A too-narrow narrow gap between natural gas and crude oil prices contributed to the decision that South Africa-based chemical and energy company Sasol made to cancel its plans to build a $15 billion gas-to-liquids (GTL) factory in Louisiana next to its $11 billion ethane cracker plant. When those prices do not differ very much, the energy giant said, it’s hard for it to make back its investment. As a result, Louisiana lost out on the investment, jobs and other benefits that the GTL factory would have injected into the local economy.
Natural gas is gaining popularity because it’s considered a cleaner alternative to coal and oil, so many local and regional energy companies are investing in it. In December, the Lansing (MI) Board of Water and Light announced plans to build a $500 million natural gas plant this year to replace an existing coal-powered facility. The plant is part of the board’s effort to generate 30% of its electricity from cleaner sources by 2020. The utility also uses wind and solar energy.
Natural gas also feeds ethane cracker plants as ethane is a component of natural gas. In addition to Sasol’s plant in Louisiana, Shell Chemicals is building a $6 billion ethane cracker facility in Potter Township, PA. Shell expects to employ about 6,000 construction workers at the peak of building activity. ExxonMobil and Saudi Arabia-based Sabic should start work on their $11 billion Texas ethane steam cracker plant in 2019, and, when it’s complete, the Corpus Christie-area facility will be the largest plant of its kind in the world.