Company may add ethane cracker at Geismar
Energy giant Williams is considering adding a second ethane cracker at the company’s Geismar complex and is looking to partner with one or two other firms on the project that could cost $5 billion or more.
“We’re out in the market right now trying to assess the market’s interest in participating in an investment there,” said John Dearborn, Williams’ senior vice president of NGL and petchem services, during a conference call Thursday with stock analysts and investors.
Geismar 1, the existing ethane cracker, has been expanded about as much as possible, Dearborn said.
The plan is to build a new, large cracker — Geismar 2 — and sell its production on a fee-for-service basis.
Williams did not disclose the estimated cost of the project and its production capacity. But Steve Lewandowski, IHS Chemical senior director, global olefins, said the project would be on the same order as Sasol’s world-scale ethane cracker in Lake Charles. The pricetag on that project is $5 billion to $7 billion.
Ethylene is used in shrink wrap and food packaging.
Abundant supplies of low-cost natural gas have prompted companies to switch to gas as the feedstock for ethylene.
Williams plans to restart Geismar 1 in June, close to a year after an explosion shut down the facility. Williams was close in June to completing a 600-million-pound expansion to bring the plant’s annual production capacity to 1.95 billion pounds. Two people were killed and more than 100 injured in the accident.
The expansion’s cost was estimated at $350 million to $400 million. Repairing the damage added more than $100 million to the total. Before the expansion, the Geismar plant accounted for 2.4 percent of the country’s ethylene production.
Lewandowski issued a report Tuesday saying the second ethane cracker is attractive for several reasons.
“First and foremost, the Louisiana market is short on ethylene. Currently, the market produces 12 billion pounds of ethylene annually, but current ethylene demand in the region is approximately 16 billion pounds annually and growing,” Lewandowski said.
Any potential partner would benefit greatly from a partnership with Williams because of the company’s experience operating an ethane cracker, infrastructure and access to ethane feedstock.
And Williams won’t lack for potential joint-venture partners.
There are nine U.S. companies that need more than 550 million pounds of ethylene a year. Some have assets in Louisiana and/or Texas.
Ethane crackers are among the most costly projects that have been proposed in Louisiana.
In December, Axiall Corp., which has manufacturing complexes in Plaquemine and Lake Charles, said it is looking at a $3 billion ethane cracker and ethylene derivatives plant somewhere in Louisiana.
Sasol’s Lake Charles ethane cracker is expected to produce 3 billion pounds of ethylene and other products a year.