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Methanex selected Jacobs to relocate Chile Methanol plant in Louisiana

Methanex to invest $550 million to benefit from low shale gas prices

Methanex produces about 3.8 million t/y of Methanol and is the world’s largest supplier of Methanol to major international markets with production units in Canada, Chile, Egypt, New Zealand and Trinidad.

 

Methanol is produces mainly out of natural gas, therefore the access to reliable and competitive sources of supply of natural gas as feedstock is critical.

Methanex operates four Methanol production units in Chile, but significantly below the sites capacity.

This is primarily due to curtailments of natural gas supply from Argentina and the delays in developing new gas fields in Chile.

While significant investments have been made in the last few years for natural gas exploration and development in southern Chile, the timelines for significant increases in gas production are much longer than originally anticipated and existing gas fields are experiencing depletion.

As a result, the short-term outlook for natural gas supply in Chile continues to be challenging and requested to idle one of the four Methanol facilities in Chile.

In parallel, the development of shale gas in USA provided in a couple of years with an unexpected reliable and highly competitive source of supply of natural gas for all downstream activities and especially Methanol.

In this context, Methanex performed the feasibility study with Jacobs Engineering (Jacobs) to relocate the idle Methanol facility from Chile to USA and investigated potential areas to establish it in USA.

In July 2012, Methanex reached a final investment decision (FID) to proceed with the project to relocate this idle Chile facility to Geismar in Louisiana, USA.

Some other projects are still under feasibility study to increase the utilization of the remaining Chilean assets.

Methanex is planning approximately $550 million capital expenditure for this relocation and expansion te be its first Methanol production unit in USA, since USA had to import its gas so far.

In Chile the idle plant had a capacity of 882,000 t/y of Methanol which will be expanded in Geismar to 1 million t/y production capacity.

The project offers substantial capital savings compared to a greenfield Methanol plant.

In addition, it can be executed in significantly less time, which allows to capitalize faster on the current low natural gas price environment in North America.

Geismar is an excellent location for a Methanol project as it possesses world-class gas pipelines, tank farms and export terminal infrastructures such as operated by Cheniere in Parish, Louisiana.

With natural gas, ready supplies of hydrogen, oxygen and other industrial gases exist in Ascension Parish, along with easy access to barge, rail and interstate highway transportation.

In addition North America is one of the biggest Methanol consumer market, so this capital expenditure will also contribute to substantial logistics cost savings.

Methanex awarded the engineering services contract to Jacobs in Baton Rouge, Louisiana.

The dismantling of the plant in Chile has already started, so that Methanex is targeted to complete the Louisiana facility by the end of 2014.

Methanex in brief

Methanex has headquarters in Vancouver, British Columbia, Canada.

Methanex shares are listed for trading on the Toronto Stock Exchange in Canada, on the NASDAQ in the USA, and on the Foreign Securities Market of the Santiago Stock Exchange in Chile.

Methanex‘s global Methanol production for the second quarter of 2012 was 1,034,000 tonnes compared with 945,000 tonnes for the first quarter of 2012.

Methanex is the world’s largest supplier of Methanol to major international markets in North America, Asia Pacific, Europe and Latin America.

Methanol is an important ingredient in many of the essential industrial and consumer products that make the world a better place in which to live, work and play.

Methanol is used for many applications from windshield washer fluid to recyclable plastic bottles, plywood floors to paint, silicone sealants to synthetic fibres.

The fastest growing markets for the use of Methanol are in the energy sector including: direct gasoline blending, dimethyl ether and biodiesel.

As a global enterprise, Methanex has  production facilities, distribution terminals and storage facilities strategically located in North America, Latin America, Europe, the Caribbean, the Middle East and throughout the Asia Pacific region.

Methanex also operates the largest fleet of Methanol ocean tankers in the world.

With the relocation and expansion of its Chile facility into Ascension Parish, Louisiana, Methanex adjusts it business model to consolidate its Methanol Market Leadership in optimizing the use of its assets, reducing it sourcing costs and getting closer to his customers for a minimum capital expenditure.

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