January 28, 2015 – Wall Street Journal
Sasol Shelves Plans for Louisiana Gas-to-Liquids Plant
By Patrick McGroarty in Secunda, South Africa, and Alison Sider in Houston
South African energy giant Sasol Ltd. said Wednesday it was shelving an $11 billion factory on Louisiana’s Gulf Coast, turning one of the largest prospective foreign investments on U.S. soil into another casualty of falling oil prices.
Sasol has spent years planning to expand its chemical factory outside Lake Charles, La into a sprawling facility to turn natural gas into industrial compounds and diesel. In October, Sasol committed $8 billion to equipment that will convert natural gas into ingredients for everything from formaldehyde to plastic bags.
But Sasol on Wednesday said its plans have changed. Plummeting oil prices have obliged it to push back its own 2016 deadline for deciding whether to build the more expensive gas-to-diesel plant. Sasol’s shares on the Johannesburg stock exchange have shed more than a third of their value since crude prices started a precipitous decline in June.
Read the full story here: http://www.wsj.com/articles/sasol-reviews-investment-plans-for-louisiana-gas-to-liquids-plant-1422446980
What Sasol designed for Louisiana would take advantage of a glut of natural gas. In addition to selling for more money within the U.S. than natural gas, diesel can also be exported for sale anywhere in the world.
But the economics of creating diesel for the open market are proving more fickle than generating fuel to sustain the captive South African market that Sasol’s first liquid fuel plants supplied.
“We have a surplus of gas and a surplus of crude. Both are down in the dumps,” said Sandy Fielden, an analyst with energy consultancy RBN Energy LLC. “Until that situation improves, the economics of such a plant aren't good.”
