Methanex secures long-term gas supplies for Louisiana methanol plant

24 January 2013 14:56  [Source: ICIS news]

TORONTO (ICIS)--Methanex has secured long-term natural gas supplies for its methanol project in Geismar, Louisiana, in the US, the Canada-based international methanol firm said in a statement released late on Wednesday.

Under a 10-year deal, Chesapeake Energy agreed to supply all of the natural gas required for Methanex's 1m tonne/year methanol plant in Geismar, Methanex said.

Methanex is relocating a methanol plant from Chile to Louisiana. Methanex has had chronic problems securing enough natural gas for its operations in Chile, where it has four plants near Punta Arenas.

The Geismar plant is expected to start up by the end of 2014, when gas deliveries will begin.

“This contract will enhance our ability to reliably supply quality product to our US customers for at least the next 10 years,” said Methanex CEO John Floren.

The agreement is structured so that the natural gas price is linked to the methanol price, and both Methanex and Chesapeake will share in the risks and rewards resulting from the changing price of methanol over the decade of this contract, Floren said.

“This gas pricing formula, in addition to the capital cost advantage of relocating a methanol plant as compared to a new-build facility, enables the project to be profitable across a broad range of methanol prices," he said.

Floren added that Methanex expects to decide during the first half of 2013 whether to relocate a second methanol plant from Chile.

Additional reporting by Lane Kelley and Al Greenwood

By: Stefan Baumgarten
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