Construction products company unveils plans for $2b cracker

By Catherine Kavanaugh
Staff Reporter

Published: December 20, 2013 4:15 pm ET
Updated: December 20, 2013 4:19 pm ET

Related to this story

Topics Construction, Materials, Pipe/Profile/Tubing, Extrusion, Materials Suppliers
Companies & Associations Georgia Gulf Corp.

Formed just a year ago by the merger of two well-known, long-time petrochemicals companies, Axiall Corp. is looking in Louisiana for a place to build a $2 billion ethane cracker as well as a partner to go in halves on the project.

Also, if the same partner or a different one is interested in building an ethylene derivatives plant adjacent to the ethane cracker, officials of the Atlanta-based company said the value of the joint-venture investment could go up another $1 billion.

Louisiana Gov. Bobby Jindal welcomed the news Dec. 19 that his state is in line for a $3 billion industrial development that could create 250 new permanent full-time jobs if both facilities are built.

Another 2,000 to 3,000 construction workers also would be employed for 4-5 years and the surrounding area could see 2,200 indirect jobs, according to Louisiana Economic Development (LED).

But where?

“We’re evaluating a lot of sites,” Alan Chapple, Axiall’s corporate communications director, said in a telephone interview. “With all the shale gas that’s in Louisiana, it’s a very attractive state. We’ve got roots here, too, and their workforce understands our industry. There are a lot of ifs, potentials and possibles but the one thing we have determined is if this does go forward and we get approval to do it, it will be in Louisiana.”

Ethane is a natural gas liquid used as a feedstock for many applications. One way to extract it is from shale gas. When ethane is cracked, or broken down into simpler molecules, ethylene and other derivatives are formed. Ethylene is used to produce raw chemicals.

Axiall, which was created by the union of Georgia Gulf Corp. and the chemicals businesses of PPG, needs about 2 billion pounds of ethylene every year for its manufacturing operations, which encompass both chemicals and building products.

Axiall makes vinyl windows, doors, siding and decking that are marketed by Royal Building Products. The company says it is North America’s third-largest siding manufacturer in addition to being the third-largest producer of chloro-alkali and the second-largest producer of vinyl chloride monomer.

Ethylene is used to make vinyl chloride monomer, which then is turned into polyvinyl chloride, which can be turned into any number of vinyl products downstream.

The proposed ethane cracker would allow Axiall to make half of the ethylene it consumes at a lower cost than paying a middleman’s markup.

“We’re not at a point yet where we’re talking about size or capacity of the ethane cracker but it would be considered large by any standard. World-scale is the best way to describe it,” Chapple said.

He described the derivatives plant as an optional facet of the project.

“It could be built as an adjacent manufacturing facility. We would not own or operate it. The plant would just be co-located to take advantage of our ethylene. As far as the derivatives, there are a number that can be produced from ethylene and it would be dependent on what the partner wants.”

Axiall has a number of potential partners in mind for both the ethane cracker and derivatives plant, CEO Paul Carrico said in a statement. He also said he plans to announce one partner in the near future.

If only the ethane cracker is built, 150-175 full-time, permanent jobs would be created. If a partner builds the derivatives plant, the jobs number goes up to 225-250.

The state of Louisiana has offered Axiall a performance-based incentive package to build there but Chapple said he isn’t in a position to disclose the terms. A phone call to the LED wasn’t immediately returned.

In Louisiana, Axiall has two manufacturing complexes in Lake Charles and one in Plaquemine. The company expects to award an engineering and design contract for the ethane cracker in early 2014 if Axiall’s board of directors gives its approval. The facility could be in operation by 2018.

The low cost of shale gas has been a game changer for the chemicals industry during the last five years. Businesses can get it for $3-$4 per thousand cubic feet compared to $10-$12 per thousand cubic feet for natural gas. The so-called “shale gale” has made the United States one of the cheapest places to make plastic.

“Because of the high cost of natural gas, a lot of U.S. companies were going offshore to compete,” Chapple said. “Now with shale gas we actually have a competitive advantage over a lot of foreign producers.”


Comments

Construction products company unveils plans for $2b cracker

By Catherine Kavanaugh
Staff Reporter

Published: December 20, 2013 4:15 pm ET
Updated: December 20, 2013 4:19 pm ET

Post Your Comments


Back to story


More stories

Image

Vinyl siding's lead slips, but industry pushing back

July 29, 2014 2:04 pm ET

Vinyl siding continues to be the top cladding choice for home builders and remodelers but fiber cement is gaining ground — at an alarming rate...    More

Unipex Group buys Ferguson Chemical Innovation

July 29, 2014 1:57 pm ET

Chemical distributor Unipex Group Inc. announced July 29 that it had purchased Ferguson Chemical Innovation, a Brampton, Ontario-based supplier of...    More

Image

Universal Polymer beefing up capabilities through acquisition

July 29, 2014 12:04 pm ET

Universal Polymer & Rubber Ltd. is growing again and adding to its capabilities, this time via another acquisition and a plant expansion.    More

Image

Carbon black supplier Orion begins trading on NYSE

July 29, 2014 11:29 am ET

Orion Engineered Carbons S.a.r.l. has priced the initial public offering of 19.5 million common shares at a price to the public of $18 per share.    More

Image

Dow sees solid second quarter performance

July 29, 2014 11:19 am ET

Dow Chemical Co. has reported its second quarter figures, with its seventh consecutive quarter of growth, according to the company.
More

Market Reports

Plastics Recyclers Data Report & Directory

This exclusive MS Excel database contains all the companies from Plastics News' ranking of top North American Recyclers and Brokers by reprocessed volume and also includes a directory with materials processes, services offered and company contact information. Data is based on primary research by PN editorial staff.

Learn more

2014 Injection Molding Industry Report

GROWTH, OPPORTUNITY IN SIGHT FOR INJECTION MOLDERS IN 2014

In the wake of the economic turbulence earlier in this decade, molders today find themselves in much better shape. Molders are gaining a competitive advantage by investing in people, equipment and seeking inroads into new markets on a global scale.

Growth in the injection molding industry is going to be driven by low financing costs and a continued move to reshore some business.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events