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Largest U.S. Methanol Plant Ever Planned for Texas

Dutch fertilizer giant OCI NV on Thursday said cheap domestic natural gas will fuel the largest-ever U.S. methanol plant, which it proposes to build in Beaumont, TX.

The $1 billion-plus greenfield facility planned by subsidiary Natgasoline LLC could begin operations by late 2016, capable of producing up to 1.75 million metric tons/year (mmty) of methanol, or 5,000 metric tons/year (mty), the largest domestic facility of its kind based on nameplate capacity.

Applications for environmental approvals were filed with Texas and federal officials last February, according to OCI. The project, to be sited on a portion of a 514-acre site, would incorporate best available environmental control technology.

The methanol plant would be OCI's third natural gas monetization project in the country, said CEO Nassef Sawiris. OCI refurbished an integrated methanol and ammonia facility in Beaumont, which currently has 730,000 mty of capacity and by itself accounts for almost 80% of U.S.methanol production available for sale, Sawiris said.

The mothballed Beaumont facility was purchased by OCI two years ago and now is being expanded to provide capacity of 912,000 mty. OCI also recently built a $1.8 billion nitrogen fertilizer complex in Wever, IA, for subsidiary Iowa Fertilizer Co.

"We believe that the prospects for the U.S. methanol industry will remain positive for the foreseeable future because of growing U.S. and global demand, continued access to attractively priced natural gas feedstock and the United States' current position as a net importer," said Sawiris.

"Natgasoline LLC is well positioned to supply methanol, an essential building block for numerous end-use products, to the domestic market and help reduce a substantial reliance on annual methanol imports into the country." OCI's construction subsidiary is slated to build the facility, he said.

To smooth its plans, a $2.1 million grant was awarded by the Texas Enterprise Fund, a cash grant used as a financial incentive to enable projects that offer "significant projected job creation and capital investment, and where a single Texas site is competing with another viable out-of-state option."

The project is expected to create close to 3,000 construction jobs over the next three years, with about 240 permanent jobs.

OCI also received incentive commitments from officials in Beaumont and in Jefferson County, as well as the Beaumont Independent School District, the Port of Beaumont and the Sabine-Neches Navigation District.

"Texas has created a job-friendly economic environment through our low taxes, smart regulations, fair courts and skilled workforce that welcomes world-class companies looking to expand or relocate their operations," said Gov. Rick Perry. "Natgasoline's commitment to expanding and creating jobs in Texas further strengthens our energy industry and continues the Lone Star State's longstanding role in fueling the nation."

The efforts shown by state and local officials "reaffirm our commitment to Beaumont and the surrounding communities," said Sawiris.

OCI joins a growing number of methanol newbuilds and expansions slated to take advantage of abundant domestic gas supplies. Last June, at least five methanol plants were on the drawing board for the Gulf Coast, according to Raymond James & Associates Inc. (see Daily GPI, June 25). With OCI's announcement and a proposed methanol plant planned by Valero Energy Corp. announced in July, that number is at least seven.

Valero plans to build a $700 million plant in St. Charles Parish, LA, with capacity to produce 1.6 mmty, close to the size of the one planned by OCI (see Shale Daily,July 17).

In January Chesapeake Energy Corp. agreed to a 10-year gas supply agreement for Methanex Corp.'s 1 mmty methanol plant planned in Geismar, LA, set to begin operations in late 2014 (see Daily GPI,Jan. 25;Oct. 31, 2012). Celanese Corp. in mid 2012 said it would construct a 1.3 mmty methanol facility near its acetyl complex south of Houston (see Daily GPI,June 15, 2012).

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