Methanex's Geismar Plant Reassembly Takes Shape
Methanex disassembled the plant months before Cajun came on site in Geismar. "It was fast-tracked and we had to mobilize to start the site work very quickly. No dates could be missed," LaBlanc says. "If adjustments had to be made, they were done on site."
After the modules had been disassembled and reinforced, Mammoet moved them from the remote Chilean location to their new U.S. home, along with many heavy components, a spokesman for the heavy-haul contractor says. "All components and modules had a combined weight of more than 157,000 tons. Sometimes these facilities needed to be transported over roads and bridges specially constructed for the project."
Other challenges included loading and sea fastening in the Straits of Magellan, an area notorious for strong currents and sudden storms. In addition, a Mississippi River levee had to be crossed using a specially engineered and constructed bridge. "The soil conditions required a customized design for the bridge and its foundations," the Mammoet spokesman says.
Another challenge was starting the new site in a cow pasture. "Sand and clay had to be stabilized, underground pipe and foundations had to be laid," LaBlanc says. "We've had about 300 people out at the site ourselves—carpenters, machine operators, concrete finishers. It's a major project."
Geismar is a sought-after hot spot for industrial projects because it has a deep-water port and offers financial incentives. Methanex did not encounter difficulties in securing a site. "Site surveys were prioritized early on in the process, and as a result, the site was procured without major issues," Parra says. "The U.S. Gulf Coast and Louisiana possess world-class infrastructure, skilled workers and a very positive, low-risk environment in which to do business."
Five years ago, construction costs associated with building new methanol capacity were about $750 per ton. "We think that has risen to over $1,000 recently, and escalating construction costs are one of the risks that Methanex is exposed to," says Chris McDougall, a methanol-sector analyst for Westlake Securities in Austin, Texas. "There are some labor-related increases associated with building on the Gulf Coast, but those aren't enough to kill the economies."
To date, however, Methanex says it has not experienced a shortage of trades or craft labor. "To avoid high turnover of craft labor, it has been necessary to permanently monitor market conditions to ensure salaries and wages are competitive," Parra says. "Labor needs going forward are expected to be in the piping, mechanical, electrical, instrumentation and insulation-painting areas," he adds.
In its 2013 financial report, Methanex said capital expenditures related to the Geismar projects were $145 million and the remaining budget for the project was $635 million, not including interest. Methanex expects to be producing methanol from Geismar 1 in late 2014 and from Geismar 2 in early 2016. "These key projects support the 3-million-tonne increase in our operating capacity to 8 million tonnes by 2016, a time when new market supply is expected to be limited," the report says.
Few liquid hydrocarbons can be manufactured from natural gas, but methanol can be. It is used in China and Europe as a component of gasoline blends to improve octane. The U.S. is consuming methanol as a net importer—mostly for specialty chemical manufacturing—so the strategy to leverage idled equipment supplying the U.S market is sound, McDougall says.