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Potential big gas discoveries in Taranaki could give the region’s idle methanol plants a new lease of life. By ALAN TITCHALL.
Methanex New Zealand, a subsidiary of the Vancouver-based Methanex Corporation (the biggest single supplier of the product in the world), has three methanol manufacturing ‘trains’ in Taranaki, but two of them remain mothballed because of a lack of gas. “We would restart both plants if we had the gas,” says Methanex NZ manufacturing director Dennis Addison (pictured right). Made up of two trains at Motunui and another at Waitara Valley, Methanex’s operation is capable of producing up to 2.4 million tonnes of methanol a year but currently has only enough gas to keep one train at Motunui going until June next year, says Addison. However, the company believes recent gas discoveries in Taranaki and the expansion of existing fields have the potential to supply all three plants and return Methanex to its status as the jewel in the region’s energy crown.
Fuel blending (MTBE) is also growing in China. “Methanol is being blended with gasoline in different rations, and there’s even a number of vehicles in China being run on neat methanol.” This link with the energy industry is changing the methanol industry, Addison iterates. “Traditionally it has gone into chemicals, and now that it’s going into energy we are beginning to see a link between the price of crude oil and the price of methanol.” This development is growing quickly, he adds, and New Zealand is perfectly situated to supply the growing Asia market. “Over 50 percent of the world’s methanol goes into Asia – 30 percent into China and 23 percent in other regional countries. It’s a massive market and we are in the best position to supply it. So our location is very important.” Preparing for the good timesWe can only realise that potential if we have both the plant and the gas, says Addison, and Methanex is keeping both its operating and idle methanol plant in a state of readiness.
The company’s methanol production sites in Taranaki consist of two trains at Motunui and one at Waitara Valley with the overall capacity of producing 2.4 million tonnes of methanol a year. When fully operational, the two Motunui trains can both produce 950,000 tonnes a year, depending on the composition of the gas, while the smaller Waitara Valley plant is capable of producing 500,000 tonnes a year. There was also a gasoline plant at Motunui but this was demolished five years ago – sent to Korea in the way of scrap metal. Motunui 1 was shut down in March 2004, while Motunui 2 was closed in November 2004 leaving only the smaller, 530,000 tonne capacity Waitara Valley plant operational. Addison says at this point the parent company was very close to shutting its New Zealand operations down. “Then we got a phone call in February last year to restart Motunui 2, which we did in October 2008.” Methanex spent $70 million refurbishing and restarting this plant, while shutting down Waitara Valley plant about the same time. “Once we had Motunui 2 up and running and were happy it was going to be reliable, we shut down Waitara Valley as we just didn’t have sufficient gas to run both plants.”
The cost of refurbishing Motunui 1 would be less than $100 million and take about a year, he says. Parts were used from this plant to restart Motunui 2, so the company would need a lot of new gear. However, to build a plant of this size plant from scratch would cost about US$1 billion, he adds. “So $100 million for a methanol plant is pretty damn good, but we need 35PJs of gas a year – that’s the big thing.” It would be easier to restart the idle, stand-alone plant at Waitara Valley that originally came on stream in 1983. In fact, there were plans to get it back into operation earlier this year before the recession hit home. “We were hoping to restart it this year, but the global financial crisis came along and the price of methanol plummeted, so unfortunately it didn’t happen.” The Waitara plant is in very good condition, with the power still on for some limited pumping activity, and Addison estimates it would cost less than $50 million and take just six months to restart. “If we had done so earlier this year as planned, it would have cost a fraction of that, but the longer the plant stays idle the more expensive it gets. It’s not just about preservation – there’s statuary obligations on the likes of pressure vessels, and Waitara Valley was built 25 years ago... and we may have to upgrade some of the plant.” The train would also need at least 20PJs of gas a year to be worth restarting. Waiting for gas“When we had all three plants operating we used 90PJs of gas a year. We were the single biggest user of gas in New Zealand. The total demand at the time was 230PJs. So we had a big impact on the oil and gas industry here.”
However, Methanex NZ believes future new gas reserves looks optimistic, if indications by the Ministry of Economic Development (reported in June 2009) and discussions with field operators prove correct. “With the information we have at the moment we don’t think there’s enough gas to start up the two idle plants, but potential to start up one plant,” says Addison. Whether that is Motunui or Waitara Valley, the company doesn’t know at this stage until the extra gas reserves become available, says Addison. “And we have to see what the demand for methanol is – going forward.” Methanex Corporation believes it has opportune location here to supply Asia Pacific with methanol in the future. The country is politically stable and has a good skills base. “New Zealand is also a pretty good place to live, so ultimately is the ideal place to be producing methanol,” comments Addison. “And that is also the view of our board of directors.” In fact, two board members who visited the Kiwi operation this year went away with the same impression, he says. “But their parting comment was ‘you need to get some gas for this place’.” Methanol diversityIn 2008 there was around 40 million tonnes of methanol sold around the world. Methanex supplied around 15 percent of that resource. In the manufacturing process, methane is steam reformed to make syngas (hydrogen and carbon monoxide), and this in turn is used to make methanol, or methyl alcohol (CH3OH -the simplest alcohol) – a light, volatile, colourless, flammable, liquid that will mix with water and a variety of organic liquids.
Also in the early 1970s a methanol to gasoline (MTG) process was developed by Mobil for producing fuel ready for use in vehicles, leading to the industrial facility built at Motunui, Taranaki in the 1980s. This plant has since been dismantled. In the 1990s, large amounts of methanol were used in the United States to produce the clean burning gasoline additive methyl tert-butyl ether (MTBE), which is no longer marketed in the US (after it was banned by many states) but still widely used in other parts of the world. Methanol is not nearly as flammable as gasoline, so harder to ignite, but produces just one-eighth of the heat upon burning – the reason why pure methanol is required by rules to be used in many racing vehicles. Methanol is also used to produce dimethyl ether (DME) which is like a synthetic LPG and used primarily as a propellant in aerosol canisters, and as a precursor to dimethyl sulfate. DME is also a promising fuel in diesel and petrol engines, and gas turbines owing to its high cetane number, which is greater than 65, compared to diesel, which is 40–53. Only moderate modifications are needed to convert a diesel engine to burn DME.
Energy NZ No.11 Summer 2009 |
Methanex is keeping its Kiwi operation poised to capitalise on any future major gas extraction in Taranaki.
Methanol is being used more and more by the energy market, says Addison. Around eight percent of the world’s production already goes into the fuel market and another five percent into to producing dimethyl ether (DME), commonly known as synthetic LPG (particularly in the Asia region) and used for domestic heating and cooking and even for power generation and powering vehicles, he says. “Very exciting for us – for every tonne of DME you need 1.4 tonnes of methanol.”
“Methanex needs to position itself to take advantage of any new significant gas find in the future.”
Closed for over five years, Motunui 1 will have a lot of capital spent on its preservation next year (2010) to keep it in good shape for a restart if the gas turns up.
With its current gas contracts, Methanex can operate Motunui only until the end of June 2010, says Addison.
While the transport industry is becoming a substantial user of methanol, especially in Asia, its most common use is still for making other chemicals. About 40 percent of methanol is still converted to formaldehyde, and then into products as diverse as plastics, plywood, paints, explosives, and permanent press textiles. In addition to direct use as a fuel, methanol, is also used as a component in the transesterification of triglycerides to yield a form of biodiesel.