Lake Charles

Lake Charles

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Aerial view of Sasol construction site in Secunda in 1980.

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Sasol’s Lake Charles chemicals project is an ethane cracker, which will use about 100,000 barrels of ethane a day to produce 1.5Mt of ethylene a year for Sasol.

About 90% of this output will then be used to make speciality chemicals.

By June, about half the Lake Charles project had been built, at a cost of US$4.8bn.

By 2019, about 80% of the project’s production will be online, and the rest will follow soon after.

Timing, however, is crucial.

Sasol’s oil and gas rivals are scrambling to build ethane crackers in North America to take advantage of cheap and abundant shale gas as a feedstock to make more complex chemicals products.

Fleetwood Grobler, Sasol’s executive vice-president of the chemicals business, says there will be a short-term glut of polyethylene in North America over the next few years as the first wave of ethane crackers moves into production.

But Grobler says supply growth in North America will actually be quite modest given demand, so it should be absorbed rapidly.

Steve Lewandowski, a vice-president at consultancy IHS Markit, says demand is growing for ethylene and its derivatives.

A large chunk of this demand will come from the US itself. Demand is also growing in China, as these are inputs for low-cost plastics.

Lewandowski says the biggest risk to Sasol’s project isn’t its pricing or demand, but its execution.

The US Gulf Coast is known for extreme weather, and this was on full display in recent months, as Louisiana was rocked by once-in-a-generation rains.

However, Sasol says that while this is a setback during construction, once these complexes have been built they are designed to withstand powerful category-five hurricane winds.