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US methanol—the resurgence of an industry

06.01.2014  |  Nichols, L.,  Gulf Publishing, Houston, TX

The latest resurgence of the US petrochemical industry is reflected in the planned construction of new ethylene and methanol (MeOH) capacities throughout the country.

Keywords: [US] [methanol] [petrochemicals] [natural gas] [shale gas]

The US petrochemical sector is in the midst of one of the largest industry expansions to ever occur in North America. Cheap, readily available shale gas is sparking a surge in the construction of new processing capacity. Total announced capital investments in capacity expansions, upgrades, plant restarts and greenfield facilities have climbed to over $100 billion (B). No greater example of this resurgence of the US petrochemical industry is better illustrated than in the construction of new ethylene and methanol (MeOH) capacities (Table 1).

 



One of the largest impacts in the US will be in new ethylene capacity. Companies such as Axiall, Chevron Phillips Chemical (CPChem), Dow Chemical, ExxonMobil, Sasol, Shell and LyondellBasell will be instrumental in adding over 10 million tons per year (MMtpy) of new US ethylene capacity by 2018.

The shale gas boom has also propelled MeOH production to the forefront of the US petrochemical sector. Cheap natural gas feedstock has spurred a boom in MeOH plant construction, expansions, plant restarts and even plant relocations from other regions around the globe. The US plans to add over 10 MMtpy of additional MeOH output capacity by 2018. This capacity represents more than $8.5 B in new project investments over the next four years.

However, the US MeOH outlook was reversed in the early years of the new millennium, when spiking domestic natural gas prices shrunk the US MeOH industry substantially. By the early 2000s, the number of operating US MeOH plants had shrunk from 18 to 10. Domestic MeOH processing capacity dwindled from over 7 MMtpy to well under 3 MMtpy. This made the US more dependent on imports from countries such as Trinidad and Tobago, Chile, Venezuela, Equatorial Guinea and Canada. By the end of 2013, US MeOH imports had climbed to 5.5 MMtpy.

Within the next three years, however, US imports of MeOH are not only expected to cease, but the US is also expected to become a net exporter of this sought-after chemical.

Installed capacity

The MeOH industry spans the entire globe. Presently, over 100 MeOH plants are in operation around the globe, representing over 100 MMtpy in total processing capacity. MeOH is used in many applications, mainly in the creation of acetic acid and formaldehyde. Acetic acid and formaldehyde are basic building blocks for the creation of products such as paints, coatings, plastic resins, adhesives, disinfectants and even embalming fluid.

The US will utilize its cheap natural gas feedstock to become self-sufficient in MeOH production by 2018. Major facilities have been planned, mainly along the US Gulf Coast in Texas (TX) and Louisiana (LA). These projects include multiple billion-dollar mega-projects with capacities of over 1 MMtpy.

The following is an overview of major MeOH projects in the US. This information is primarily derived from Hydrocarbon Processing’s Construction Boxscore Database.

Methanex

The corporation is the global leader in MeOH production. Methanex is in the process of relocating two idled MeOH plants from its Chile site to Geismar, Louisiana. The project consists of the dismantling, relocation and reassembling of two 1-MMtpy MeOH plants, Geismar 1 and Geismar 2. The total cost of the project is expected to reach $1.1 B—an estimated $550 MM per plant.

Geismar 1 will be Methanex’s first US-based MeOH production facility constructed in over a decade. Methanex began to dismantle the Chilean plant in mid-2012. Shipments of the plant’s infrastructure began in early 2013, shortly after Methanex signed a 10-year natural gas supply contract with Chesapeake Energy Corp. All modules and equipment reached the 225-acre Geismar site in early 2014. Reassembly is expected to take six to seven months. The plant is scheduled to be operational by the end of 2014.

In early 2013, as Geismar 1’s modules and equipment were loaded onto specially designed ocean vessels for the 7,500-mi journey, Methanex greenlighted the relocation of a second 1-MMtpy MeOH plant, Geismar 2. This facility is expected to be fully operational by early 2016.

Celanese

The company plans to establish two MeOH facilities in Texas. The first is a 1.3-MMtpy plant located at its existing Clear Lake, TX facility. Celanese is developing the project with Tokyo-based Mitsui & Co. The equal joint venture (JV) will invest $800 MM in the development of the plant. WorleyParsons will provide engineering, procurement and construction (EPC) management services for the plant. Completion is scheduled for mid-2015.

Celanese plans to build an additional 1.3-MMtpy MeOH plant at its petrochemical facility in Bishop, TX. The plant will utilize natural gas sourced from the nearby Eagle Ford shale. The Bishop MeOH plant will mirror the size and scope of the Clear Lake plant. Total capital expenditure is expected to reach $700 MM–$800 MM. Presently, Celanese is preparing the necessary environmental permits for the plant. If greenlighted, the plant should be operational in 2017/2018.

Valero

The company is spending $700 MM to construct a 1.6-MMtpy MeOH facility. The complex will be located adjacent to its St. Charles refinery in Norco, LA, about 25 mi west of New Orleans. The project is the largest investment Valero has made in the petrochemical sector, and it is expected to be operational by the second quarter of 2016.

OCI

Following on the success of its Beaumont, TX facility, OCI, through its subsidiary, Natgasoline, will build one of the largest MeOH plants in the US. The 1.75-MMtpy, world-scale facility will be located on a 514-acre plot in Beaumont, TX. The $1-B plant will utilize Air Liquide’s Lurgi MegaMethanol process technology.

Air Liquide’s engineering and construction division, Air Liquide Global E&C Solutions, will provide the design of all basic engineering works for the plant. These include detailed design, engineering and the procurement of proprietary equipment. The plant is expected to be operational by the end of 2016.

Northwest Innovation Works

The company intends to build twin billion-dollar MeOH plants at the Port of Kalama, Washington (WA), and at Port Westward on the Oregon (OR) side of the Columbia River. Each plant will have a capacity of 5,000 tons per day (Mtpd), which equals 1.825 MMtpy.

The project is being developed by Northwest Innovation Works (NWIW). NWIW was formed at the beginning of 2014 as a JV among PPE, Shanghai Bi Ke Clean Technology, Dalian Xizhoug Island Petrochemical Park and Silicon Valley-based private equity firm H&Q Asia Pacific.

NWIW will invest approximately $3.8 B on the construction of the two plants. The $1-B Port Westward facility will be constructed on an existing industrial park owned by the Port of St. Helens. The Port of Kalama plant will be constructed in two phases, at a cost of $1.8 B. The MeOH produced will be shipped to Dalian, China for olefins production. Construction of both plants is expected to begin in late 2014. MeOH shipments are scheduled to begin in 2018.

South Louisiana Methanol

South Louisiana Methanol (SLM) is a JV between TX-based Zero Emission Energy Plant and its financial backer, Todd Corp., a private company located in New Zealand. SLM is building a 5-Mtpd (1.825-MMtpy) MeOH plant in St. James Parish, LA. The $1.3-B facility will be located along the Mississippi River in close proximity to intrastate and interstate natural gas pipelines, deepwater ports and the major industrial hubs of Baton Rouge and New Orleans.

Fluor was awarded the engineering and design contract in September 2013. Fluor will prepare a detailed EPC execution plan, a cost estimate and a detailed schedule. Fluor has selected Johnson Matthey Davy Technologies’ MeOH processing technology for the plant. Construction is scheduled to begin in the third quarter of 2014, with an initial startup date of the fourth quarter of 2016.

G2X Energy

Construction of Phase 1 of G2X Energy’s Pampa, TX plant began in early 2013. The plant will use natural gas from local sources to produce 65 Mtpy of MeOH. G2X’s partner, Southern Chemical, will market the MeOH to customers in the TX Panhandle. Phase 1 completion is scheduled for June 2014.

G2X is also developing a methanol-to-gasoline (MTG) complex in Lake Charles, LA. The $1.3-B facility will utilize ExxonMobil Research and Engineering’s MTG process technology. The plant will convert 130 million cubic feet per day of dry natural gas into MeOH, and then convert MeOH to conventional gasoline. The 12,500-bpd plant is scheduled to begin operations in early 2017.

LyondellBasell

In December 2013, LyondellBasell restarted its MeOH plant in Channelview, TX. The 780-Mtpy plant sat idle for almost 10 years due to high domestic natural gas prices. In late 2011, with the advantage of low-cost shale gas feedstock emerging in the US, the company invested $150 MM in the upgrade and restart of the facility.

This project is one in a series of Gulf Coast projects by LyondellBasell. The company plans to spend approximately $1.5 B on new capacity additions. These additions include new ethylene and polyethylene capacities at facilities in Channelview, La Porte, Corpus Christi and Matagorda County, TX. HP



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