Interview with Don Pierson, Senior Director of Business Development, Louisiana Economic Development (LED)
Don will be presenting at the 13th World XTL Summit in London on 20-22 May, when he will share the exciting GTL progress and success story that is unfolding in the US and particularly in Louisiana.
- (1888PressRelease) April 10, 2013 - Sasol has announced plans to build an integrated Gas to Liquids (GTL) plant in Louisiana. The GTL facility, the first of its kind in the U.S., will produce high quality transportation fuels, including GTL diesel, as well as other value-adding chemical products. This project will be the largest single manufacturing investment in the history of Louisiana and it also represents one of the largest foreign direct investment manufacturing projects in the history of the entire United States. Here Don Pierson of Louisiana Economic Development (LED) provides an insight into the Lake Charles project and its benefits.
What attracted LED to gas to liquids as a gas monetization option?
Louisiana Economic Development (LED) is a branch of state government that seeks to attract jobs and investment to the State of Louisiana. LED has a long history of working closely with Chevron, Shell, Exxon and other major companies involved in energy production. Louisiana provides approximately 30% of US oil and gas production via the Gulf of Mexico (GOM). Louisiana is also home to over 17 refineries and 90 chemical plants. All this is recited to say that the foundation for working in the gas monetization arena was established long ago. Louisiana's companies and workforce are skilled in meeting new challenges and embracing the technology changes that have been a part of the energy production industry for decades. All this is to say that the "LED attraction to GTL activity" is indeed already in our DNA.
What are the benefits and incentives for the project developer, Sasol?
LED worked closely with Sasol (and is willing to work with other companies) to provide 10 or more years of tax abatement (no property tax on building or equipment); world class training of the required work force at no cost to the company and a payroll rebate of 6%, each year for 10 years. Of course these incentives are subject to certain representations by the company and approval by governmental agencies. To secure the project, Louisiana offered Sasol a custom incentive package that includes a performance-based grant of $115 million for land acquisition and infrastructure costs associated with the facility. Sasol also will receive the services of LED FastStart™, the nation's No. 1 state workforce training program. In addition, the company will qualify for Louisiana's new Competitive Projects Payroll Incentive (up to 15 percent payroll rebate for each GTL job) and Quality Jobs Program (up to 6 percent payroll rebate for each ethane cracker job). To support the project's workforce needs during construction and operations, the state will be investing $20 million for a new training facility and associated equipment focused on industrial technology at SOWELA Technical Community College in Lake Charles. Finally, Sasol is expected to utilize the Industrial Tax Exemption Program for both the GTL and the ethylene facilities.
The new training center initially will focus primarily on meeting the training needs of Sasol; once Sasol's initial needs have been met, the facility will serve the broader needs of growing manufacturers throughout the region.
Tell us about the plans and timeframe for construction and completion of the Sasol project
LED respects that certain aspects of companies' business plans and projections are proprietary and reflect information that they may or may not wish to disclose. I would defer your question to SASOL for technical answers. What we anticipate is hiring for the GTL and ethane cracker facilities to begin in 2014. Operations of the first plant are expected to start in 2017, with full employment reached within two years after commercial operations begin.
What is the plant's production capacity and product slate?
LED respects that certain aspects of companies' business plans and projections are proprietary and reflect information that they may or may not wish to disclose. I would defer your question to SASOL for more technical issues. What I can say is that the GTL facility, the first of its kind in the U.S., will produce high quality transportation fuels, including GTL diesel, as well as other value-adding chemical products. GTL diesel is a cleaner-burning, high-performance fuel with significant emission reduction benefits. GTL diesel can be used in existing vehicles and fuel delivery infrastructure without modifications.
The project will consist of an integrated, 96,000 barrels-per-day (bb/d) GTL facility representing a capital investment of between $11 billion and $14 billion, as well as an ethane cracker representing a capital investment of $5 billion to $7 billion. The GTL project will be delivered in a phased approach, with phase one delivering the first 48,000 bb/d and phase two delivering the remaining production capacity. The ethane cracker will produce 1.5 million tons per annum of ethylene, one of the chemical industry's key buildings blocks for alcohol- and plastics-based products, including solvents, surfactants and polymers.
Based in Johannesburg, South Africa, Sasol has been an innovator in coals-to-liquids and gas-to-liquids processes since the 1950s. Through its Sasol North America Inc. subsidiary, the company supports more than 550 existing direct and contract jobs at its Westlake Chemical Complex, where Sasol is completing a $175 million capital investment to build the world's first ethylene tetramerization unit.
To what extent will the project impact economic growth in Louisiana?
The Sasol project, and a number of other major projects that have announced in Louisiana, will yield a very significant economic impact. This will be manifest in the thousands of construction and fabrication jobs created by the requirement to construct these facilities, the long term direct employment at the facilities, and the long term service and maintenance requirements for the facilities. Our analysis indicates that there is a strong "job multiplier" associated with LNG activity.
Tell us what the Lake Charles project will mean for job creation in the region?
LED is forecasting thousands of well-paying jobs will be available in Southwest Louisiana as a result of this project. To be more specific, on December 3, 2012 Sasol announced the largest manufacturing investment in Louisiana history, creating more than 7,000 direct and indirect jobs. The integrated gas-to-liquids (GTL) and ethane cracker complex will create 1,253 direct jobs with salaries averaging nearly $88,000, plus benefits; project will be one of the largest foreign direct investment (FDI) manufacturing projects in the history of the United States. The company plans to invest between $16 billion and $21 billion in an integrated GTL and ethane cracker complex in Westlake that is expected to create 1,253 direct jobs paying an average salary, at full employment, of nearly $88,000, plus benefits, and resulting in an additional 5,886 new indirect jobs, for a total of more than 7,000 direct and indirect jobs. Sasol also will retain 435 existing direct jobs in Westlake as a result of the project.
How will the training needs be met to provide skilled employees for project?
Louisiana is recognized nationally in the US as having the best work force training program available for meeting the needs of companies that are seeking skilled employees. LED FastStart was developed and started by LED Executive Jeff Lynn. FastStart provides customized workforce solutions to new and expanding companies in Louisiana. LED FastStart became the number one workforce development program in the nation within its first two years of operation. LED FastStart has great expertise in assisting manufacturing start ups and with transfer of technology operations. Further areas of expertise include: experience with 100's of companies, innovative human resource recruitment processes, technical assessment and training, manufacturing regulatory compliance, leadership development, post secondary curriculum programs, and human resources. Companies locating or expanding in Louisiana can qualify for a full suite of best in class work force development opportunities.
To support the Sasol project's workforce needs during construction and operations, the state will be investing $20million for a new training facility and associated equipment focused on industrial technology at SOWELA Technical Community College in Lake Charles.
The new training center initially will focus primarily on meeting the training needs of Sasol; once Sasol's initial needs have been met, the facility will serve the broader needs of growing manufacturers throughout the region.
Why do you feel it's important to be part of the 13th World XTL Summit?
The World XTL Summit has a proven track-record of being the premier gas, coal and biomass to liquids forum. I feel it's important to communicate to interested parties through this forum that the US natural gas supply, developed through major US shale plays, is a game changer. Soon the US will provide low-cost energy to markets across the globe. At the center of this activity are Louisiana's deep-draft waterways which make the global export of US shale gas efficient. Those active in the XTL sector will benefit by learning more about the market opportunities that now present in Louisiana and the southern United States for the energy industry.
For more information on the 13th World XTL Summit please contact Sofia Barros on +44 20 7978 0028 or email sbarros ( @ ) thecwcgroup dot com
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