Planned Global Methanol Capacity Continues to Rise

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Researched by Industrial Info Resources (Sugar Land, Texas)--Producers of methanol, a building block chemical, are taking advantage of low-cost natural gas feedstock and an improvement in demand to build new capacity. Methanol is a key feedstock used in the production of many other chemical commodities, such as formaldehyde, alternative fuels and others, helping to increase demand. Only a decade ago, many methanol producers idled or shutdown production units due to high or volatile feedstock costs. The exploration of natural gas shale plays across the United States has helped to reduce the cost of natural gas and make methanol production profitable again.

There are three capital projects currently planned in the U.S. to increase methanol production capacity, with a total investment estimated at $1.3 billion. The largest of the three is an investment of $700 million for a new unit at the site of Celanese Limited (NYSE:CE) (Dallas, Texas), at its Clear Lake plant located in Pasadena, Texas. This new unit is expected to produce approximately 1.3 million tons per year of methanol when complete. This project is expected to start construction by late 2013.

Methanex Corporation (NASDAQ:MEOH) (Vancouver, British Columbia) is also looking to add methanol capacity to the U.S. with their plans to dismantle and relocate an existing 950,000 metric tons per year methanol unit from Chile to a new grassroot plant in Geismar, Louisiana. Jacobs Engineering Group Incorporated (NYSE:JEC) (Pasadena, California) is performing the front-end engineering and design (FEED) studies with hopes to kick-off construction in early 2013. A second unit is also being evaluated to be dismantled from the same plant in Chile and also brought to the U.S. This relocation is largely the result of feedstock cost advantages here in the U.S. and feedstock constraints in Chile.

Globally, there are more than 60 methanol capacity projects planned in 15 other countries spanning six different continents, with an investment of approximately $36.5 billion. China makes up the majority of those projects with an investment total of more than $20 billion. Over the next four years, it is expected that approximately 24.5 billion tons per year of new capacity of methanol be brought come online in China. Many of the methanol capacity projects in China will utilize coal as a feedstock, as opposed to the natural gas that is being used in the U.S., as it is a more economical option in this part of the world. In this rapidly developing country, the increasing demand for methanol to be used in the production of other end-products is also helping to drive the project spending and capacity projects for methanol in China.

Industrial Info has identified three projects in Africa with a total investment of $5.3 billion. The largest is a grassroot plant in Algiers, Algeria, being constructed by a joint venture between Algerian Methanol Company (Subahiya, Kuwait), Sonatrach (Algiers, Algeria) and Total S.A. (NYSE:TOT) (Paris, France). This project, with a total investment of approximately $3 billion is expected to kick off construction of the 1.6 million methanol plant by mid-2013, with a completion in 2016.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.