LAAC Ethane Cracker, Lake Charles, Louisiana, United States of America

LAAC Ethane Cracker

The LAAC joint venture (JV) between Axiall and Lotte Chemical is investing approximately $3bn for the construction of an ethane cracker facility and a monoethylene glycol (MEG) plant, to be located adjacent to Axiall's existing facilities in Lake Charles area, Calcasieu Parish, south-west Louisiana, US.

The Lake Charles ethane cracker project will require an investment of approximately $1.9bn, of which Axiall will contribute $225m, corresponding with its share in the project. Axiall also has an option to increase its share in the project to 50%, following the start of production.

With an annual capacity of 700,000t, the $1.1bn MEG plant will become the biggest facility of its kind in the US. It will be solely developed and owned by Lotte Chemical, and the products will chiefly be exported.

Strategic location of the project site

The project site was chosen due to the availability of shale gas feedstock, pipelines, steam, electricity and deepwater access. The presence of existing infrastructure at the adjacent chlor-alkali chemical facility, which could be incorporated to the needs of the current projects, provides added advantages.

The projects will further benefit from the incentive packages offered by the state of Louisiana for large-scale projects and availability of a sizeable workforce.

Development timeline for the LAAC ethane cracker project

The decision to form the JV was announced in February 2014 and was finalised in June 2015. The final investment decision for the project was taken in December 2015 and the main construction activities are schedule to start in mid-2016. The ethane cracker facility is anticipated to start production in early 2019.

LAAC ethane cracker project details

The project primarily involves the construction of an ethane cracker facility with an annual production capacity of one million tonnes (two billion pounds).

The project will also involve the construction of a barge slip to facilitate bulk transfer of large materials to the site by waterway. The existing roads located in close proximity to the project site will also be upgraded with an estimated investment of $4.5m.

Approximately 50% of the plant's output is expected to be acquired by Axiall to produce vinyl chloride monomer and other products, while Lotte plans to use majority of the ethylene in its share for feeding the adjacent MEG plant.

EPC contractor and technology supplier

The engineering, procurement and construction (EPC) contractor for the ethane cracker project is CB&I, who was earlier involved in conducting the front end engineering study (FEED).

"With an annual capacity of 700,000t, the $1.1bn MEG plant will become the biggest facility of its kind in the US."

CB&I will also licence its proprietary ethylene technology, including its selective SRT cracking heaters, design the plant's recovery section integrating low-pressure separation and mixed refrigeration, as well as supply the spheres and fabricated pipe spools.

The company has also been selected by Lotte Chemical to provide construction services for the MEG plant. Samsung Engineering has been awarded the early works contract for the MEG project.

Economic benefits from the Lake Charles area chemical projects

The ethane cracker and MEG projects combined are expected to generate approximately 2,000 jobs during the peak construction phase and 250 direct jobs and approximately 2,200 indirect jobs during the operational phase. The project will further enable Axiall to retain 1,750 existing jobs in the state of Louisiana.

During their operational life, the projects are expected to generate $653.4m in economic benefits to the Lake Charles area and approximately $867m to the rest of the areas in Louisiana.