Axiall Corp. has chosen Louisiana as the site for a potential world-scale ethane cracker that would be built by the company and a joint venture partner in conjunction with a related ethylene derivatives plant.

The cracker would cost about $2 billion, and the derivatives plant would add another $1 billion to the project, the company said. Axiall said it would put up $1 billion and a partner, yet to be chosen, would be responsible for the remainder. Axiall expects to award a front-end-engineering and design (FEED) contract in early 2014. If the company's board of directors approves the project, commercial operations could begin by 2018.

A chemicals and vinyl-based building products company, Axiall operates major manufacturing complexes in Louisiana -- two in the Lake Charles area and one in Plaquemine -- and is evaluating where in the state it would build the new plants.

Earlier this month Louisiana got an economic development letdown when Royal Dutch Shell plc said it would not proceed with a proposed 140,000 b/d gas-to-liquids (GTL) project in the state (see Daily GPI,Dec. 5). However, multiple other projects are proposed or under way to take advantage of the state's proximity to shale natural gas and natural gas liquids as well as energy and petrochemicals infrastructure.

"Time after time, investors with world-scale projects are choosing Louisiana for our incomparable advanced manufacturing workforce, our rapidly improving business climate and our strategic location as an energy transmission hub with superior access to domestic shale gas," said Louisiana Gov. Bobby Jindal.

Axiall was formed in January by the merger of Georgia Gulf Corp. and the chemicals business of PPG. It operates more than 40 chemicals and building products manufacturing facilities in North America, where it is the third-largest chlor-alkali producer, the second-largest vinyl chloride monomer producer and the third-largest siding manufacturer.

The company requires about 2 billion pounds of ethylene per year for its manufacturing operations. The potential new investments would position the company to have ethylene integration for its vinyl chain. "As part of Axiall's long-term growth strategy, we believe it is important we have further integration with cost-based economics on 50% of our current annual ethylene requirements," said Axiall CEO Paul Carrico.

The state offered Axiall a performance-based incentive package to encourage the company to move forward with projects in Louisiana.

One year ago, Sasol announced a $16 billion to $21 billion GTL and ethane cracker complex that would be the largest manufacturing investment in Louisiana history (see Daily GPI, Dec. 4, 2012). Sasol said it expects to conclude the FEED phase for the ethane cracker in 2014 and begin construction later that year. The company expects to reach final investment decision for the GTL project in 2016.

Last January G2X Energy announced a $1.3 billion GTL facility at the Port of Lake Charles (see Daily GPI, Jan. 18). And last September, SGC Energia SA of Portugal and Houston-based Great Northern Project Development LP said they would spend $100 million to renovate a dormant steam methane reformer in the Westlake, LA, area and convert it to a GTL facility (see Daily GPI, Sept. 6).