South Africa's Sasol helps Louisiana to lead America's gas-to-liquid race
Sasol, an energy and chemicals giant based in Johannesburg, plans to spend up to US$14 billion to build the first commercial plant in the United States that will turn natural gas into liquid fuels.
Sasol chose the south-western region of Louisiana as the site for the planned gas-to-liquid (GTL) facility. The company will chemically convert low-cost shale gas into high-performance, low-emissions diesel and other transportation fuels.
"We believe Sasol's proprietary GTL technology can help unlock the potential of Louisiana's clean and abundant natural gas resources and contribute to an affordable, reliable and high quality fuel supply for the United States," says Ernst Oberholster, the managing director of new business development for Sasol.
This mega-project involves one of the biggest investments from a non-US company in American history.
In addition to the GTL facility, the project includes a $5bn to $7bn ethane cracker and derivatives plant that will convert ethane to ethylene and other downstream derivatives.
The US' abundant shale gas, which is released through the controversial drilling process of hydraulic fracturing, also referred to as fracking, was a main reason for Sasol's decision to lay the foundation for its GTL facility in Louisiana.
The Louisiana plant's location, at Calcasieu Parish, is in close proximity to shale gasfields just north, as well as west in Texas.
The plant is expected to produce 96,000 barrels of fuel per day when fully operational. It will be the second-largest plant of its kind in the world, following Royal Dutch Shell's Pearl plant in Qatar.
Today, only Sasol and Royal Dutch Shell are working on GTL on a commercial level.
Production for the Louisiana plant is slated to begin in 2018 and Sasol estimates that it will create at least 1,200 permanent jobs and 7,000 more jobs in construction as it is being built. Louisiana provided more than $2bn worth of tax credits and other incentives for the project.
According to an economic impact study commissioned by Louisiana economic development and completed by the Louisiana State University division of economic development, the Sasol project will produce a total economic benefit of an estimated $46.2bn over the next 20 years.
"Never before in our nation's history has there been a greater call for energy independence, but that independence will only result from a meaningful application of innovative and practical solutions for new sources of energy," says the Louisiana governor Bobby Jindal.
"This project is a giant step forward to help our country become more energy independent and less reliant on foreign sources of energy," Mr Jindal adds.
The GTL process dates back to the 1920s. However, conversion technology was largely abandoned by the 1950s. The reason was that GTL at that time had proven to be commercially unviable primarily due to high production costs and the emergence of cheaper products made from refined crude oil.
South Africa was the only country where the technology continued to develop, even during apartheid.
On August 16, Louisiana policymakers agreed to Sasol's contract without objection in exchange for $257 million in state incentives over a decade. It was determined the fuel plant would provide a substantial economic boost to the state.
Updated: September 1, 2013 04:00 AM