, will comprise about 40% of the LCCP’s existing total cost.

“Unfortunately, during the last quarter of the 2018 calendar year, several factors within and beyond our control impacted on the completion schedule and associated cost for the remaining units, resulting in the overall project capital cost estimate being revised from $11.13-billion to a range from $11.6-billion to $11.8-billion.

“The difference between the upper end and lower end of the range represents a contingency and weather provision of $200-million.”

Sasol has noted that while the underlying productivity factor remains on track, inclement weather, scope additions and absenteeism have had a significant impact on actual productivity.

These factors have been assessed and quantified late and, where feasible, management interventions have been put in place to arrest the controllable trends. However, these interventions have not been successful in reversing the full impact on schedule and cost.

As a result of the delays, Sasol is revising the Lake Charles earnings before interest, taxes, depreciation and amortisation (Ebitda) estimate down from $110-million and $160-million to a loss of between $165-million and $195-million for the 2019 financial year.

“However, we maintain our guidance that [the project] will deliver a steady-state Ebitda of $1.3-billion in 2022,” the company has advised.

Sasol will release its interim results on February 25.

Key Contracts and Suppliers
Fluor Corporation and Technip joint venture (engineering, procurement and construction management contract).

On Budget and on Time?
The project remains on track for start-up of the first units in the second half of 2018.

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) head of group media relations, Alex Anderson, tel +27 11 441 3295 or email alex.anderson@sasol.com.