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Saudis May Join South Louisiana Methanol Project Planned in Louisiana

Preliminary plans are in the works to build a 2 million metric ton/year (mmty) methanol production plant on the Mississippi River in Louisiana, which would be the largest of its kind in North America.

South Louisiana Methanol (SLM) and state-owned Saudi Arabia Basic Industries Corp. (SABIC) signed an initial six-month agreement, which could be extended, to consider whether to build the plant in St. James Parish.

“SABIC brings years of proven methanol operating experience and a global distribution network,” SLM CEO Paul Moore said. SLM is majority owned by New Zealand-based Todd Corp. with partner ZEEP Ltd., which is based in Austin, TX.

A final investment decision (FID) on the methanol plant would be contingent on regulatory approvals and financing.

SABIC, already a major manufacturer around the world, has taken more stakes in U.S. ventures as oil and natural gas reserves have expanded. One joint venture underway with ExxonMobil Corp. is a 1.8 mmty ethane cracker in South Texas near Corpus Christi, which if it were to move forward with an FID, would be the world’s largest.

"The agreement is part of SABIC strategy to focus on geographic diversification of its business to reach new global markets and enable the company to access competitive feedstock," a SABIC spokesperson said.

The St. James project on the Mississippi River between Baton Rouge and New Orleans is expected to cost about $2 billion and create nearly 650 construction jobs, 75 direct operating jobs and 350 indirect operating jobs in Louisiana and elsewhere. The St. James site has sufficient space for at least five trains, and seven natural gas pipelines exist within a five-mile radius, according to SLM.

SLM already has secured the land and has a commercial endeavors agreement with the Department of Louisiana Economic Development. In addition, it has a received a Title V air permit extension for construction and operation from the Louisiana Department of Environmental Quality. It also has approval for the project from the St. James Planning Commission.

State-owned Saudi Arabian Oil Co., aka Saudi Aramco, is in discussions to buy a 70% stake in SABIC. Last March, Aramco clinched commercial partnerships with 14 U.S. energy companies and other global operators that combined were worth $10 billion-plus. The dealmaking followed transactions secured in 2017 with U.S. energy firms by Aramco during President Trump’s trip to the Middle East and Europe.

Aramco affiliates also own Motiva Enterprises, which operates North America’s largest refinery in Port Arthur near Houston, with crude capacity of 630,000 b/d. Motiva also operates the largest U.S. lubricant plant, which is on the Gulf Coast.

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