Sasol ups US project cost estimate; UP, Katoen Natie start resin export service

Petrochemicals news you need to know.

Sasol raises Lake Charles project cost estimate by $2.1B

Sasol has increased the total cost estimate for its Lake Charles, Louisiana ethane cracker and derivatives project from $8.9 billion to up to $11 billion, including site infrastructure and utility improvements, the company announced on June 6.

According to a preliminary project review, the estimated capital expenditure increase is mostly due to construction delays caused by higher-than-expected rainfall, higher labor costs, certain of the lump-sum bid contract prices being higher than originally estimated, as well as bulk materials exceeding the quantities in the original estimate.

In March 2016, Sasol announced that it would be undertaking a detailed review of the project after deciding to pace the execution of the facility to support the company´s low oil price response plan.

The slower rate of capital spending until June 2018 has extended the project schedule and contributed to further project cost increases. Some of the cost escalation has been partially offset by productivity benefits due to improved phasing of the engineering and construction activities, Sasol said.

As of late April, the capital expenditure on the project was $4.5 billion, and the overall project was more than 40% complete, with all engineering activities nearing completion and procurement at an advanced stage.

The ethane cracker is expected to start up in the second half of 2018, which will enable around 80% of the total output from the project to reach beneficial operation later in 2018 and early 2019. The remaining volumes from the other derivative units will reach beneficial operation by the second half of 2019, according to Sasol.

The project comprises a world-scale 1.5 million ton per year (mtpa) ethane cracker, and six downstream chemical projects – two large polymer plants (low-density and linear low-density polyethylene) and an ethylene oxide/ethylene glycol plant, which together will consume around two thirds of the ethylene produced by the cracker; and three smaller, higher-value derivative plants, which will produce specialty alcohols, ethoxylates and other products.


Major ethane cracker projects (announced and under construction) in the U.S. and proposed new ethylene capacity by state. Click on and interact with the map to learn more. Source: Petrochemical Update.

Shell approves Northeast cracker; Axiall/Lotte start Louisiana plant construction

Shell announced on June 7 it had taken a final investment decision to build its proposed 1.5 mtpa petrochemical complex near Pittsburgh, Pennsylvania, comprising an ethylene cracker with polyethylene derivatives unit.

The main construction will start in about 18 months, with commercial production expected to begin in the early 2020s. The project is expected to create about 6,000 construction jobs and 600 permanent positions.

The complex will use low-cost ethane from shale gas producers in the Marcellus and Utica basins to produce 1.6 million tons of polyethylene per year.

Meanwhile, Axiall has started construction of its joint venture 1 mtpa ethane cracker with Lotte Chemical in Calcasieu Parish, Louisiana, Axiall announced on June 14.

Besides the cracker, Lotte Chemical will also construct an adjacent plant to produce 700,000 tons annually of ethylene glycol (EG).

The total capital investment in the facilities is estimated to be $3 billion. Together, the plants are expected to create about 2,000 temporary construction jobs, more than 200 new direct jobs and more than 1,800 indirect jobs in the community.

CB&I will execute the main steam cracker engineering, procurement and construction (EPC) contract, using its proprietary technology, following successful completion of front-end engineering and design, and other early-stage engineering works.

BASF postpones Texas propylene plant

Meanwhile, BASF announced on June 6 it would postpone the construction of its proposed 475,000 ton per year methane-to-propylene (MTP) plant in Freeport, Texas because of volatile commodity prices and the “prevailing economic environment.”

The investment decision is based on mid- and long-term forecasts of crude oil and natural gas prices, a BASF spokeswoman said in an email to Reuters.

With oil prices down 50% from 2014 highs, the ratio between oil and gas prices has shrunk significantly, eroding the business case for building petrochemical plants that would primarily process gas.

Propylene prices have been falling since 2014 amid capacity additions and falls in crude.

According to analysts cited by Platts, BASF’s decision to postpone the project was also prompted by the growing supplies in the global propylene market.

In the United States, the Dow Chemical Company recently started up a propane dehydrogenation (PDH) facility in Oyster Creek, Texas, and Enterprise Product Partners and Formosa Plastics have plans to open similar plants in Texas within the next two years.

According to S&P Global Platts data, the North American PDH capacity is projected to increase to 2.8 million tons/year (mtpa) in 2018 from around 500,000 tons/year in 2013. Asian PDH capacity is expected to increase to 10 mtpa in 2018 from about 2.5 mtpa in 2013.

Meanwhile in Asia, China has seen significant expansion of methanol-to-olefins capacity, with 13 methanol-to-olefins and MTP plants with an annual methanol consumption of 12 mtpa, according to Platts. China will see the startup of another four plants this year with a combined methanol consumption of 6.5 mtpa.

UP, Katoen Natie launch resin export service

Union Pacific (UP) and global logistics services supplier Katoen Natie have partnered to provide an overseas export service for plastic resins from the U.S. Gulf Coast, UP announced on May 16.

The Dallas to Dock service ships plastic pellets by hopper car from the Gulf Coast to Dallas, where they are packaged and loaded into intermodal containers for Union Pacific to move to ocean ports.

Union Pacific’s intermodal service is expected to increase container availability in Dallas and expedite shipment to ocean ports at a low-cost by minimizing drayage, Union Pacific said.

To support the Dallas to Dock service, the two companies will construct a plastic packaging facility adjacent to Union Pacific's Dallas Intermodal Terminal. Scheduled for completion in Q3 2017, the facility will have approximately 500,000 square feet of warehouse space with railroad access.