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NatGas Draws Chinese Chemical Company to Louisiana

Louisiana has landed a methanol manufacturing complex thanks to its proximity to inexpensive natural gas.

Yuhuang Chemical Inc. said it will make a $1.85 billion capital investment in a world-scale methanol manufacturing complex on the Mississippi River in St. James Parish. The project by the subsidiary of Shandong Yuhuang Chemical Co. Ltd. represents the first major foreign direct investment by a Chinese company in Louisiana, according to Louisiana Economic Development (LED).

"This facility's location fits well with our strategy to leverage the advantage that natural gas feedstock provides," said Yuhuang Chemical CEO Charlie Yao. "Our goal is to maximize technology innovation and develop our company into a petrochemical and fine chemical world leader, with an equally important reputation for being a resource-efficient and environmentally friendly global enterprise."

The newly formed Yuhuang Chemical will make its first major U.S. investment in St. James Parish, where it has secured an option to purchase more than 1,100 acres for a three-phase project next to the Plains All-American Pipeline terminal. After the first methanol plant is completed, the company plans to build a second methanol plant and reach an annual capacity of 3 million metric tons per annum of methanol. A third phase is expected to include a methanol derivatives plant that will produce intermediate chemicals.

Most of the project's methanol will be exported by oceangoing vessels for use in the parent company's production of downstream chemicals in China, with 20-30% of the methanol to be shipped by barge and rail and sold to North American customers.

"Building a new world-scale methanol unit in Louisiana is Shandong Yuhuang's first major step in becoming a global player in the petrochemical industry," Yao said. "While the company has long been highly regarded in China as one of its primary contributors to the industry in Asia, this Louisiana operation represents the company's commitment to significance on the world petrochemical platform. Louisiana was the right choice for our company to locate our first operation in the United States."

LED began discussing the potential project with Yuhuang Chemical in February. Louisiana offered the company an incentive package that includes two performance-based grants: $9.5 million to be paid over five years beginning in 2017 to offset infrastructure costs of the project and $1.75 million to be paid over 10 years to partially defray the costs of riverfront access and development.

"Following such historic foreign direct investment projects as Sasol in Southwest Louisiana [see Daily GPI, April 30] and Benteler Steel/Tube in Northwest Louisiana [see Daily GPI, Oct. 31, 2012], our state continues to raise the bar for attracting high-quality, world-class foreign direct investment projects," said Gov. Bobby Jindal.

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