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Posted by Heidi Schwartz
Gov. Bobby Jindal and Axiall Corporation President and CEO Paul Carrico have announced Axiall’s selection of Louisiana as the location for a potential world-scale ethane cracker to be built in conjunction with a related ethylene derivatives plant. The capital investment by Axiall and a joint venture partner would approach $3 billion, with approximately two-thirds of the investment dedicated to the ethane cracker and the remainder to the derivatives plant. Axiall would invest approximately $1 billion in the proposed project – with a partner investing the additional capital – and Axiall expects to award a front-end engineering and design contract early this year. If the company’s board of directors approves the project, commercial operations could begin by 2018.
A chemicals and vinyl-based building products company, Axiall operates manufacturing complexes in Louisiana – two in the Lake Charles, LA, area and one in Plaquemine, LA – and is evaluating where in the state it would build the new plants. Combined, the approximately $3 billion capital investment would result in up to 250 new direct jobs. LED estimates that the new plants would collectively result in an estimated 2,200 new indirect jobs, for a total of more than 2,400 new jobs. An estimated 2,000 to 3,000 construction jobs also would be created during the four- to five-year development of the ethane cracker and derivatives plant. In addition to the new jobs, Axiall would retain 1,600 existing jobs in Louisiana.
Gov. Jindal said, “Louisiana’s energy, workforce and economic development strengths continue to draw major investments from companies like Axiall that recognize there’s no better place to build their future than in Louisiana. Time after time, investors with world-scale projects are choosing Louisiana for our incomparable advanced manufacturing workforce, our rapidly improving business climate and our strategic location as an energy transmission hub with superior access to domestic shale gas.”
Axiall was formed in January 2013 from the merger of Georgia Gulf Corp. and the chemicals business of PPG. Axiall operates more than 40 chemicals and building products manufacturing facilities in North America, where it is the third-largest chlor-alkali producer, the second-largest vinyl chloride monomer producer and the third-largest siding manufacturer. The company requires about 2 billion pounds of ethylene per year for its manufacturing operations, and the potential new investments would strategically position the company to have ethylene integration for its vinyl chain.
“As part of Axiall’s long-term growth strategy, we believe it is important we have further integration with cost-based economics on 50 percent of our current annual ethylene requirements,” Carrico said. “While we are still considering a number of options and potential partners for the project, and we have not yet received final investment approval from our board of directors, we have narrowed our siting choices to Louisiana. We are excited about the prospect of expanding our footprint in the state and continuing to invest in Louisiana and its talented workforce.”
LED began discussions with Axiall about the potential expansion projects in February 2013. The State of Louisiana has offered Axiall a competitive, performance-based incentive package to encourage the company to move forward with the projects in Louisiana. The incentive package offer is contingent upon a final investment decision by the company to proceed with the planned projects.
Axiall will begin the permitting process and certain front-end engineering and design activities as the next step in its process to select a final Louisiana site for the project. The company is evaluating potential partners for both the ethane cracker and derivative investments and expects to announce a partner in the near future.