Sasol’s Lake Charles start-up delayed, Exxon-SABIC select service provider, Economists see recession by end of 2021

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Sasol is constructing a world-scale petrochemical complex in Southwest Louisiana. The project will roughly triple the company's chemical production capacity in the U.S. but is experiencing cost and schedule overruns.

Sasol delays posting results to review Lake Charles cracker

Sasol shares fell the most in 20 years on 16 August when the South African trading company announced delays to the release of its full-year results. The company said they needed to complete a review of problems affecting its Lake Charles Cracker Project (LCCP).

The delay in releasing financial results is linked to the cost overruns and delays at LCCP.

Costs at the site have climbed from an initial projection of $9bn to levels of nearly $13bn announced by the company in May.

The challenges are a result of weather, engineering and staffing difficulties.

The company also announced a new problem, saying the start of an ethane cracker had been delayed. The delay is a technical challenge relating to a large heat exchanger. An update on the unit is expected by the end of August.

The project will, once complete, boost the part of chemicals in Sasol’s sales mix to 70%. It’s one of two massive plants that it had planned in the U.S., but the second – a gas-to-liquids operation –was abandoned during the oil-price crash.

LCCP was approved in 2014. Mechanical, electrical and instrumentation work began in 2016.

Exxon-SABIC select ethane, ethylene transportation provider

As construction of one of Texas' biggest petrochemical plants is underway, SABIC-Exxon Mobil's joint venture has firmed another deal with a contractor and supplier who will help to bring the $10 billion project forward.

Two affiliates of San Antonio-based EPIC Y-Grade Holdings will build over 130 miles worth of 12” ethane and ethylene pipeline to support the petrochemical plant's steam cracker.

The pipelines are expected to be complete by the third quarter of 2020.

One pipeline will transport ethane from the EPIC fractionator in Robstown, Texas into the project, called Gulf Coast Growth Ventures (GCGV). Another pipeline will deliver ethylene into the Markham, Texas marketplace, EPIC said.

The transportation agreements between EPIC and GCGV are multiyear and are underpinned by minimum volume commitments, according to EPIC.

Formed in 2017, EPIC builds pipeline and related projects to carry crude oil and NGLs from the Permian and Eagle Ford Basins in Texas into the Corpus Christi markets.

ExxonMobil and SABIC are building a multi-billion-dollar plastics manufacturing facility in San Patricio County, Texas.

Economists see US recession hit by end of 2021

In a new survey by the National Association for Business Economics (NABE), 34% of economists said they believe a recession will hit in the year 2021. 74% of economists sees a recession by the end of that year.

Not so long ago, many economists thought a recession would hit sooner.

38% of economists surveyed believe a slowing economy will tip into recession in 2020. That's down from 42% in a survey taken in February. Only 2% of those polled expect a recession to begin in 2019, while roughly a third of respondents foresee one hitting in 2021.

The Federal Reserve's move last month to dial back interest rates for the first time since 2008 is one reason fewer economists expect a recession this year. Many forecasters and investors predict the central bank will further ease monetary policy over the rest of the year.

Typical recession signals remain positive. Employers are adding jobs at a steady pace. The unemployment rate remains near a 50-year low. Consumers are optimistic as evident by U.S. retail sales figures which jumped in July by the most in four months.

Economists have previously expressed concern that the global trade war and higher budget deficits could eventually dull the economy.

The U.S. has imposed tariffs on goods from many key trading partners, including China, Europe, Mexico and Canada. U.S. trading partners have retaliated with tariffs of their own.

The NABE survey took place between July 14 and August 1. That was before the White House announced 10% tariffs on the additional $300bn of Chinese imports, and before the Chinese currency dipped below the seven-yuan-to-$1 level for the first time in 11 years.

US delays latest proposed Chinese tariffs to December

The U.S. will delay the implementation of several proposed tariffs on exports from China to mid-December.

U.S. President Donald Trump initially announced that from September 1, an additional 10% tariff will be applied on $300bn of Chinese goods. But the United States Trade Representative Office later removed some items from its list of targeted goods and delayed the implementation of new tariffs on some products until December 15.

Natural gas deliveries to US LNG export facilities set a record in July

Natural gas deliveries to U.S. facilities producing liquefied natural gas (LNG) for export set a monthly record in July 2019, averaging 6.0 billion cubic feet per day (Bcf/d)—7% of the total U.S. dry natural gas production—according to data from OPIS PointLogic Energy and the U.S. Energy Information Administration (EIA).

In the first seven months of 2019, natural gas feedstock deliveries to LNG export facilities have been the fastest growing among all U.S. natural gas consumption sectors.

Natural gas delivered by pipelines to Mexico and to U.S. LNG export facilities reached 10.9 Bcf/d in July and averaged 10.0 Bcf/d in the first seven months of this year, 30% more than in the same period of 2018. The U.S. has been exporting more natural gas than it imports on an annual basis since 2017, and the EIA expects that U.S. natural gas exports will continue to increase as new LNG facilities come online.

The EIA estimates that U.S. LNG exports set new records in June and July 2019 at 4.8 Bcf/d and 5.2 Bcf/d, respectively, based on tanker loadings data from Bloomberg L.P. Natural gas feedstock deliveries to LNG export terminals averaged 5.5 Bcf/d in June and 6.0 Bcf/d in July, implying that about 15% of the natural gas feedstock sent to LNG facilities was used as fuel in the liquefaction process.

Two new LNG export facilities—Elba Island LNG in Georgia and Freeport LNG in Texas—plan to place their first trains in service in the next two months. Since July, both facilities have been receiving small amounts of natural gas feedstock deliveries in preparation for LNG production.

Production of LNG at Elba Island was expected to begin in May 2019, but it has been delayed in part because of unevenness in cryogenic temperatures in the moveable modular liquefaction system (MMLS) units, which are using a new technology. Kinder Morgan, the developer of Elba Island LNG, stated that 4 of the 10 MMLS units (or trains) are complete and will be placed in service in the next few months.

The first train at Freeport LNG is scheduled to come online in September 2019, and the remaining two trains are scheduled for the second and third quarters of 2020, respectively. Current plans are to complete construction and bring the remaining trains at Elba Island, Corpus Christi, and Cameron online in 2020 and 2021.