Nation’s largest methanol plant planned for Texas

HOUSTON — A Dutch fertilizer company said Thursday it plans to build in Beaumont what would be the largest methanol plant in the United States.

The plant would cost more than $1 billion and produce about 1.75 million tons of methanol per year, according to the company, OCI N.V. The plant will be build by OCI N.V. subsidiary Natgasoline.

“Basically, this project has one input: natural gas,” CEO Nassef Sawiris said in an interview with FuelFix. “And the final product, methanol, is currently being imported into the U.S. The U.S. has about a 5-million-ton deficit so this project will substitute imports.”

OCI N.V. owns another methanol plant in Beaumont, which has a capacity of 730,000 tons per year and alone accounts for 80 percent of the nation’s methanol production available for sale, Sawiris said. OCI N.V. purchased the previously mothballed Beaumont methanol plant two years ago and is in the process of expanding its capacity.

Methanol is made from natural gas and is used in a wide range of products, including paints and glue. But it also has the potential to be a replacement for gasoline, or to be blended into gasoline just like ethanol is, Sawiris said. Other countries allow methanol to be used in gasoline, but Congress has yet to approve legislation that would allow it, he said.

“It’s a very clean fuel and it’s made out of natural gas and is high octane,” Sawiris said. “So it makes a ton of sense to accept it as an additive and it’s not going to compete with ethanol. It’s going to be put alongside ethanol.”

Large chemical and refining companies produce methanol for their own use, but don’t sell it to third parties, Sawiris said.

Another planned methanol plant, to be constructed by Valero, would have a capacity of 1.6 million tons per year and would cost about $700 million, according to that company.

The decision by OCI N.V. means at least four methanol plants currently are planned for the U.S. Gulf Coast. The other projects are being built by Valero, Methanex and Celanese.

Methanol benefits from cheap natural gas, which has inspired dozens of plans for new plants in the United States. The planned investments in those plants exceed $72 billion, according to the American Chemistry Council.

Sawiris said OCI N.V.’s decision to build a new methanol plant was a “no-brainer.” He said choosing Texas as a location was not hard, either.

“Texas has a very attractive tax regime,” Sawiris said. “The best in the world: Zero, my favorite word.”

OCI N.V., which employs more than 75,000 people in 35 countries, is expanding the other methanol facility it owns in Beaumont to a capacity of 912,000 tons per year and the company recently built a $1.8 billion nitrogen fertilizer plant in Iowa.

The new methanol plant would go on OCI N.V.’s existing 514-acre plot of land in Beaumont, the company said.

The project received $2.1 million from the Texas Enterprise Fund, a taxpayer-supported fund aimed at luring large projects to the state. Construction of the new plant is expected to create 3,000 jobs over the next three years and the facility will employ 240 people when it starts up in 2016, the company said.

Since natural gas is currently cheap in the United States, methanol added to a gallon of gasoline would lower pump prices for consumers, Sawiris said. Methanol could be added to gasoline at the price equivalent of about $2 a gallon, displacing more expensive gasoline made from oil, Sawiris said.

Sawiris said the methanol plant will be viable, even if natural gas prices rise significantly. But it will be dependent on demand for methanol, which currently sells for about $500 per ton, he said..

“It depends on the price of methanol,” Sawiris said. “We can afford higher gas prices if methanol prices remain where they are today.”

But locating methanol production to the United States likely will give OCI N.V. an advantage on imported methanol, which is made from natural gas elsewhere in the world, Sawiris said. Foreign natural gas currently costs at least double what it costs in the United States.

Additionally, methanol produced at a U.S. plant not only has lower input costs, but it does not have to incur expensive overseas transportation costs to move products to customers in the United States, Sawiris said.

“For us, it became pretty obvious that it makes a ton of sense to put that facility in Texas,” he said.


Also on FuelFix:

Refineries expanded, but not constructed