Formosa Plastics plans to build ethylene plant in Louisiana

13:12 PM | January 15, 2014 | Natasha Alperowicz

Formosa Plastics is planning to invest in a new ethylene plant in Louisiana using shale gas feedstock, according to local reports citing Formosa Plastics’ chairman Lee Chin-tsuen. Lee was speaking to Formosa employees in Kaohsiung, Taiwan, on Tuesday at the company’s end-of-year party. Lee made the statement a day after the governor of Louisiana, Bobby Jindal, visited the company at Taipei.
Formosa Plastics is already developing a 1.2-million m.t./year ethylene plant at Point Comfort, TX. “The governor called on us to invest not only in Texas but also in Louisiana, because the tax rate in the state is the same as in Texas, while gas prices in Louisiana are actually lower," Lee says, according to local reports. Formosa does not as yet have estimates of how much the Louisiana project would cost because the company needs to make further studies to evaluate the project, the chairman says.
Formosa’s Texas facility is expected to cost $3 billion. The facility will include units producing 1.2 million m.t./year of ethylene; 600,000 m.t./year of propylene; and 400,000 m.t./year of high-density polyethylene and will come onstream in the first quarter of 2017, Lee says. “The costs of making ethylene with shale gas are one-third of the costs of making it using other raw materials,” Lee says.
Global production of ethylene will rise by 5.8 million m.t. this year, which is relatively low, he says. The Mideast, which accounts for 17% of global ethylene production, is unlikely to grow above 20% of the global total in the future because there is not a lot of cheap gas there, Lee says. Formosa plans to spend $13.2 billion on new plants in the United States, China, and Vietnam, he says.