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.

Besides the ethane cracker, the project includes six downstream chemicals projects.

Two large polymer plants – a low-density and linear low-density polyethylene 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 and other products.

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 with Louisiana businesses and nearly $200-million in 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 LCCP reached beneficial operation in June 2019. The ethane cracker reached beneficial operation in August 2019.

Latest Developments
Sasol CEO-designate Fleetwood Grobler insists that he is “realistic” about the challenges still confronting the chemicals and energy group, which parted ways with its previous joint CEOs on October 28, following a damning board review of cost and schedule overruns at the giant LCCP.

The review confirmed that the LCCP could cost as much as $12.9-billion to complete, well above the initial price-tag of $8.9-billion. To date, $12.2-billion has been invested.

Addressing staff and stakeholders in Sandton only hours after Bongani Nqwababa and Stephen Cornell resigned as part of what outgoing chairperson Dr Mandla Gantsho described as a “leadership reset”, Grobler said his immediate focus would be on short-term actions aimed at salvaging the group’s tarnished reputation and rebuilding trust.

Grobler said “realism, focus and delivery”,  would be his watchwords when he officially took over as CEO on November 1.

Grobler told Engineering News Online during an interview that his immediate priority would be to focus on delivering the LCCP within the revised cost estimate and schedule, while managing the group’s near-term balance-sheet constraints.

Grobler also said that he would seek to implement a change in a culture of “excess deference”, which the board review highlighted as a key reason for the failure to pass on accurate and realistic information on the LCCP.

During a media briefing on October 28, before the release of the full-year results, Gantsho attributed many of the problems at the project to a lack of megaproject competence within the project management team (PMT), as well as a “culture of fear”, which undermined transparent reporting of the problems.

“It is the board’s assessment that the former leadership of the LCCP PMT’s conduct was inappropriate, demonstrated a lack of competence and was not transparent.”

As part of the remedial actions, disciplinary action has been instituted against the executive VP previously in charge of the LCCP and a separation from the company of the three senior VPs with roles in the project.

The board believes, however, that further remedial steps are required to embed a new culture at the company to ensure the flow of “bad news” to the leadership.

Gantsho insisted that the board found no evidence of misconduct or incompetence by Nqwababa and Cornell, describing their October 31 departure as the outcome of “an amicable mutual separation with the company”.

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

On Budget and on Time?
The project has experienced some delays and the project’s budget has been revised. In 2014, the group said the Louisiana project would cost $8.9-billion to build, but there have been several cost revisions since then. In February 2019, Sasol provided a cost-to-completion range of between $11.6-billion and $11.8-billion. That revision increased the project’s price tag by between $1-billion and $1.3-billion, with the higher figure including a contingency of $300-million. The latest revision, in May 2019, increased the project’s price tag to between $12.6-billion and $12.9-billion.

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.