Petrochemicals: Chinese firms eye construction of massive U.S. methanol plants

Cheap shale gas, which has already rejuvenated the U.S. chemical industry, may soon spur a petrochemical boom across the Pacific as well. Two Chinese companies are planning multi-billion-dollar methanol plants on the U.S. Gulf Coast that would provide feedstock for plants back home.

Fund Connell USA Energy & Chemical Investment Corp. says it may spend as much as $4.5 billion to build a 7.2 million-metric-ton-per-year methanol plant and deepwater terminal in Texas City, Texas.

Fund Connell is a joint venture between the Chinese firms Sino Life Insurance and Connell Group. Connell’s chemical affiliate, Jilin Connell Chemical Industry, calls itself the world’s second-largest aniline producer after DuPont.

“The abundant resources of natural gas in the Gulf Coast region and the expansion of the Panama Canal in 2016 make this location attractive for the production and exporting of methanol in large quantities as feedstock for the growing petrochemical production capacity in China,” said Sino Life Chairman Zhang Jun in a statement put out by the Galveston County Economic Alliance.

Another Chinese firm, Yuhuang Chemical, is planning a $1.9 billion methanol project in St. James Parish, La., to open in 2018. The company plans up to 3.0 million metric tons of methanol capacity plus derivatives units. Yuhuang will export some 70 to 80% of the output.

China is increasingly looking to methanol as an alternative to traditional steam cracking for making olefins. Although the methanol-to-olefins technology isn’t yet practiced in the U.S., dozens of such facilities are running, under construction, or being contemplated in China, said IHS Chemical analyst Paul Pang at a conference earlier this year.