Cheap US shale gas transforming NA methanol production: CEO

HOUSTON (ICIS)–Low-cost natural gas derived from US shale formations has changed the methanol industry, the chief executive of G2X Energy said on Thursday.

“As late as mid 1990s, we had fairly stable and balanced methanol demand in the US,” said Tim Vail, the CEO of G2X Energy. “In the late 2000s, we saw the tremendous gas [price] spike…and many plants not only shut down, but they were also disassembled and moved [from North America]. We were literally to the point where only two or three plants remained.”

Vail made his remarks during a presentation at the Monetizing C1 Methane Feedstocks conference in Houston. The event was organized by American Business Conferences.

The US shale gas revolution, driven by an innovative horizontal drilling technique known as hydraulic fracturing, changed all that by increasing domestic production to levels never seen before.

“Gas prices plummeted again, and now the US is the world’s largest producer of natural gas and one of the cheapest,” Vail said. “Now we’re starting to see that methanol capacity come back.”

However, the opportunities afforded the methanol industry by low-cost natural gas also come with some challenges, he added.

Methanol plants are very expensive to build. They require a great deal of expertise to maintain. And the producers must have access to a tremendous network in order to market their methanol.

Vail said it will become much more difficult to market methanol with all the new capacity coming online.

“We don’t see a lot of new entrants in this business ultimately being successful in building their plants and getting them over the goal line,” he said. “I think you really need to look at what the incumbents are doing.”

Those incumbents include companies like Methanex, OCI and Celanese, all of which have projects ongoing.