21 May 2012 00:00 [Source: ICB]
Methanol is mainly used to make three derivatives: formaldehyde, methyl tertiary butyl ether (MTBE) and acetic acid. It also has an outlet in fuel applications such as dimethyl ether (DME), biodiesel and for direct blending into gasoline. It is also used as the basis for many other chemical products.
US methanol demand has been weak this winter because of mild weather, with sales of antifreeze and windshield washer fluid providing little boost. Oil and gas drilling fluids have sold well, but not well enough to offset the warm weather.
Producers talk of global supply not keeping up with global demand through 2015, but talk of new capacity in North America has put a damper on spot prices recently. The past year has been the "year of the restart" in North American methanol, with three locations targeted for new methanol plants on the US Gulf Coast.
The key idea behind restarted units in Texas and Louisiana is to take advantage of low US natural gas prices from shale plays. OCI Nitrogen plans to restart a mothballed methanol plant with capacity of 750,000 tonnes/year at Beaumont, Texas, in June, according to the company.
Methanex said in late April that it was planning to buy a significant but unspecified portion of the methanol to be produced at the plant. When methanol production at Beaumont resumes, the Texas unit will be one of two North American methanol plants restarted within approximately a year.
Methanex restarted a 470,000 tonne/year unit plant in Medicine Hat, Alberta, Canada, in April 2011. Also in Texas, LyondellBasell plans to restart in 2014 a mothballed methanol unit near Houston with capacity of 780,000 tonnes/year, according to the company.
In addition, Methanex said in January that it was planning to move one of its idled plants in Chile to Geismar, Louisiana, possibly in the second half of 2014, although the company is yet to give final approval for the move. That move would add around 800,000-900,000 tonnes of yearly methanol capacity to the US.
But even if all of the plants restart and move as scheduled, the US will remain a net importer of methanol. US imports in 2011 totalled about 5.5m tonnes, with 69% of the imports coming from Trinidad.
The tiny island country off the coast of Venezuela also has a project worth noting: a proposed methanol-to-olefins (MTO) and methanol-to-propylene (MTP) complex which, at a cost of $5.3bn, would be by far the largest chemical plant ever located in the country. Proposed by SABIC and China's state-owned Sinopec earlier this year, the project has encountered political opposition in Trinidad and a heavy dose of skepticism from industry sources. Methanex's top executive downplayed the chances of such a huge project getting off the ground in Trinidad because of the country's natural gas supply problems.
US spot methanol prices broke out of a tight 112-115 cent/gal range in April that had lasted throughout the first quarter of 2012 on tensions over sanctions on Iran and an extended turnaround at a plant in Trinidad. Contract prices for May posted by Methanex touched the 52-week high of 138 cents/gal as uncertainty remained over conditions in the Middle East and demand continued to grow in China.
The majority of methanol is produced today from natural gas, naphtha or refinery light gas used in large-scale, low-pressure processes. This has replaced the older, less efficient method of distilling wood for wood alcohol that was then converted to methanol.
In a synthesis gas (syngas) route, a hydrocarbon feedstock mixture is passed with steam through a heated tubular reformer and then cooled and compressed before being converted to methanol. The conversion step uses a copper-based catalyst at 250-260˚C (482-500˚F).
US industrial gases producer Air Products has developed a liquid-phase methanol converter. A demonstration plant was integrated into US-based Eastman Chemical's coal gassification facility in Kingsport, Tennessee. Other processes under development include autothermal reforming, which uses a pure oxygen route, and compact reforming with low methanol synthesis, which uses a non-oxygen route. Dutch-based biomethanol producer BioMCN has also developed a process to make biomethanol from glycerin.
The future for US methanol does not yet look as rosy as it does for methanol in China, where cars are already being tested to run on methanol-blended fuel. That idea has been tried and discarded in the US. Methanol produces about half the energy that a gallon of gasoline does, but methanol is still much more cost competitive than gasoline.
The methanol industry wants to give consumers a choice in blended gasoline beyond ethanol, but that means persuading Congress to enact an open fuel standard, which remains a tough political option. Until that happens, methanol in North America is most likely to continue mainly as a feedstock for chemicals such as formaldehyde, MTBE and acetic acid.
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