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Sasol shuts troubled Lake Charles plant in hurricane’s path

‘We will continue to monitor the situation and resume operations when it is safe to do so,’ Sasol said.
Image: Waldo Swiegers/Bloomberg

Sasol, the fuel and chemicals maker, shut its $13 billion Lake Charles Chemicals Project due to Hurricane Laura, which made landfall earlier Thursday on the US Gulf Coast.

“Given Hurricane Laura’s forecast path,” Sasol is temporarily closing its facilities at Lake Charles, Louisiana, as well as Greens Bayou and Winnie, Texas, a spokesman for the company said. The Houston Wickchester office will also close.

Shares were down 3.5% to R141.89 at 11:37 a.m. in Johannesburg, even as oil prices held steady.

Any damage or delay at Lake Charles caused by the storm will put pressure on Sasol, which has already suffered mismanagement and other issues at the expansion project. Approved in 2014 at an estimated cost of $8.1 billion, the various setbacks have increased the price to $12.9 billion. The natural disaster also strikes as the company is in a process to sell a stake in the facility, the crown jewel in an accelerated asset disposal to pay down debt.

The project experienced construction delays in 2017 after heavy rain from Tropical Storm Harvey. Completion was within sight before a fire in January. The low-density polyethylene unit that was damaged as a result had been expected to be online by the end of October.

The company must now wait for the hurricane to clear before any potential damage can be assessed. “We will continue to monitor the situation and resume operations when it is safe to do so,” Sasol said.

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Please excuse my ignorance but why would one build such a large expensive plant in an area where hurricanes can stop processing and damage the plant????

Maybe I must plead ignorance myself, but is it really possible to know where natural disasters will strike over the next fifty years. Then we can all move to the save places and leave the unsafe places to be wrecked by nature at its own time. Maybe it is wise to shut down the plant before the storm strikes, it might just reduce the damage.

We used to know, then global warming changed what we know.

I’ll give you an example, floods in ancient to modern Egypt were welcome. They do some really useful things to allow soil rejuvenation to facilitate for farming.

Hi Auretha, it’s very easy, just call the National Weather Service. They’ll you that major hurricanes hit the Lake Charles area every 2.4 years. Flooding is usually significant since the whole area is only 4 meters above sea level and flat.

The only change in the weather data is that the frequency is increasing and the floods peaks are higher.

Thanks Milo. Then I will really like to know what were the reasons for building the plant there. Is it close to raw materials or other inputs in their processes?

hopefully for the cash flow trapped sasol the management took out some insurance for gamble projects like lake charles

End of comments.

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