Yuhuang Chemical's Methanol Manufacturing Complex, Louisiana, United States of America

Yuhang Chemical

Yuhuang Chemical, a subsidiary of Shandong Yuhuang Chemical, has proposed to construct a world-scale methanol manufacturing complex along the Mississippi River in St James Parish, Louisiana, US, with an investment of $1.85bn.

With approximately 1.7 million tonnes a year capacity earmarked for phase one, it will be the biggest facility of its kind in the US. The facility will produce approximately 5,000t of Grade AA methanol a day.

The land required for the project was purchased in July 2015, construction works began in September 2015 and the first phase of the three-phased project is expected to come online in 2018.

"With approximately 1.7 million tonnes a year capacity earmarked for phase one, it will be the biggest facility of its kind in the US."

The project is expected to generate approximately 2,500 construction jobs at peak, 400 direct permanent jobs and 2,365 indirect jobs.

Strategic location

To be built on an area of approximately 1,300 acres (526ha), the project primarily benefits from the availability of natural gas feedstock and associated infrastructure.

Louisiana Economic Development (LED) has granted Yuhuang Chemical a $9.5m incentive to be paid over five years beginning from 2017 to offset infrastructure costs of the project and a $1.75m loan to be paid over ten years to partially bear the expenses of necessary riverfront access and development.

The developer will also be benefited by the LED's trademark FastStart workforce training programme, and the State of Louisiana's Quality Jobs and Industrial Tax Exemption programmes.

Yuhuang Chemical's methanol project details

Phase two will involve the construction of another methanol unit to increase the methanol production capacity of the complex to three million metric tonnes a year. Phase three will add a methanol derivatives plant that will produce intermediate chemicals.

Majority of the methanol produced at the site will be exported to China by oceangoing vessels, for production of downstream chemicals by Shandong Yuhuang Chemical, whereas the rest will be shipped by barge and rail to North America.

Feedstock supply and processing technology

The new plant will use natural gas as primary feedstock. Yuhuang Chemical has entered a 20-year agreement with Transco for a transportation capacity from points in the Transcontinental Gas Pipe Line (Transco) Zone 3 to a new onsite delivery interconnection that will be constructed and operated by Transco.

OCI subsidiary Natgasoline is building a methanol plant, which is touted to become the biggest methanol plant in the US, based on production capacities.

Air Liquide Global E&C Solutions, a subsidiary of Air Liquide Group, has licensed its proprietary Lurgi MegaMethanol technology for the project. The technology is touted for its ability to convert natural gas into methanol in large quantities at a lower cost. A typical Lurgi MegaMethanol technology-based, single-train methanol plant provides double the capacity compared to a conventional methanol plant.

Contractors involved

China Huanqiu Contracting & Engineering (HQC), a subsidiary of China's National Petroleum Corporation, was contracted to perform the front-end engineering design (FEED) studies for the project.

Air Liquide has been contracted to supply 2,400t of oxygen a day for the methanol plant. Air Liquide Global E&C Solutions has also been contracted to provide procurement services for the long lead and ancillary equipment for the complex.

Amec was awarded the engineering, project management, procurement and early construction services contract for phase one in September 2015.

Marketing commentary for Yuhuang Chemical

Yuhuang Chemical, the North American subsidiary of Shandong Yuhuang Chemical, operates from its administrative office in Houston to develop the current methanol project. Its parent company is a Chinese petrochemical group of companies.

Shandong Yuhuang Chemical accrued sales of more than $4.5bn in 2014 and employs more than 5,600 people worldwide. It primarily produces and markets propylene, isobutene, butadiene, isoprene, styrene, toluene and other chemicals.