FG LA planning construction soon on $9.4 billion Louisiana petrochemical complex

Houston — FG LA, a division of Formosa Taiwan, has received final permits on a $9.4 billion petrochemical complex in Louisiana and aims to start construction soon, the company has said.

"FG is focused on preparing for the start of construction," the company, a division of Taiwanese conglomerate Formosa Plastics Group, said in an email late Monday.

The project will be built in two phases through 2029, according to permit documents filed with the Louisiana Department of Environmental Quality.

The first phase, targeted for startup in 2024, will include a 1.2 million mt/year ethane-fed cracker, a 600,000 propane dehydrogenation plant, a 600,000 mt/year polypropylene unit, linear low density and high density polyethylene plants with capacities of 400,000 mt/year each, and a 900,000 mt/year ethylene glycol plant

The second phase, to start up by 2029, will have a second 1.2 million mt/year cracker, LLDPE and HDPE plants with capacities of 400,000 mt/year each, and a second 900,000 mt/year ethylene glycol plants.

Permitting documents show the EG plants will make monoethylene glycol, diethylene glycol and polyethyene glycol.

COMPLEX TO COME ONLINE AFTER FIRST-WAVE OVERSUPPLY DECLINES

FG LA initially sought permits for the complex, dubbed the "Sunshine Project," in 2015, LDEQ records show. The project's string of new plants will emerge during the second wave of new petrochemical infrastructure stemming from cheap ethane unearthed by the US natural gas shale boom.

The first wave bought 10.68 million mt/year of new or revamped ethylene capacity online from 2017 through the first quarter this year. The second wave involves 8.3 million mt/year of new ethylene capacity under construction or planned, including both FG LA crackers.

That first wave also includes 6.4 million mt/year of new PE capacity coming online from 2017 through the first half of this year, followed by another 7.27 million mt/year of new PE output through the 2020, also including FG LA's four plants.

If all projects in the second wave reach fruition, US PE capacity will have risen by about 59% since 2017. US export PE prices have been under pressure from oversupply since early 2018 as new production came online, with prices at levels not seen since early 2009.

HDPE blowmolding prices were last assessed January 29 at $783/mt FAS Houston, while LLDPE butene was assessed on Tuesday at $805/mt FAS Houston and LDPE also Tuesday at $904/mt FAS Houston.

While prices have seen some recent strength, they are down sharply from March 2018 highs of $1,389/mt FAS Houston for HDPE blowmolding, $1,312/mt FAS Houston for LLDPE butene and $1,400/mt FAS Houston for LDPE.

S&P Global Platts Analytics expects global supply to begin to tighten in 2024 and beyond, when FG LA's plants are slated to come online.