Methanex will move ahead with a third methanol plant in Louisiana - a project that once competed with a plan to twin the company's Medicine Hat facility, and was more recently the subject of public showdown with a major shareholder. -- NEWS FILE PHOTO
cgallant@medicinehatnews.com@CollinGallant
Methanex will move ahead with a third methanol plant in Louisiana — a project that once competed with a plan to twin the company’s Medicine Hat facility, and was more recently the subject of public showdown with a major shareholder.
The company announced late Friday that construction will begin later this year in Geismar, L.A., towards an in-service date of 2022 for the US$1.4 billion project.
In spring 2018, the company announced had prioritized plans to build next to its two existing plant sites in the U.S. Gulf Coast ahead of the Medicine Hat project.
It had acquired land for “Geismar 3” and was seeking creative partnerships to defray capital costs, a plan which could result in the firm putting Medicine Hat plant expansion back into the development queue.
Since then, however, no partnership developed, major shareholder M&G Investments argued against the project, but this week, the company announced it would potentially go it alone on the project it called a unique chance to boost production and add value to the company.
“We are extremely pleased to move forward with the Geismar 3 project which we believe will create significant long-term value for shareholders,” stated CEO John Floren in a press release.
“As stated previously, we have a preference for a strategic partner for the project and we will continue to pursue that option.”
It also states that activist investor M&G was recently provided with representation on the board and an independent audit of the project was agreeable.
Financing on the project will be provided from in-house funds and a new five-year US$800-million credit facility, plus refinancing some existing debt structures.
The company has maintained that the potential expansion of its Alberta facility, estimated to cost C$1.3-billion when proposed in 2013, remains attractive. It has stressed that rail transportation to get added production to Pacific ports is a main stumbling block.
The company was not successful in the Alberta government’s 2016 Petrochemical Diversification Program, which offered up to $500 million in tradable royalty credits for new plants that would upgrade natural gas. The company did not apply to a subsequent round in late 2018.
The Geismar 3 plant would have an capacity of about 1.8 million tonnes, about three times more than the existing Medicine Hat facility.
“Our long-term outlook for the methanol industry is very positive,” said Floren. “Demand forecasts are strong and new capacity additions will be needed to meet expected demand growth.”
“Geismar 3 is an exceptional opportunity to deliver on our long-term strategy to enhance our position as the methanol industry leader.”
