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Sasol Ltd Goes All In on US Chemical Plant

The Logo of Sasol Ltd.

The Logo of Sasol Ltd.

South African fuel maker, Sasol Ltd has approved plans to begin building an $8.1 billion petrochemical plant in Lake Charles, Louisiana. The plant is expected to convert natural gas from shale gas formations into plastics and other industrial and consumer products. One of the plants will operate a cracker which is capable of converting ethane into ethylene. It is the ethylene that is used in the production of other chemical products, such as ethylene oxide and ethylene glycol, for use in carpet fibre, water bottles and antifreeze. The unit will have a production capacity of 1.5 million metric tonnes per annum. Energy Corporation in Louisiana will supply the necessary 200 MW of power needed to run the cracker.

Sasol Rides the Wave of Abundant US Gas Supplies

The $8.1 billion price tag is significantly higher than investments made by competing companies, including Chevron Phillips Chemical Company ($5 billion) and Dow Chemical Company ($4 billion). Combined, various chemical makers have ploughed $124 billion into the booming US shale industry to capitalise on abundant natural gas resources and a robust infrastructure. The CEO of Sasol Ltd, David Constable, said that the cheap price of ethane was the reason Sasol Ltd decided to invest in the US.

The Lake Charles Louisiana

The Lake Charles Louisiana

The Lake Charles Louisiana plant is not expected to begin operating until 2018, but site preparation is currently underway. Sasol Ltd will be investing $800 million in utility improvements and infrastructure in the area. The company will make use of global U.S.-based dollar sources to raise the necessary capital. Sasol has gone ahead with its plans to invest, regardless of the slumping oil prices in the Brent crude and WTI markets. Sasol is the #1 producer of motor vehicle fuel made from coal.

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