Competitive advantages

More than 300 facilities owned by U.S.-based and international process industries are concentrated in Louisiana, where they produce building-block and specialty chemicals, along with traditional and emerging forms of energy that fuel contemporary life.

Louisiana’s strength in process industries springs from the state’s natural resources, including crude oil first produced decades ago both inland and off the Louisiana coast in the Gulf of Mexico. The state holds rich deposits of natural gas, along with natural salt domes beneath the ground being used in the production of chlorine, an essential component in creating the polymers necessary for making PVC plastics and other products. 

The SOWELA Technical Community College process technology program is just one way Louisiana is fueling workforce growth for the process industries.

Those natural resources – joined by a favorable business climate, a skilled workforce, a diverse transportation infrastructure and a support network including approximately 200 small businesses – have created competitive advantages for process industries to thrive, expand and evolve in Louisiana. 

Not the least of those advantages is the intricate pipeline system developed in the state to transport natural gas; other industrial gases, such as hydrogen; crude oil; refined products and other liquids. All told, Louisiana boasts a pipeline density (interstate and intrastate) that’s more than twice as great as any other state in the Continental U.S., with Ohio a distant second.

Natural gas is a critical part of that pipeline system, with many process industries dependent upon natural gas as a feedstock and fuel source for operations.

“The impact of shale gas development in North America has resulted in a competitive natural gas environment and a positive environment to produce methanol,” Methanex’s Glynn Fontenot says.

An industrial evolution

Some of the world’s largest petrochemical manufacturers, including ExxonMobil, Dow, BASF and Shell have operated in Louisiana for decades, creating a thriving manufacturing ecosystem with built-in efficiencies that help companies compete on a global scale.

ExxonMobil’s Louisiana site was first founded as a Standard Oil facility in Baton Rouge in 1909, and today is one of the largest petrochemical campuses in the world. Three key facilities in Greater Baton Rouge – a refinery, a chemical plant and a lubricants production facility – share feedstock, thereby increasing efficiencies and reducing waste.

Those costs savings, and Louisiana’s business-friendly environment, have helped ExxonMobil reinvest in the company’s local operations, says Bob Johnston, who oversees the Exxon Mobil Baton Rouge Chemical Plant as site manager.

Johnston adds that Louisiana’s multiple assets go a long way in ensuring the company can stay nimble.

Meanwhile, Dow Chemical Company is marking its 60th anniversary in Louisiana in 2016. The global manufacturer has six sites across the state producing chlorine, ethylene, polyethylene and an array of specialty chemicals used for making industrial and household goods. With a capital investment of more than $1 billion, Dow is expanding its Louisiana Operations site in Plaquemine with a pair of new polyolefins plants that will produce next-generation synthetic rubber and high-performance polyethylene. That follows Dow’s restart of an ethane cracker downriver in Hahnville, Louisiana.

Both locations will enable Dow’s Performance Plastics business unit to supply key parts of a $450 billion global market in adhesives, sporting goods, diaper components, automotive interior and exterior materials, carpeting, home furnishings and personal care products.

In Geismar, south of Baton Rouge, Shell Chemical recently began building a fourth linear alpha olefins plant, adding 425,000 tons of capacity. Linear alpha olefins are used to produce lighter and stronger polyethylene plastic for packaging and bottles, and are also used in industrial oils and drilling fluids. Upon completion of the $717 million expansion, Shell Geismar will be the largest single-site manufacturer of the chemicals in the world.

“This important investment demonstrates our ongoing commitment to the growth potential in chemicals,” says Executive Vice President Graham van’t Hoff, a key leader in Royal Dutch Shell plc’s Global Chemicals business. “With the investment in new profitable facilities, Shell Chemicals is well placed to respond to increased global customer demand for linear alpha olefins.”

Since 1958, Geismar also has been home to BASF’s largest manufacturing site in North America. Spanning 24 plants and 1,700 direct and contract employees with a $209 million annual payroll, the BASF site makes chemical products for electronics, automobiles, personal care products, pharmaceuticals, lithium ion batteries, furniture foams, insulation, detergents and a host of other applications.

A regional renaissance

Affordable, abundant natural gas – combined with Louisiana’s logistics and workforce strengths – is launching some of the world’s biggest industrial investments in Southwest Louisiana, where South Africa-based Sasol and global liquefied natural gas supplier Cheniere Energy are expanding.

In early 2016, Cheniere became the first major exporter of LNG to offshore markets after gaining U.S. Department of Energy and Federal Energy Regulatory Commission approval. The company’s recent $12 billion investment brings its total LNG investment in Louisiana facilities to $20 billion, with the ability to ship bi-directionally. As energy prices fluctuate, Cheniere will be capable of exporting or importing liquefied natural gas, a strategy also being pursued by the Cameron LNG project, a $10 billion joint venture in Louisiana by Sempra LNG and investment partners Engie (formerly GDF Suez) of France; and Mitsui, Mitsubishi and Nippon Yusen Kabushiki Kaisha (NYK), all of Japan.

“In Southwest Louisiana, we’ve got $40 billion in projects underway now, and another $40 billion to $50 billion on the schedule,” says President and CEO George Swift of the Southwest Louisiana Economic Development Alliance. “We have at least nine additional LNG projects in the pipeline.”

Due to the surging investment, employment is up 9 percent in Southwest Louisiana over the past two years – the highest growth rate in Louisiana.

Swift says the region’s infrastructure, including the Port of Lake Charles and the Calcasieu Ship Channel, has been essential in generating the industrial boom. He places a premium on continued maintenance and dredging to accommodate the robust growth. Deep-draft ship traffic is projected to double over the next decade, according to a 2014 regional impact study completed by the Growth Opportunity Group.

With a wood pellet facility in Bastrop, Louisiana, and a shipping facility in Baton Rouge, Louisiana (pictured), U.K. company Drax Group employs over 60 Louisiana workers.

“The port has been instrumental in helping to secure these projects and the ship channel is the main driver in making sure these ships get out to the Gulf (of Mexico),” Swift says.

A globally significant project is Sasol’s $11 billion petrochemical complex, which will consist of a next-generation ethane cracker and six chemical derivatives plants to be completed before 2020.

Construction began in 2015 in Westlake, adjacent to Lake Charles, where Sasol will produce 1.5 million tons of ethylene per year to enable downstream chemical applications and make possible the manufacture of detergents, cleaners, packaging, paints and adhesives. The ethane cracker complex will create 500 permanent new manufacturing jobs averaging $88,000 per year, plus benefits, and it will result in an estimated 2,395 permanent new indirect jobs in the region while generating 5,000 construction jobs at peak. Already, 3,600 construction workers are erecting piping and beginning to place massive components in place on the 650-acre site, where work is more than 40 percent complete.

Sasol’s Lake Charles Chemical Complex could also include a gas-to-liquids production facility, further rounding out Louisiana’s energy mix with 96,000 barrels per day of high-quality transportation fuels.

The long view

Louisiana’s natural resources also are positioning the state for expansion in the global biofuels market and a new generation of hybrid process industries.

Massachusetts-based Myriant, a leader in high-value, bio-based chemicals, selected Lake Providence, Louisiana, as the site of its first commercial facility to produce bio-derived succinic acid, a $100 million investment. Succinic acid is a chemical intermediate used in a variety of food, pharmaceutical, clothing and household product applications.

Myriant selected Lake Providence, located in Northeast Louisiana, because of the area’s port access to sorghum and other feedstocks shipped on the Mississippi River. Moreover, $9 million from the state’s Port Priority Program, matched by an additional $1 million from the Lake Providence Port Commission, generated port improvements needed for Myriant’s operations.

Louisiana also has attracted energy pellet producers. Drax Biomass, allied with one of the largest electrical power producers in the U.K., harvests forestry byproducts from 169,000 acres of timberland in Morehouse Parish in Northeast Louisiana, and converts the wood waste into pellets at its facility near Bastrop. The pellets are then transferred and stored in specialty tanks at the Port of Greater Baton Rouge for worldwide use in weaning markets off coal-fired power into cleaner forms of electrical generation.

Long known as a leading sugar cane producer, Louisiana has attracted a potential $300 million capital investment from NFR BioEnergy, a company converting sugar cane waste, called bagasse, into solid energy pellets for similar global power markets. While that company operates in White Castle, southwest of Baton Rouge, Virdia – a biomaterials subsidiary of Finland-based Stora Enso – is completing a $60 million investment in Raceland, near Houma. There, Virdia will convert bagasse into high-value industrial sugars, along with potential biofuels production.

“Louisiana has a deep and wide role in the energy market,” says Mark Zappi, dean of the College of Engineering at the University of Louisiana at Lafayette. “There’s global interest in clean technology.”

For those reasons – Louisiana’s foundation as an energy state and its leading role in advancing technology – companies view Louisiana as a strategic part of their process industry future.

Says ExxonMobil’s Johnston of the company’s Baton Rouge complex: “Our highly skilled workforce and tight integration of our facilities, coupled with a strong transportation infrastructure, will help position these sites for continued future success.”