US refiner Valero Energy will build one of the world's largest methanol plants at its St. Charles, Louisiana, refinery, the company said Thursday.
The $600 million-$700 million project will add a 1.6 million tons/year methanol plant at the 270,000 b/d refinery by the end of the first quarter of 2016, the spokesman, Bill Day, said.
Valero so far has only had a "low level" of petrochemicals production, Day said. The decision to take a bigger role in petrochemicals was based on a combination of low natural gas prices and projects already underway at the refinery that would add the hydrogen units needed to create methanol, he said.
Natural gas prices, which are now under $4/Mcf in the US futures market, should remain low for the foreseeable future, said Day. He said Valero expects gas prices "to remain at a level that will make this project economic for [the] long term."
While Valero's methanol will likely be used in the US for petrochemical products, there could be a knock-on effect on the transportation fuel side, said Day.
"Since it would replace imports of methanol...foreign-made ethanol could then go to other uses, including fuel. Some Asian, Latin American and Caribbean countries blend methanol with other fuels," he noted.
"This is probably not a one-time thing," said Day, adding "this is the first development, but we will look at other petrochemical plants at our plants in the future."
