An aerial photo of Methanex's current facility in Geismar, Louisiana. The methanol producer recently announced plans to expand its facility in Louisiana, but says a proposed expansion in Medicine Hat will continue to be considered (Photo credit: Methanex)

By Charles Lefebvre

Methanex

Methanex announces plans to expand Louisiana facility; Medicine Hat expansion still being considered

Jul 23, 2019 | 10:47 AM

MEDICINE HAT, AB — Methanex has decided to focus on construction of a new methanol plant in Louisiana, but the company says a long-discussed expansion for the facility in Medicine Hat remains in consideration.

On Friday, the company announced they’re planning to move forward with the construction of a 1.8 million tonne methanol plant adjacent to its current facility in Geismar, Louisiana. Construction of the plant, known as Geismar 3, will begin later this year, and the company says operations at the plant are targeted to begin in the second half of 2022. Methanex says the facility is expected to cost between $1.2 and $1.4 billion.

“We are extremely pleased to move forward with the Geismar 3 project which we believe will create significant long-term value for shareholders,” said John Floren, President and CEO of Methanex, in a statement. “Compared to a standalone US Gulf greenfield plant, this project benefits from substantial capital and operating cost advantages, and we expect will deliver outstanding returns. We believe we are well positioned to complete this project as we have a rigorous and well-defined execution plan, an experienced team in place and a strong balance sheet and financial flexibility to execute the project safely across a wide range of prices. As we have stated previously, we have a preference to have a strategic partner for the project and we will continue to pursue that option.”

The Geismar 3 project has been considered for expansion for many years, alongside a proposed expansion for the Medicine Hat facility.

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CHAT News reached out to Methanex for an interview about the decision, but were instead sent a statement from Mark Allard, vice-president – North America with Methanex, noting the Medicine Hat project still remains a possibility.

“The potential Medicine Hat new build methanol project will continue to be considered along with other growth opportunities globally,” Allard says in a statement. “Medicine Hat continues to be positioned to benefit from the competitive gas prices that have historically been experienced in Alberta. Medicine Hat is a great location to build a new methanol plant. We have an existing brownfield site in Medicine Hat, we own the land, we have a good team in place, and Medicine Hat has accessible and reliable utility services through the City of Medicine Hat.”

Allard adds there are a number of factors to be overcome before a Medicine Hat facility, including “capital cost uncertainty, higher logistics costs to service Asia Pacific due to our inland location/limited local methanol demand and uncertainty with carbon pricing.”

However, he says a Medicine Hat project is best suited to overcome the challenges.

“Compared to other potential Alberta methanol projects, the Medicine Hat new build methanol project is best positioned to overcome these challenges given the brownfield benefits that result in meaningfully lower capital and ongoing operating costs,” he said.

positioned to overcome these challenges given the brownfield benefits that result in meaningfully lower capital and ongoing operating costs.”