What is the Lake Charles Methanol Project?
LCM is a $4.4 billion clean energy manufacturing project that will use advanced technology to refine petroleum coke (“petcoke”) into clean domestic energy and chemical products, including methanol, hydrogen, sulfuric acid and industrial gases.
What are the economic and other benefits to the project?
The project will create 1,500 new U.S. manufacturing and construction jobs starting in early 2019. The LCM plant will be a low cost producer of methanol that will be sold in the domestic and international markets. Carbon dioxide (“CO2”) recovered by the project will be sold and shipped by pipeline to oil fields where it will be used to support 12,500 barrels per day of domestic oil production, or over 4.5 million barrels per year. This shovel-ready project will create high-paying jobs, refine a domestic waste product, increase oil production, and help bolster the U.S. industrial base. And it will do so with advanced technology that will protect the environment.
What jobs will be created?
LCM will create up to 1,000 construction jobs for 3-4 years beginning in early 2019. In addition, LCM will have approximately 200 full-time employees earning wages well in excess of current average wages in the area. LCM will also create an estimated 300 high-quality oil and other industry jobs.
What is the status of project?
The project is ready to start construction once its financing is completed. LCM has received air and water permits, and all other major permits required for construction. LCM has a site prepared adjacent to the Port of Lake Charles and has completed engineering work with Fluor Corporation. LCM has been working with the Loan Guarantee Office of the U.S. Department of Energy for over eighteen months to complete due diligence and establish terms of a loan to help finance the project. In addition, Morgan Stanley is leading a process for raising equity for the project. Project Co-Sponsors, Aquamarine Investment Partners and MPC Capital, are also involved with the equity raise process. The project is targeting financial closing and construction start mid-2019.
What technology will the project use?
The project is a refinery of fossil fuel. LCM will utilize advanced technology licensed by General Electric to refine petroleum coke, a waste product from the oil industry, into a basic hydrocarbon fuel called syngas. The project then uses other well-proven industrial processes to clean and convert the syngas into high value energy and chemical products, including methanol, hydrogen, CO2, sulfuric acid and industrial gases. The same GE technology and other processes used by the project can be used for clean coal power plants and other clean coal energy infrastructure.
What is methanol used for?
The project’s primary product is methanol. Methanol is used around the world to produce many products in our daily lives. It is used to produce plastics, including plastic bottles, coatings automotive electronics, foam materials, inks, paint, adhesives, caulk, rubber tires and many other products. It can also be blended with gasoline to fuel vehicles or used to create biodiesel fuel. Because it is such a useful feedstock, methanol demand is projected to grow at about 6% worldwide for the foreseeable future. Currently, much of the methanol used in the U.S. is imported; the LCM project will help to significantly reduce these imports.
Who will build the project?
LCM has executed an agreement with Fluor Corporation to provide a fixed-price and date-certain contract to build its petcoke refinery. This contract puts Fluor in charge of building, starting and commissioning the facility to ensure it is ready for commercial operations.
Who will operate the project?
Once built, the project has a highly qualified operations and maintenance (“O&M”) team to work with Fluor during startup and commissioning and to operate the facility. The core O&M team has a track record of success starting up and operating a very similar facility in Coffeyville, Kansas using the same GE technology to refine petcoke. They were integral in relocating, rebuilding and commissioning the Coffeyville plant and operated it successfully for eight years. That experience enabled the team to formulate start-up, commissioning and operating plans, review design specifications and prepare detailed operating budgets for the project. LCM team’s Coffeyville experience is the best experience the team could have for running the LCM plant.
What pollution is created by the project?
The technology employed by LCM represents the next generation of clean energy. Air emissions of criteria pollutants are reduced by 99% compared to conventional uses of similar fuels. No appreciable solid or liquid wastes are produced. Close to 90% of the CO2 that would otherwise be emitted is utilized to produce oil and is permanently sequestered underground. Impurities in the petroleum coke such as sulfur, rather than becoming pollutants, are actually recycled by LCM into valuable chemicals.
How does LCM help to solve the problem of petcoke?
Petcoke is created in massive quantities by the everyday refining of oil to make gasoline and other petroleum products. Today, about 80 percent of Gulf Coast petcoke is exported – sometimes just across the border – and often burned without controls. The LCM plant will protect the environment by using advanced technology to refine the petcoke (rather than directly burning it or letting it pile up where it is not welcome) in order to extract energy and chemicals. At the same time, the closed refining system will avoid harmful emissions and employ zero liquid discharge technology for all process water. The project will also produce a non-hazardous solid that can be reused as road fill or for other construction uses.
Can this technology be used for other fossil fuels, such as coal?
Yes. This project is a great example of how the U.S. can manufacture valuable products from its vast fossil fuel resources, using U.S. developed advanced technology, all while being environmentally responsible.
What happens with the project’s CO2?
As part of its gas cleanup processes, the project will separate and capture a concentrated stream of CO2. That stream of CO2 will be compressed and put into a short connector pipeline that will take it to hundreds of miles of existing pipeline infrastructure along the Gulf Coast that transports CO2 to oil fields that use CO2 for enhanced oil recovery (“EOR”). The LCM CO2 will support an additional 4.5 million barrels per year of domestic oil production from EOR and when used in this manner the CO2 remains secure in the oil formation rather than being released to the atmosphere. The capture and sale of CO2 for use in EOR is economically beneficial for the project.
Is CO2 EOR new?
No, it has been around since the 1970s. CO2-EOR was pioneered in West Texas in 1972 as a way to sustain oil production in otherwise declining oil fields. It works by injecting CO2 obtained from natural or manmade sources into existing oil fields to free up additional crude oil trapped in rock formations. In this way, CO2 EOR can significantly extend the lifespan and revitalize production of mature oil fields in the United States. More than 100 million barrels of oil, about 5 percent of U.S. production, are currently produced from CO2 EOR. CO2 is transported for EOR in more than 3,900 miles of CO2 pipeline infrastructure in the U.S.