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Sasol Picks Louisiana as Site of $10-Billion Natural Gas Plant

Louisiana Gov. Bobby Jindal and Sasol New Business Development Managing Director Ernst Oberholster have announced the South African company has selected Calcasieu Parish as the location for a potential gas-to-liquids, or GTL, complex that would entail a capital investment of approximately $8 billion to $10 billion and produce direct employment of approximately 850 jobs, with average salaries of about $89,000, not including benefits.

LED estimates the project also would result in approximately 4,000 indirect jobs, which means the total impact of the project would be nearly 5,000 new jobs in Southwest Louisiana. Additionally, at full production capacity, the facility would consume approximately 305 billion standard cubic feet of natural gas per year, which would represent roughly $1.3 billion to $1.5 billion per year in natural gas purchases at current prices and, accordingly, Sasol’s proposed GTL complex would provide a huge new source of demand for the Haynesville Shale and other natural gas plays in Louisiana.

Gov. Jindal said, “Sasol has selected Calcasieu Parish as their preferred location in the U.S. for one of the largest industrial projects in Louisiana history. This is great news for Southwest Louisiana and our entire state. Not only would this project result in nearly 5,000 new jobs, but it also would represent a huge new source of demand for natural gas in Louisiana, which would benefit the Haynesville Shale and other natural gas plays here. For nearly four years, we have made economic development our top priority so that we could put Louisiana in a position to secure projects like this one that would provide 850 jobs with salaries averaging $89,000, plus benefits. Without question, the Haynesville Shale and other unconventional natural gas plays are transforming the energy economy in the U.S., and we are positioning Louisiana to be one of the chief beneficiaries of that transformation.”

“Louisiana has proven to be a place where research and next-generation technologies can thrive and grow,” Oberholster said. “We believe Sasol’s GTL technology can help unlock the potential of Louisiana’s abundant natural gas resources and contribute to an affordable, reliable fuel supply for the United States. We look forward to continuing to work with the people of Louisiana to make a long-term and sustainable contribution to the state.”

Sasol’s GTL complex would be the first of its kind built in the United States, with Sasol converting natural gas into synthetic gas and then converting the synthetic gas into premium diesel fuel and related products. Sasol Ltd., based in Johannesburg, has been an innovator in coal-to-liquids and gas-to-liquids refining methods since the 1950s. Its Sasol North American Inc. subsidiary currently operates the 400-employee Sasol Lake Charles Chemical Complex in Westlake, with that facility located next to the city’s ConocoPhillips petroleum refinery.

The state has actively cultivated GTL projects with Sasol and other leading energy companies around the world for about two years. LED’s analysis and research suggests that the decoupling of natural gas and oil prices creates a tremendous opportunity for GTL development in the U.S., and that Louisiana is uniquely positioned to secure these projects due to a unique combination of strategic advantages. These advantages include but are not limited to: a large, world-class industrial construction and petrochemical operations workforce; proximity to the Haynesville Shale and other emerging shale plays; highly competitive tax structure and incentive offerings for manufacturers; extensive petrochemical infrastructure; and one of the largest port complexes in the world.

LSU recently completed an economic impact analysis — commissioned by Sasol — that shows how significant this project would be for the State of Louisiana and for the greater Lake Charles area. The study says that construction alone will generate another $1.73 billion in additional business activity and more than 12,000 new jobs associated with $577 million in personal earnings during the five-year construction period. Once the Sasol GTL complex is fully operational, it would lead to additional economic activity in the state of almost $919 million a year.

At the Lake Charles Chemical Complex, Sasol previously announced construction of a $175 million ethylene tetramerization unit in December, and that project is under way.

Working since mid-2010 with the Business Expansion and Retention Group of Louisiana Economic Development, or LED BERG, Sasol identified another Calcasieu Parish site that would work well for its GTL complex. Specifically, LED BERG utilized innovative GIS mapping technology to recommend locations that would optimize a variety of customized site-selection criteria. The GIS work and partnerships with the Port of Lake Charles to secure land options saved the company months of planning and preparation work, which helped make the Louisiana proposal Sasol’s preferred option. LED is working with Sasol on a customized incentive package for the project.

Sasol considered several other states before selecting Louisiana as its preferred location in the U.S. The company could develop both a U.S. facility in Calcasieu Parish as well as a second facility in Canada, which also is under evaluation. Sasol plans for a design-and-engineering phase for the proposed Calcasieu Parish facility to begin soon, following the company’s completion of an extensive feasibility study estimated to cost in the tens of millions. If all proceeds as planned, construction is expected to start in 2013, and the complex would be built in two phases that upon completion in 2018 would process approximately 4 million tons of products per year, with a maximum capacity of 96,000 barrels per day. According to Sasol, the project would create thousands of construction jobs at an average salary of $75,000.

The new facility will utilize Sasol’s innovative GTL technology to convert abundant, domestic natural gas into diesel and other products in a cost-efficient and environmentally safe way, the company said. As part of America’s energy mix, GTL would help the U.S. meet its growing transportation needs while advancing its energy independence.

“Two years ago, we identified a focused set of priority growth targets for Louisiana, including unconventional natural gas opportunities like GTL facilities,” said LED Secretary Stephen Moret. “Since that point in time, we have focused an increasing amount of our energy on cultivating relationships with the companies most likely to have the capacity and willingness to bring this type of technology to fruition in the U.S. We are thrilled that Sasol has selected Calcasieu Parish as its preferred U.S. location for this project. Supporting the retention and expansion of Louisiana’s existing businesses has been and will continue to be our top economic development priority.”

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