Grassroots methanol project revived for Louisiana

South Louisiana Methanol (SLM) and new joint-venture partner Saudi Arabian Basic Industries Corp. are planning a $2.2-billion capital investment to build a grassroots methanol complex in St. James Parish, La. Originally announced in 2013 as a project of ZEEP and Todd Corp., SLM—which is now majority-owned by Todd—will pursue the JV methanol project with a SABIC subsidiary, Louisiana Economic Development said.

South Louisiana Methanol LP (SLM) and new joint-venture partner Saudi Arabian Basic Industries Corp. (SABIC) are planning a $2.2-billion capital investment to build a grassroots methanol complex in St. James Parish, La.

Originally announced in 2013 as a project of Texas-based ZEEP Inc. and New Zealand-based Todd Corp. Ltd., SLM—which is now majority-owned by Todd—will pursue the JV methanol project with a Houston-based subsidiary of SABIC, the Louisiana Economic Development (LED) said.

Preliminary work on the project began last year at a 1,500-acre site along the west bank of the Mississippi River, about 8 miles south of the Sunshine Bridge, with formal construction on the complex to possibly begin later this year subject to pending negotiations between SLM and SABIC, according to LED.

The methanol plant would have a proposed production capacity of 2 million tonnes/year to support customers both in the US and internationally.

The methanol project would create 75 direct jobs with an average salary of $71,400/year, plus benefits. In addition, the project would result in an estimated 350 permanent indirect jobs while generating 800 construction jobs at peak building activity.

“SABIC brings years of proven methanol operating experience and a global distribution network, and we are pleased to be based in St. James Parish, with great access to the Mississippi River and gas feedstock, and a business-friendly community and state,” said Paul Moore, chief executive officer of SLM.

Based upon competitive trends and developments in the methanol marketplace, SLM reevaluated earlier plans for its Louisiana project, a process that led to redesigning the plant technology and incorporating production features that would benefit the company’s customers and those of new JV partner SABIC, LED said.

Mohammed Al-Wakeel, president and chief executive officer of SABIC US Methanol, said the agreement with SLM represents part of SABIC’s strategy to focus on the geographic diversification of its business, to reach new global markets, and enable the company to access raw materials at competitive prices.

To secure the methanol project in St. James Parish, LED renegotiated incentive terms with SLM, which has not yet received incentives from the state of Louisiana for the project.

SLM will, however, be eligible for a $5-million performance-based grant, with $1.5 million payable upon the company making a minimum of $150 million in capital expenditures in the state. The $1.5-million portion of the performance-based grant would not be received before June 1, while the remaining $3.5 million would be payable upon the start of plant operations and no earlier than June 1, 2022.

Additionally, SLM will receive the comprehensive solutions of LED FastStart state workforce training program as well as access to Louisiana’s Industrial Tax Exemption and Quality Jobs programs, LED said.

A definitive timeframe for the project has yet to be disclosed.

Contact Robert Brelsford at rbrelsford@ogjonline.com.

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