OCI Natgasoline start-up represents new era for US methanol

Source: ECN

2018/06/29

The commercial start-up of the OCI joint venture Natgasoline plant this week marks the beginning of a new era in the US methanol industry. Natgasoline’s 1.8m tonne/year capacity puts the US on course to satisfying its own demand without imports and becoming a net exporter of methanol.

“The US has been a net importer of methanol since before the 1990s,” said James Ray, senior consultant at ICIS. “That will change in 2019, when the US becomes a net exporter of low cost methanol. This historical shift has come as a result of the abundant associated natural gas feedstock from horizontal drilling. With the recent business friendly US tax structure, this trend is expected to continue as petrochemical projects that were previously on the bubble are now a ‘go’.”

For years, the US depended largely on imports from tiny Trinidad and Tobago for its methanol supply, until producers began restarting mothballed plants in 2011-2012.

A few years later US methanol capacity was just short of 2.5m tonnes/year in early 2015. By the end of that year, US capacity had grown to 6m tonnes/year.

OCI’s announcement showed how size matters in the new era. The company called the commercial start-up of the plant in Beaumont the largest in the US, surpassing the previous largest US methanol plant, the 1.3m tonne/year Celanese-Mitsui unit in Clear Lake, Texas.

“The plant will continue its ramp-up in the coming weeks while under-going normal fine-tuning of equipment,” OCI said in a statement. “This achievement signals that construction and pre-commissioning activities are substantially complete for the facility.”

The methanol plant was mechanically completed in April this year. OCI also noted its new unit would be “the only new capacity expected in the Americas to come online in 2018”.

The latter reference points to new tonnage that might come up in 2019, when Yuhuang Chemical’s new 1.8m tonne/year unit in Louisiana is scheduled to start up late in the year at St James parish, Louisiana.

Yuhuang has said that most of the methanol from the new unit will be used in the US, and the rest for export to Europe and China. Methanol watchers, though, said the capacity will by necessity be headed to Asia.

Growing US exports this year already show Asian countries to be top destinations.

Exports to South Korea have doubled so far this year, according to the most recent trade data, and shipments to China through April were 18 times greater than in the same period last year.

Natgasoline is a joint venture between OCI and Consolidated Energy Ltd.