Sasol confirms Lake Charles blast
Synthetic fuels and chemicals group Sasol says there was an explosion at its troubled US-based Lake Charles Chemicals Project. The company said the incident occurred around midday on January 13 at its low-density polyethylene unit, which forms part of the mega-complex in Louisiana. “The fire was extinguished and all employees and contractors are safe and accounted for,” the company said in a statement.
Synthetic fuels and chemicals group Sasol said on Monday that there was an explosion at its troubled US-based Lake Charles Chemicals Project (LCCP).
The company said the incident occurred around midday on January 13 at its low-density polyethylene (LDPE) unit, which forms part of the mega-complex in Louisiana.
“The fire was extinguished and all employees and contractors are safe and accounted for,” the company said.
The Sasol share price had fallen 2.43% to R301 by the market close on Tuesday.
The JSE-listed company has had a tough time at its yet-to-be completed Lake Charles plant, which caused Sasol management to draw the ire of investors after the project experienced numerous delays and ran 45% over budget. An independent probe was launched into what went wrong and in October last year Sasol’s joint CEOs stepped down over the debacle.
In Tuesday’s statement, Sasol said the new LDPE unit had not yet achieved beneficial operation as planned for in December 2019 and was in the final stages of commissioning and start-up when the incident occurred.
“The unit has been shut down and an investigation is underway to determine the cause of the incident, the extent of the damage and resulting impact on the LDPE unit’s beneficial operation schedule,” the company said.
According to Abdul Davids, head of research at Kagiso Asset Management, the unit in question is responsible for about 30% of the LCCP’s total production. Although the unit had not yet reached beneficial operation, it was running and Sasol is likely losing more than 1,000 tonnes of production for every day the unit is shut down, Davids estimated.
At current prices for LDPE, he expects the revenue effect to be a loss of some $1.5m (R21.5m) a day. The wider significance is yet to be seen and will depend on how long the unit is shut down for, Davids said.
“If it is contained and they resume operations tomorrow, it would be insignificant.
“But it depends how long this sets them back for that’s the outstanding question.”
The Calcasieu.info report said several nearby buildings had been damaged by the explosion, including hurricane shutters for a nearby fire station.
In the statement, Sasol said all other Lake Charles units and previously commissioned LCCP units are unaffected and operating to plan.
The ethane cracker, which is the heart of the project, has achieved full capacity after the successful replacement of the acetylene reactor catalyst in the plant during December 2019.
Sasol said the remaining three downstream units, which are under construction and will complete the integrated LCCP site, are also unaffected and remain within cost and schedule.