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U.S. Methanol Plants Coming Back, But at Slower Pace

With plentiful North American natural gas continuing, the commitment to develop U.S. methanol production capability and Asian demand remains strong while the pace of U.S. manufacturing plant development has lagged, according to a Chinese-backed consortium developing multiple facilities in the Pacific Northwest.

Northwest Innovation Works (NWIW) expects to start construction next year on the first of two production plants after dropping plans last year for its largest proposed facility at the Port of Tacoma, WA. Now the focus is on a $1.8 billion plant at Port Kalama in Washington along the Columbia River.

"The Tacoma [project cancellation] experience has taught us that one project at a time is probably the right way to go forward," Clay Riding, vice president, energy resources, told NGI on Monday. "Anything beyond Kalama will be done after that project is behind us."

Created by China-based Clean Energy Commercialization Co., NWIW at one time had multi-billion-dollar plans for three natural gas-consuming methanol plants in the Pacific Northwest with Port St. Helens on the Oregon side of the Columbia River being the third one that the consortium was pursuing simultaneously. Port St. Hellens remains inactive until Kalama is built, Riding said.

NWIW's founders partnered with units of Double Green Bridge, the Chinese Academy of Science Holding Co. and private investors in H&Q Asia Pacific, and now it is owned by China’s Shanghai Bi Ke Clean Technology Co. Ltd.

Whether one or two plants ultimately are built, Riding said there are adequate gas supplies to satisfy both.

"We've got commitments in place for all of the pipeline capacity and most of the supply, all coming from Western Canada," he said, noting that at this point all U.S. Rockies capacity is committed elsewhere.

"There is plenty of gas supply up here certainly, and Canada is looking for market. All of the Rockies' pipeline capacity has been spoken for” for years through Williams’ Northwest Pipeline Co.

Local and state permitting remain the challenge, although Riding does not see Kalama facing the same degree of local opposition that the larger, more complex Port of Tacoma project had faced. Port Kalama has an industrial mix of grain and log handling operations, a steel rolling plant and a chemical plant. Concerns about greenhouse gas (GHG) emissions are not significant.

"You're going to have emissions issues with anything, and part of it is that we're self-generating for part of the electricity load [150 MW] and that takes 10% of our gas load." Riding said. "We're using an ultra-low emissions technology that cuts them from a traditional gas plant 20% or 30%, and the story is that we are 90% cleaner on GHG emissions as compared to producing methanol from coal."

NWIW has generally billed its proposed approach to methanol production as the “cleanest” in the world, which includes capturing and recycling all water used, so it would not have discharges into the nearby Columbia River.

Project backers remain confident the long-term market is present for exporting methanol to the Far East.

"We certainly have a first-mover advantage on the West Coast,” Riding said. “I don’t know of other West Coast plants currently being developed -- and certainly, none are as far along if under consideration.” He would not "rule out competitors, but we are currently in a strong position.

"And given its natural gas position, the U.S. is indeed a great place to produce methanol with a much lower GHG footprint; while Gulf Coast plants are being contemplated, we believe we have the logistical shipping advantage from the Pacific Northwest."

British Columbia-based Methanex Corp. and several other foreign methanol companies have active projects in the Gulf Coast region. On the other hand, NWIW has the only projects slated for the West where there used to be two production plants in Canada before they were shuttered years ago in the face of high natural gas prices.

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