Some of the major industrial projects fueling Louisiana’s expected economic boom could be at risk if the price of oil continues to fall, says economist Loren Scott, including one of the largest in the pipeline: Sasol Ltd.’s gas-to-liquids complex outside Lake Charles that alone could represent as much as a $22 billion investment.
“The main thing is the Sasol [gas-to-liquid] plant. That’s more and more in jeopardy as the price falls,” Scott says.
Sasol Ltd. announced in October its final decision to move forward with an $8.1 billion ethane cracker project in Lake Charles, but the South African firm is still mulling over whether to build additional GTL facilities. Sasol is expected to announce a final decision in 2016. Among the factors it’s weighing are the potential overrun costs of the ethane cracker project. They’re also closely watching the difference in the price between oil and natural gas.
As the price of oil has continued to fall in recent weeks, the gap between the price of oil and natural gas has been closing. And as Scott explains, if the price of oil falls to below seven times the price of natural gas, they are about equal in cost of thermal energy content and it is no longer economically advantageous to pursue some natural gas projects. Daily Report has the full story.
