China is looking offshore for cleaner, cheaper chemical feedstocks. Northwest Innovation Works, or NWIW, an international consortium of oil and chemical companies, aims to build in Washington state nearly $7 billion worth of methanol plants along the Columbia River to serve the Chinese market.

Touted by Washington state officials, including the governor and port directors, as “one of the most innovative clean-energy manufacturing projects in the nation,” NWIW’s proposal to build a major methanol facility at each of the Kalama, St. Helens and Tacoma ports represents the largest-ever U.S. investment by a Chinese-led group, said Gov. Jay Inslee (D) at a September visit to the Port of Kalama.

NWIW was created through a partnership between British Petroleum and the Chinese Academy of Sciences, along with Silicon Valley-based private-equity investment firm H&Q Asia Pacific. According to the Washington Public Ports Association, project financing is complete, and groundbreaking is set for late 2016.

Port officials say some 40% of jobs in Washington state are tied to international trade, but new initiatives are needed to keep them competitive. Global port competition is heating up, including major upgrades to other ports on the West Coast. “Washington has vigorously pushed the projects because of the investment in the port,” said Liz Newman, spokeswoman for the Port of Kalama. “In addition to the methanol plant, NWIW will be building a wharf and complete water system [for more ocean-going vessels]. That’s why we’ve been so supportive of the project.”

Like port deepening and other improvements to support plant operations, many more ancillary infrastructure projects will be needed to support natural-gas-to-methanol production at the scale NWIW proposes. “Infrastructure is a major aspect of new gas-based projects,” says Dan Kirschner, executive director, Northwest Gas Association. “Are there enough pipes to deliver the gas? For these projects to access the magnitude of the loads projected, there will have to be pipeline capacity expansion, too.”

The $1.8-million Kalama project is the closest to starting construction. Newman told ENR that a draft environmental impact statement—led by a Washington state-based Louis Berger subsidiary, Berger ABAM, and a “long list” of engineering consultants—will be released by the end of the year. NWIW says it is negotiating with the St. Helens and

Tacoma ports regarding long-term lease agreements and expects to begin permitting activities in 2016. 

NWIW’s search for an “ultra-low-emission technology” to convert natural gas into methanol caused delays, Newman said. The project team selected Johnson Mathey’s methanol refining technology, said NWIW President Simon Zhang. Johnson Mathey has a partnership with Jacobs Engineering Ltd. to develop technology, process design and engineering services for the methanol industry.

Maintaining consistent, safe and reliable operations is critical to a methanol plant’s financial performance. “We estimate for each day of unplanned downtime our lost-opportunity cost to be approximately $800,000 to $900,000 per day, [which] does not include the additional repair and maintenance costs,” said methanol producer OCI Partners in a recent SEC filing. 

For construction firms, the new developments’ scale and scope are massive. The capacity of methanol plants is increasing quickly. A decade ago, a world-scale plant produced about 2,500 metric tons per day; the current output is double that, says chemical engineering company Haldor Topsoe, Denmark. Plants yielding 10,000 metric tons and above per day are “being considered to improve economics and to provide the feedstock for the methanol-to-olefin prices.”

Besides volatile oil and gas prices, a major risk component for new methanol projects is the environmental permitting process. NWIW said that, for just the Kalama project to proceed, it needs 17 permits from federal, state and local authorities. While the Pacific Northwest is home to ample gas reserves, it is also a stronghold of powerful environmental advocacy organizations that have been outspoken about the risks to clean air and water posed by NWIW’s methanol plans. 

Washington state estimates that converting gas to methanol at Kalama would release up to 1.3 million metric tons of carbon dioxide a year, largely because gas also is expected to power the plant’s operations, the Northwest Environmental Defense Center (NEDC) and Columbia Riverkeepers said in joint comments submitted to the Port of Kalama as part of NWIW’s environmental review process.  

All negative environmental aspects of the plant’s operational life cycle, from increased fracking, pipeline expansion and more barge traffic on the river to even the plastic that will be made in China from the methanol, should factor into the state’s ultimate approval or denial of the project. “Unfortunately, Oregon and Washington see many of those plastic products washing up on Pacific Northwest coast lines,” NEDC said.