MOVING FORWARD WITH GTL IN LOUISIANA

A previous posting on this site addressed gas-to-liquids ("GTL") technology and discussed some of the considerations that are cited both for and against GTL.  Despite the skepticism about GTL described in that entry, at least one company is moving ahead with plans for a GTL facility in Louisiana.  Last month, South African chemical and synthetic fuels company Sasol Ltd. announced plans to construct an integrated GTL and ethane cracker complex in Westlake, Louisiana.[1]  The GTL facility will be the first ever in the United States.  Sasol's total projected capital investment for the complex is between $16 billion and $21 billion, with the GTL portion accounting for $11 billion to $14 billion of that total.  The State of Louisiana and Sasol trumpeted the project as creating 1,253 direct jobs and 5,886 indirect jobs.  An economic impact study by the LSU Division of Economic Development predicts that the Sasol project will produce a total economic benefit of $46.2 billion over the next 20 years.

The planned facility's Southwest Louisiana location made sense to Sasol for several reasons.  First, it is close to the abundant natural gas fields in North Louisiana and Texas.  There is pipeline infrastructure already in place that can be linked to the new facility.  Louisiana also offers a trained labor force and an industry-friendly regulatory environment.

State incentives valued at over $2 billion also helped attract the investment. [2]  Incentives include a $115 million grant for land acquisition and infrastructure costs, payroll rebates, a $20 million investment in training facilities and equipment, and Louisiana's Industrial Tax Exemption Program, which provides a 100% property tax abatement for up to ten years on qualifying capital investments. 

The Sasol facility and other processing facilities like it raise a number of legal issues, some of which will be addressed in future entries.  And, many people in the United States and around the world will be watching closely to see whether Sasol's − and Louisiana's − investment will prove worthwhile.


[1]           La. Economic Development, "Sasol Announces Largest Manufacturing Investment in Louisiana History, Creating More Than 7,000 Direct and Indirect Jobs" (Dec. 3, 2012), available at http://www.louisianaeconomicdevelopment.com/led-news/news-releases/sasol-announces-largest-manufacturing-investment-in-louisiana-history,-creating-more-than-7,000-direct-and-indirect-jobs.aspx?c=News%20Releases&id=39.

[2]           Clifford Krauss, "South African Company to Build U.S. Plant to Convert Gas to Liquid Fuels," New York Times, Dec. 3, 2012, available at http://www.nytimes.com/2012/12/04/business/energy-environment/sasol-plans-first-gas-to-liquids-plant-in-us.html?_r=0.

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