Axiall, Lotte Chemical delay final decision on new US Gulf ethane cracker

Axiall and joint venture partner Lotte Chemical of South Korea have agreed to postpone their final investment decision (FID) to build an ethane cracker at Axiall's Westlake plant in Louisiana, according to news reports.

Paul Carrico, president and CEO of Axiall, said uncertainty in US energy, feedstock and labor markets prompted the decision, according to the American Press newspaper in Lake Charles, Louisiana.

Carrico said both partners are seeking time for "additional analysis and clarity in these areas."

The FID was initially planned for the first quarter of this year, and Carrico did not indicate when the company expects to reach a final decision going forward.

Axiall's announcement came just as the company completed its six-month front-end engineering and design (FEED) study for the project. During that time. however, "a major period of volatility in the energy and feedstock markets" occurred, according to project officials.

Additionally, Carrico said a "nearly unprecedented set of build announcements" continue to pressure the construction labor and engineering markets on the US Gulf Coast.

"Both pieces deserve more looking before we come to a final decision," the CEO said.

Axiall's announcement comes a month after Sasol chose to delay its final decision on a $14-billion gas-to-liquids (GTL) project in Westlake. Sasol, however, is still proceeding with its plans for a new ethane cracker.

In February 2014, Axiall and Lotte Chemical signed a preliminary agreement to build a $2 billion ethane cracker, with Lotte Chemical agreeing to build and operate a monoethylene glycol (MEG) facility adjacent to the ethylene plant.

The total estimated cost of both facilities is $3 billion, the American Press reports.

Axiall's website says both plants could start commercial operations in 2018.