Axiall, Lotte Plant Spearheads Second Wave of Ethylene Projects

Researched by Industrial Info Resources (Sugar Land, Texas)--The announcement that a 2.2 billion-pound-per-year ethylene plant project has been cleared for takeoff in Louisiana gives some measure of validation to a second wave of U.S. ethylene projects that face a less-than-certain future due to market conditions. Industrial Info is tracking greenfield, brownfield, expansion, restart, upgrade and debottleneck projects that add up to about 42.4 billion pounds in new capacity if they all were to reach fruition. But as the old saying goes, there's many a slip twixt the cup and the lip, and that could hold especially true for many of the projects that would start production after 2018.

Industrial Info is tracking 31 active ethylene capital projects in the U.S., with a total investment value (TIV) of $52.08 billion, which are set for completion through 2022. Capital investments in the U.S. Southwest region, which includes Louisiana, Texas, Oklahoma and Arkansas, comprise $31.87 billion, or more than more than 60% of the total value.

Click on the image at right for a graph detailing the number and total investment value of ethylene projects in each U.S. market region.

Sparked by the shale gas boom, the first wave of ethylene projects being tracked by Industrial Info would increase annual production capacity by roughly 21 billion pounds through 2018. Projects completed after 2018 would increase annual capacity by an additional 21.4 billion pounds.

Axiall Corporation (NYSE:AXLL) (Atlanta, Georgia) and Lotte Chemical Corporation (Seoul, South Korea) announced last week they had reached a final investment decision to build an ethane-based ethylene plant in Lake Charles, Louisiana. The green light for the $2 billion project, which would begin production in 2019, comes after the final decision was postponed earlier this year. Executives involved in the joint venture had cited uncertainly in energy, feedstock and labor markets. For related information, see August 24, 2015, article - Ethylene Industry: $15.6 Billion of North American 'Second Wave' Projects Hang in the Balance.

The ethane steam cracking facility will be built by LACC LLC, a joint venture company formed by Axiall and Lotte. Chicago Bridge & Iron Company (NYSE:CBI) (CB&I) (The Hague, Netherlands) was awarded a contract valued at more than $1.3 billion to provide engineering, procurement, fabrication and construction. LACC will hire other firms to develop ancillary offsite facilities and tie-ins to existing infrastructure.

Most of the ethylene produced by the plant will supply a $1 billion monoethylene glycol (MEG) plant to be operated by Lotte. In addition, the plant will provide nearly half of the total ethylene used by Axiall for its existing manufacturing facilities at the site. Any remaining ethylene is expected to be sold to third parties via pipeline.

Site preparation began this quarter, and construction is expected to start in April 2016.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.