Photos courtesy of SASOL

Sasol existing chemicals plant in Lake Charles, La.; the South African firm's planned new facilities would be adjacent.

Sasols flagship gas-to-liquids facility in Qatar, which it owns in joint venture with Qatar Petroleum, cost much more than its original $5-billion construction estimate, one Wall Street analyst says.

South Africa integrated energy and chemical company Sasol is pushing ahead with its planned gas-to-liquids (GTL) facility and ethane cracker projects in Louisiana, with the latter's final investment decision expected by the first quarter of next year.

Company spokesman Anderson Alex said the projects will cost the Johannesburg-based firm between $16 billion and $21 billion.

Sasol announced on Oct. 16 that Technip has won a contract for the ethane plant's technology and some front-end engineering design (FEED). The engineer says it will execute work on the Lake Charles plant from its Houston operating center and is set to complete work by year's end.

Fluor Corp. was selected in July as the main FEED contractor for the plant and an associated chemical facility, a complex that is set to cost between $5 billion and $7 billion and be completed by 2017. It will produce an estimated 1.5 million tons per year of ethylene.

Other firms supplying design, technology and project management services for the project are Toyo Engineering Corp., Mitsui Engineering & Shipbuilding Co. Ltd., Samsung Engineering America Inc. and Worley Parsons Ltd.

Alex says the GTL final investment decision will be 18 to 24 months after the ethane plant. In an August note, Jamie Cook, lead engineering and construction analyst for Credit Suisse, said that she thinks "Fluor will team up with [contractor] JGC to improve its positioning on the GTL package; however, the project is large enough to warrant multiple packages."

Michael Dudas, sector analyst for Sterne Agee, said in a Sept. 26 note, "GTL plants have been difficult to develop with common delays and cost overruns." He says that Shell Corp.’s Pearl GTL facility in Qatar "was originally estimated to cost $5 billion; however, final project cost was estimated to be over $20 billion."

According to Dudas, "Lessons learned from several complex projects and a stronger understanding of advanced GTL technology could serve well to reduce mistakes at future projects and make sponsors more confident in going forward with developments."

Sasol, whose market capitalization is estimated at $30 billion, has staggered the investment decisions as it mobilizes funding. Alex says the company’s recent $1-billion bond offering “has introduced flexibility into our funding plan.”

Alex says the GTL facility, the first of its kind in the U.S., will convert natural gas into 4 million tons per year of diesel and other products. It is estimated to cost between $11 billion and $14 billion.

Sasol completed feasibility studies on the two projects last year.