U.S. Gulf Coast polyethylene projects face start-up delays

Petrochemical projects in the U.S. Gulf Coast to add polyethylene capacity expected to start by the end of 2019 have experienced issues including an explosion, pushing some production to later in 2020.

The U.S. Gulf Coast has attracted petrochemical investment. Image shows a view of Port Arthur, Texas, at night. Image courtesy of David Mark/Pixabay

Sasol Ltd. delayed of the start of its low-density polyethylene (LDPE) unit in Louisiana while Formosa´s new LDPE line in Texas also saw a postponement, as the last the first wave of ethylene and polyethylene investment that started in the middle of the past decade slowly keeps coming online.

Sasol Ltd., based in Johannesburg, said on Jan. 25 that after an explosion and fire on Jan. 13 it will delay the start of its projected low-density polyethylene unit in Lake Charles, Louisiana.

As of December 2019, construction progress at it Lake Charles Chemical Project had been at 99% and capital expenditure amounted to over $12.5 billion, it said.

Sasol past challenges on its complex have included problems at the time of the cracker start up in July 2019. Sasol shut and then restarted the cracker in August, running it at about half capacity rates during the rest of the second half of 2019.

Still determining extent of damage

Sasol had said on Dec. 17 it anticipated the startup of the low density polyethylene unit that same month before the explosion occurred in January in a high-pressure section of the facility.

“The investigation is underway to determine the cause, extent of the damage, and the scope and timeline of repair,” Sasol said.

“Initial findings indicate the damage is limited to a small portion of the LDPE unit and, importantly, major equipment such as the compressors were unaffected. Parallel commissioning activities on the remainder of the LDPE unit will continue,” it added.

However, there isn’t any new start-up date for the LDPE unit. Sasol is still uncertain as to the extent of the repairs needed.

“We expect to determine the repair scope and outage duration by the second half of February,” it added.
The ethylene produced by the cracker and originally intended for the unit will be sold externally until the LDPE unit starts, Sasol said.

The projected earnings for the LCCP complex during the 2020 financial year will only be impacted by the loss in the margin of ethylene to low-density polyethylene, the company said.

All previously commissioned units were unaffected. The Ethoxylates, Ziegler and Guerbet plants are also unaffected and remain within cost and schedule, it said.

Project hit by cost overruns and delays

In August 2019 a review ordered by Sasol’s board of directors to look at repeated cost increases and past delays in Lake Charles mentioned likely problems related to project control. Sasol changed the total estimated project cost at $12.9 billion, up from the previous $12.6 billion.

The Advocate, a newspaper based in Baton Rouge, Louisiana, 125 miles east of Lake Charles, reported on October 2019 that Sasol removed several executives, including top officers, after the cost overruns at its Lake Charles plant.

The project involves 1.5 million tons of ethylene annual capacity. Back in 2014, Sasol estimated construction would take about four years and cost under $9 billion.

Formosa delays new Texas polyethylene unit

Formosa Plastics had anticipated starting its new Point Comfort, Texas as well as its low-density polyethylene production line before the end of 2019.

However, the initial startup of the LDPE unit is now expected by April 2020, Formosa Plastics said on Jan. 22 as it issued an update. The initial start-up of the cracker was complete with “output scale-up in progress,” it said.

Formosa’s new ethylene plant has 1.25 million tonnes of annual capacity. The low-density polyethylene plant will produce 400,000 tonnes annually.

The Point Comfort site consists of 16 units and support facilities. The site started with a VCM/PVC plant in 1983. In the 1990s it saw added olefins, LLDPE, HDPE, PP, PVC, chlor-alkali and EDC units.

Formosa´s ethylene plant and new LDPE unit are part of most recent expansion that included a third olefins unit, a PDH unit, an LDPE resin plant, another HDPE resin plant and an additional PP line.

Other projects

Another ethylene plant under development in the region that has faced its share of delay is Shintec, a unit of Japan’s Shin-Etsu. It did not announce a startup by the end of 2019, as anticipated.

In 2015 Shintec expected to complete the expansion in the first half of 2018 but faced cost and problems with contractors, according to a separate report in The Advocate about this Plaquemine, Louisiana project.

The cracker is intended supply ethylene as feedstock for PVC production.

North American PE capacity is expected to increase from 23.15 million tonnes annually in 2018 to 33.82 million tonnes per year in 2023, according to GlobalData.

A wave of similar projects was announced around the middle of the past decade, and these are some of the last coming online. There are several other projects under construction or planned to come online in the early 2020s.

While most ethylene projects are in the U.S. Gulf Coast, the northeast in the U.S. is also attracting polymer projects with Shell leading the way with a plant under construction in Pennsylvania.

By Renzo Pipoli