FocusLure of methane continues to drive US plant projects

18 January 2013 17:38  [Source: ICIS news]

Methanol is made from methaneHOUSTON (ICIS)--The lure of methane continues to hook petrochemical entrepreneurs and investors, as new plant announcements in Texas and Louisiana showed this week.

A Texas firm, G2X Energy, broke ground this week on a small methanol unit in the northern part of the state, and the company also announced more ambitious plans for a methanol-to-gasoline unit in Louisiana.

Those are just the latest additions to a long list of plant projects announced over the past year that would use methane as a major feedstock.

Not all of them would make methanol only or turn methanol into something else such as gasoline. Some of the projects would target the fertilizer market and produce ammonia, which is also a methane derivative.

Louisiana Governor Bobby Jindal has said his state is experiencing a chemical and energy renaissance, but it is not just confined to Louisiana, Texas and the US Gulf states. The lure of methane has also prompted new plant projects in the US midwest.

But the common denominator in all the methane projects is that they seek to capitalise on cheap natural gas from the US shale-gas revolution.

Some of the projects, like G2X’s $60m (€45m) plant in Pampa, Texas, already have financing arranged and will serve a fairly defined geographical market.

“That’s a good idea,” a US methanol source said of the northern Texas project. “I think there’s a market for that there in the Oklahoma and north Texas area.”

North America has been a magnet for methanol activity over the past two years. Methanex restarted a plant in Canada at Medicine Hat, Alberta, in April 2011, and Orascom Construction Industries (OCI) restarted a Texas plant in Beaumont in July 2012.

Those two plants alone have added 1.2m tonnes/year in new methanol production to the North American market, putting existing capacity at roughly 2m tonnes. That total is likely to double - and maybe triple - in the next three or four years if companies follow through with announced projects.

Three projects are considered likely: LyondellBasell’s restart in Texas late this year, Methanex’s move of a unit in Chile to Louisiana expected to begin this year and start up in 2014, and Celanese’s new plant going up at its Clear Lake, Texas, site in 2015.

If just those projects are built, the US would not need to bring in methanol from Trinidad, Venezuela and Africa, which supply roughly 90% of the country’s imports.

Some of the announced methanol projects are just in the earliest stages of development, as with the Lake Charles G2X plant, because financing has not yet been lined up.

“We have not come to a financial close on that yet,” said Trey Fielder, G2X spokesman.

The state of Louisiana has offered G2X a $5m grant for infrastructure improvement at the port of Lake Charles. The project’s cost is estimated at $1.3bn. The company said it would not make a final investment decision until the end of 2013.

Cheap natural gas and methane has also prompted another US production boom, in ammonia plants.

Among those projects, Illinois-based CF Industries said in November that it will spend $3.8bn on new ammonia and urea/urea ammonium nitrate (UAN) units in Louisiana and Iowa.

And OCI said it was ready to begin construction on a $1.4bn ammonia, urea and UAN complex in Iowa.

Ammonia projects in the announced-but-not-decided-yet category include Mosaic’s planned $700m ammonia plant at a company site in Faustina, Louisiana. The US-based fertilizer producer has begun front-end engineering and design work. Mosaic said in late December that a final investment decision might come by mid-2013.

Also, North America's largest agricultural cooperative, Minnesota-based CHS, is conducting a feasibility study on the merits of building a $1bn nitrogen/ammonia fertilizer plant in North Dakota.

Canada-based Agrium said in November that it was close to naming a location in the US Corn Belt for a proposed new nitrogen fertilizer plant. The company’s board is expected to approve budgeting for the project in the first half of 2013.

($1 = €0.75)

By: Lane Kelley
+1 713 525 2653

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