Sasol delays its GTL plant in Louisiana, USA

Petrochemical plant
Source: DollarPhotoClub

South African petrochemicals group Sasol has announced it would delay the construction of its gas-to-liquids (GTL) project in the Lake Charles area, Louisiana. The decision was motivated by the falling oil prices putting the profitability of the plant in question.

Meanwhile, the company has said that work on an $8.1 billion ethane cracker in the Westlake complex will continue as planned.

Sasol said that it is not planning to completely abandon the project, but it will continue to work on it “at a much slower pace.” It also has indicated that it will be seeking other opportunities to reduce its costs over the next few years. At $14 billion, the delayed project would be the most expensive industrial investment in the state’s history.

“I’m comfortable that this is simply a delay,” House Speaker Chuck Kleckley, R-Lake Charles, who represents the area told ABC News. “They’re looking for predictability and stability out of the oil prices.”

The GTL project’s economics were based on the price difference between natural gas and crude oil, and now that has collapsed, Dismukes said.

“You need that high differential to cover those billions in capital investment, and it’s not there,” David Dismukes, executive director of the LSU Center for Energy Studies, told The Advocate. “You also have to factor in that you probably have a lot of risk and uncertainty associated with building a project like this.”

The Economic Development Alliance said the cracker would create 5,000 construction jobs and 500 new jobs by the time it is completed.

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