US Eastman sells shuttered methanol plant, new owner plans restart

07 January 2011 00:22  [Source: ICIS news]

Eastman sells shuttered methanol plantHOUSTON (ICIS)--Cheap US natural gas and new technology have led an entrepreneur backed by a Swiss firm to buy Eastman Chemical's mothballed Texas methanol plant - with a restart planned for mid-year, the businessman said on Thursday.

Deo Van Wijk, a former Methanex executive who has been involved in independent ventures since he left the company in 1994, said he and Janus Methanol recently acquired the former Beaumont methanol plant from Eastman Chemical in late December.

"I have acquired Beaumont Methanol from Eastman," Van Wijk said, adding that it would have capacity of 850,000 tonnes/year of methanol and begin testing in April. "By July we expect to be in consumer production."

In addition, the plant would produce a further 250,000 tonnes/year of ammonia, he said.

Van Wijk would not say how much the plant cost.

Eastman bought the plant in 2007 for a $1.6bn (€1.2bn) coal-gasification project, but called off the project in late 2009.

At that time, Eastman cited high capital requirements, the narrow difference between petroleum and natural gas prices and uncertain US energy policy.

Eastman did not immediately respond to a request for comment.

However, competitors said the Tennessee-based chemical maker has been shopping the Beaumont plant around during the past year.

One competitor said the plant needs a lot of work, particularly in dock and railroad track repairs.

Beaumont would be the second methanol plant to be restarted in North America this year.

Methanex, where Van Wijk was US marketing executive in the early 1990s, plans to invest $40m this year to restart a Canadian plant in Medicine Hat, Alberta, with cheap natural gas.

Van Wijk said cheap gas also led him and his Swiss backers to invest in the Texas plant, adding that they were spending less than what Methanex is spending to restart the Alberta site.

When the Beaumont plant was closed in December 2004, natural gas prices were around $6/MMBtu. Front-month NYMEX futures on Thursday closed at $4.41/MMBtu, 36% cheaper than the price six years ago.

Comparing methanol then and now to gas shows that the ratio of the methanol contract price to gas has essentially doubled, based on the contract price of 95 cents/gal then to 132 cents/gal now.

Methanol talk has focused for the past few years on there being too much capacity, which is why plants have been steadily closed in the US and Canada over the past decade.

Most of the Americas industry is now based in Trinidad, with a few plants in South America. Methanex CEO Bruce Aitken said in late 2010 that the company's average global gas price was $1.50/MMBtu - less than half the prevailing price of US gas.

But Van Wijk said relatively cheap gas in the US and current high contract methanol prices were the big drivers behind the Beaumont plant.

Van Wijk said new autothermal reforming (ATR) technology to be used in the plant was also a factor. He said ATR would be used to make methanol and surplus hydrogen to convert to ammonia.

Van Wijk sees increased foreign investment in US methanol projects this year.

"I believe there will be more coming," he said. "You will see more production in the US soon."

($1 = €0.76)

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By: Lane Kelley
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