Valero to spend up to $700m on methanol plant in Louisiana

HOUSTON (ICIS)–Valero, the largest independent refiner in the US, plans to build a 1.6m-tonne methanol plant near New Orleans and have it running by early 2016, the company said on Thursday.

Valero estimates upgrading its refinery in Saint Charles for a methanol plant will cost $600m-700m (€468m-546m), making it among the largest and also one of the cheaper US projects announced in order to cash in on the boom in shale plays that have kept domestic natural gas prices low.

“Who hasn’t at this point said they’re going to start making methanol in the US?” an industry observer said.

The US imported 5.54m tonnes of methanol from Trinidad and Tobago in 2012.

The list of projects to be restarted, expanded or built new in Texas, Louisiana and Canada over the next two to three years, if completed, would shift the US from being a net methanol importer to net exporter.

Another industry observer estimated that there were methanol projects in the US totalling as much as 18m tonnes in annual capacity that would be added if completed.

The observer said that low US natural gas prices have made building a methanol plant an obvious consideration for chemical and energy companies.

“All of these companies are just flush with capital now,” he said. “Where else do you put your money?”

Valero already has put a lot of money down on the methanol project, recently adding two hydrogen units at its 270,000 bbls/day Saint Charles refinery in order to make more diesel fuel. Hydrogen units also are necessary to make methanol.

Valero officials estimated that, without the hydrogen units in place, the cost of building a methanol plant would run $1.2bn-$1.3bn.

“We don’t have to build hydrogen plants; we’re already halfway there,” said Bill Day, Valero’s media director. “We think we have advantages already in place.”

($1 = €0.78)