Methanex won’t try for grants

By Collin Gallant on October 12, 2018.

cgallant@medicinehatnews.com @CollinGallant

Methanex will not take part in a current round of a provincial grant program meant to help spur new petrochemical plant construction, company officials tell the News, stating the timelines for a possible local expansion don’t line up.

The local methanol producer lauded an initial 2016 round of the Alberta Petrochemical Diversification Program, developed by the Alberta government with input from chemistry industry officials.

The new round, which required official application to be filed by Oct. 1, similarly offers to help companies meet business case hurdles, with up to $500 million in petroleum royalty credits.

“We have made this decision as the timing for our potential Medicine Hat project was not aligned with the timing objective for (the program),” stated Methanex vice-president Paul Daoust.

This summer the company announced it would advance work on another major project — building a third plant at its Geismar, Louisiana site — ahead of a plan first announced in 2013 to twin the Medicine Hat facility.

After five years, Daoust said the proposal is still facing hurdles of capital cost, export logistics on rail, and “carbon pricing uncertainty,” were still being examined, he said.

“Medicine Hat is a great location to build a new methanol plant,” Daoust stated, citing existing operations, land arrangement and relationship with the City of Medicine Hat.

Senior company officials have also said Alberta’s generally low natural gas prices are a strength.

This year the province announced up to $2 billion in supports to refining enterprises to upgrade petroleum in the province, including $500 million each for petrochemical and related supply chain infrastructure.

Specifics in production dates are not a requirement, but timelines are one of eight criteria that third-party evaluators are using to judge bids. The awards are expected to be announced later this year, or in early 2019.

Another $1 billion is earmarked for projects to further upgrade oilsands bitumen locally before export as a way to reduce volume, thereby increasing export pipeline capacity.

Companies looking to build new or expand operations that would turn ethane, methane or propane into higher value products, like, methanol, plastics or fertilizer, would receive $500 million in royalty credits that could be swapped with petroleum producers. Once the new facilities are operating, it would offset early costs, and theoretically accelerate the capital payback process.

Methanex still hasn’t made a final decision to go ahead with the Geismar project, but said it’s seeking partners or customers to build related industries on land it owns near the site. It has announced it would spend US$40 million on advanced engineering work.

Medicine Hat is still “considered along with other growth opportunities globally,” said Daoust.

“We will continue to work with the government to preserve the strength and competitiveness of our industry and to encourage the development of future investment attraction programs.”

Award winners in the 2016 program involved two propane to plastics applications.

Calgary-based Interpipeline received a $200-million award and is now building a $3.6-billion plant in the Fort Saskatchewan area. Canada Kuwait Petrochemical corporation, $300 million, in conjunction with Pembina Pipelines is in advanced planning for a $4-billion project there as well.

Separately, Pembina is underway with a propane extraction facility coupled with its natural gas straddle plant in Cypress County, near Empress. That $120-million facility and related rail terminal would be a supply hub for the facility or overseas export, Pembina has stated.

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