Louisiana megaproject complete: CEO making South Africa's energy sector more efficient
Louisiana megaproject complete, CEO Fleetwood Grobler is making South Africa's energy sector more efficient and environmentally friendly.
With the completion of the Louisiana megaproject, CEO Fleetwood Grobler is cutting risk and emissions at South Africa's energy leader. This is good news for the environment and for the company's bottom line. The project was completed on time and under budget, and it is already having a positive impact on the environment.
After a peripatetic four decades at Sasol, CEO Fleetwood Grobler now spends most of his time at the Johannesburg, South Africa headquarters of the chemicals giant. In late September however he stopped at Sasol's Houston offices (still nearly deserted vs pre-pandemic), in part to get an update on the Lake Charles Chemicals Project. It’s a Louisiana megaproject that started development in 2011 at an expected cost of $8.9 billion, felled four CEOs due to mismanagement and cost overruns (including co-CEO duo Stephen Cornell and Bongani Nqwababa). And it was also an albatross around Grobler's own neck when he took over the reins of the company in 2019. Grobler is determined to get the project back on track, and he is confident that he can do so. "We have made good progress on the project in the last year," he said. "It is now 70 percent complete and on schedule to be completed in 2022." The project has been a source of frustration for shareholders, but Grobler is confident that he can get it back on track and deliver on its promise.
Going with a Sasol lifer like Grobler was almost contrarian, but it makes sense given his wealth of experience with the company. Grobler has been with Sasol since 1979, and has worked at various locations around the world. This exposure has given him a unique perspective, and he is well-positioned to lead the company into the future.
I believe that this company is now on the right track. They have learned from their mistakes and are now determined to not let them happen again. I think this is a great step in the right direction for the company.
Sasol's new CEO, Stephan Grobler, is vowing to avoid the mistakes of the past, when the company overextended itself financially. Grobler has already taken steps to reduce Sasol's debt burden and increase its profitability, and the results have been impressive. In the past year, Sasol's net income quadrupled to $2.7 billion on $18 billion in revenue, and the company's shares are up 19%. With Grobler at the helm, Sasol is positioned for continued success in the years to come.
The South African company Sasol is a tough nut to decarbonize. It uses the Fischer-Tropsch process to convert coal or natural gas into refined fuels that would otherwise more commonly be made from petroleum. This process was developed by German scientists in the 1920s and later helped fuel Hitler's war effort. However, perfection of the process later helped South Africa fuel its economy during the apartheid years. Sasol now makes nearly 150,000 barrels per day of synthetic liquid fuels.
The Fischer-Tropsch process needs two primary feedstocks: carbon monoxide and hydrogen. Traditionally it has relied on fossil fuels to make them. Cheap and plentiful shale gas continues to be Sasol’s rationale for making chemicals at Lake Charles. If Sasol can find “green” sources for those feedstocks then maybe it can succeed in its goal of reducing emissions 30% by 2030. “We don’t need to put new steel in the ground to produce.
The future hydrogen economy holds a lot of promise, as it is a clean-burning fuel that produces nothing but water vapor when burned. However, producing hydrogen is energy-intensive, and currently costs around $1-$2.25 per pound. Thanks to recent federal incentives, the cost of producing green hydrogen from renewable sources is expected to come down significantly in the coming years, making it a more viable option for powering vehicles and other applications. Once enough green hydrogen can be produced, it can be combined with sustainable carbon sources to create sustainable jet fuel, further reducing our reliance on fossil fuels.
According to the paragraph, Sasol is looking to reduce its coal use by 25% in the near future. This will mean finding new jobs for potentially thousands of miners. However, Grobler sees plenty of opportunities emerging in the extraction of copper, platinum and diamonds. At Lake Charles, where Sasol still has land to spare, they are considering the construction of a plant with South Korea’s Lotte Chemical that would make electrolyte solvents for lithium ion batteries. In September Sasol announced a partnership with Japan’s Itochu Corp to scale up the manufacture of green hydrogen into more easily transported green ammonia. Already in their German operations Sasol makes bio-ethylene out of plant-based biomass and waste. Overall, it seems that Sasol is working to reduce its reliance on coal and move towards more sustainable practices. This is a good thing for the environment and for the workers who will be affected by the changes.
In order to grow, Sasol must find a way to make its green dreams a reality. Grobler has sworn that the company is done building new projects that rely on coal, oil, or natural gas. According to Grobler, the fossil fuel era won't last long enough for Sasol to make a good return on its investment. "If you put steel in the ground you have to run it 30-50 years to get the true value out of the investment," he says. "The petroleum economy, and the internal combustion engine, is now plateauing and there is going to be a decline.
It's refreshing to see a top executive at a major company like Sasol with such a humble attitude. Grobler recognizes that his time at the helm is limited, and his goal is to make himself expendable by ensuring that the company can continue to function smoothly without him. This is the kind of thinking that will keep Sasol moving forward for years to come.