Sasol's new ethane cracker a shining beacon of hope for US industry

Sasol's recent announcement to build a brand new ethane cracker has been seen as a signal that the industry is looking to the future with renewed optimism.

Sasol’s decision to build a brand new ethane cracker has been seen as the strongest signal yet that the US petrochemical industry is going through a renaissance, mainly driven by the shale gas boom in the last decade.

Construction of the ethane cracker, located near Westlake, Louisiana is expected to be finished by 2017 with a nameplate capacity of 1.5 million t/y when fully operational. Sasol began the Front End Engineering Design (FEED) phases for the ethane cracker GTL plant in December 2012. Technip, which controls about 50% of the global licensing market share since 2000, will provide the technology license for the ethane cracker.

“The ethane project is the largest single manufacturing investment in the history of Louisiana and also represents one of the largest foreign direct investment manufacturing projects in the history of the US,” Sasol said.

However, Sasol’s multi-billion dollar gas-to-liquids (GTL) facility now hangs in the balance. The company, an international integrated energy and chemicals firm, headquartered in Johannesburg, South Africa, has decided to delay the final investment decision on its large-scale GTL plant in Louisiana. The plant was expected to produce, among other things, GTL naphta, an important feedstock for the petrochemicals industry. The decision has been put back until “progress has been made at their world-scale ethane cracker and derivatives complex and prevailing market conditions and other strategic investment opportunities justify its construction”.

Planned ethane cracker constructions in the US

Company Location  Capacity (‘000 t/y) Start-up
Sasol Westlake, Louisiana 1,500 2018
Shell Chemical Monaca, Pennsylvania 1,000 N/A
ExxonMobil Baytown, Texas 1,500 2017
Dow Chemical USA Undisclosed 2,300 2017
Braskem-Odebrecht JV Parkersburg, West Virginia 1,000 2019
  Total 7,300  

Sasol’s new ethane cracker

The new Sasol ethane cracker will produce ethylene, which is major building block of the modern petrochemical industry. The applications of ethylene are numerous, including polyethylene (PE), its most important derivative accounting for more than 50% of world demand. The primary use of PE is in film applications for packaging, carrier bags and trash liners. Other applications include injection moulding, pipe extrusion, wire and cable sheathing and insulation.

The cracker will use cheap shale gas and ethane as a feedstock in the cracking process, during which large molecules are broken down into smaller ones at very high temperatures. Almost any hydrocarbon feedstock can be used in an ethylene cracker, but it needs to be designed to take a range of feedstocks to be able to vary the feed.

Sasol is now betting that the increased shale gas output in the country would help the company reach its goals in becoming a major player in the ethylene industry, but for now it seems its confidence in the GTL sector has shrunk somewhat.

Sasol is a world leader in synthetic fuels technologies, employing 34,000 people worldwide in 38 countries. In the US it currently has operations in:

• Westlake, Louisiana
• Tucson, Arizona
• Houston, Texas
• Richmond and Hayward, California
• Oil City, Pennsylvania
• Tulsa, Oklahoma.

Impact on workforce shortage

The Westlake project will employ up to 7,000 construction workers at peak times and at least 1,200 permanent positions in the ethane cracker. As there is a shortage of skilled workers, it may be a major issue for the company where to source the labour force. Most workers will need certifications and/or experience to work on the projects.

Required crafts positions include:

• Heavy equipment operators
• Scaffold builders
• Electricians
• Pipefitters
• Welders
• Ironworkers
• Machinists
• Millwrights
• Instrumentation
• Technicians and insulators

The skill shortage may be met by the Louisiana Community and Technical College System, which provides training for most of the required crafts to meet industrial skills and craft needs.

On the flip side, the projected slowdown in petrochemical expansions may be positive news for those companies that have already embarked on construction works. As demand for skilled workers drops with the scrapping or delaying of major projects, the wages they can demand may also drop. This will eventually lead to lower costs for the industry, providing companies with some breathing space.

As Sasol’s announcement has shown, even though the US shale industry has been seen as the strongest pillar of the global energy industry for years, a relatively short period of negative price growth in oil prices could tip the industry out of balance. It now remains to be seen whether other companies will follow Sasol’s lead and shelve some of the projects in the pipeline or carry on business as usual, hoping the tide will turn in their favour soon.

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