Methanol observers say new OCI unit would give US excess capacity

21 November 2013 22:15 Source:ICIS News

Methanol observers say new OCI unit would give US excess capacityBy Lane Kelley

HOUSTON (ICIS)--OCI’s plan to build a world-scale, 1.7m tonne/year methanol unit in Texas would put the US over the top in meeting domestic demand, industry observers said on Thursday.

“So we will make 40m tonnes of methanol and just drink it, I guess,” said one methanol seller.

The seller was exaggerating, of course. However, the seller’s point was that a wave of announced methanol plants for the North American market over the past two years has now put the US in clear sight of being a net exporter by 2017.

With annual US methanol demand pegged at 5.5m-6.0m tonnes/year and current domestic production of the petrochemical at about 1.5m tonnes/year, even the most likely projects for Texas and Louisiana would provide more than enough capacity to forego the need of any imports from Trinidad & Tobago and Venezuela, which supply about 90% of all US methanol imports.

Those projects include the following:

* LyondellBasell’s restart project in Channelview near Houston (780,000 tonnes/year), which should be running by the end of this year or early 2014 at the latest.

* Methanex has begun moving one of its idle units in Chile to Louisiana (1m tonnes/year) and expects to have it running by mid-2014. The company also plans to move another unit (900,000 tonnes/year) in Chile to the US state by early 2016.

* Celanese and Mitsui plan to build a methanol unit in Clear Lake, Texas (1.3m tonnes/year) that is expected to be running by mid-2015.

* Refining giant Valero plans to build a methanol plant near New Orleans (1.6m tonnes/year) that will be running by early 2016.

Add the capacity at those plants (approximately 4.5m tonnes/year, not counting Methanex’s second unit in Chile) to the ones already operating in North America in Canada and Texas, and US demand would be met.

Realistically, some of the announced projects will never get up and running because of the cost and regulatory hurdles in place. An analyst earlier this year said that only 60% of the announced projects would be built.

A methanol trader said OCI’s new announcement suggests it most likely will depend on putting methanol into the fuel supply – if not in the US, then in other countries that are blending methanol into gasoline already.

“They’ll be at a deepwater port,” the trader said. “Worst-case scenario, they ship it to China.”

By Lane Kelley