Gas finds key to methanol peak

MATT RILKOFF
Last updated 14:01 16/04/2014
Methanex chief executive officer John Floren
Methanex chief executive officer John Floren.

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Taranaki is now the biggest producer of methanol for the world's single largest supplier, as global demand soars.

Canadian company Methanex can make up to 2.4 million tonnes of methanol each year at its Motunui and Waitara Valley plants.

In terms of production potential this puts it way ahead of any of the company's five other facilities in Trinidad, Egypt, Canada, Chile and the USA.

Methanex's Canada-based chief executive John Floren said yesterday it was an important part of the company's global business.

"We have three plants. We are looking to secure high CO2 gas to get us to the 2.4 million tonnes, which is our maximum production," he said during a visit to the Motunui plant just outside Waitara yesterday.

"We would love to grow in New Zealand. The challenge is the gas. We have to have some new discoveries in the future."

For now the gas they need to produce methanol is assured due to a 10-year supply deal signed with Todd Energy in 2012. Whether there will be more after that was impossible to tell, said Floren, as oil and gas exploration companies would not "reveal their hand".

However with a frenzy of oil and gas exploration underway in Taranaki, combined with fracking, it is likely more will be available.

And the world is hungrier than ever for methanol, thanks to the relatively high price of oil making it a cheaper energy option, Floren said.

While demand for methanol for its traditional uses in the chemical industry increases by as much as 4 per cent annually, the energy sector's demand is increasing by 8 per cent.

"With the advancing of methanol into energy the demand growth is in the double digits. We have 15 per cent of market share globally. To maintain that we need 1 million tonnes extra capacity every two years," Floren said.

There is big money up for grabs if the company can maintain capacity. Methanol prices are prone to dramatic swings, but are trending upwards. This month the regional posted contract price for a tonne of gas is $554. For the previous three months it was $682.

To put that in perspective, Floren said they managed to survive even when the price slumped to $231 a tonne in January and February 2009.

If more gas is found in Taranaki Methanex has the money to increase production. In its January results report, Floren said the company had more than $808m in cash on hand and said yesterday that this had since increased.

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At current methanol prices, full production at Methanex New Zealand would be worth $1.33b a year.

A Business and Economic Research Ltd economic report released in March 2013 forecast that at full production, Methanex would contribute $440m a year to Taranaki's gross domestic product and $650m to the New Zealand GDP.

Among other things, methanol is used in shampoo, plastic bottles and pharmaceuticals. It can also be added to petrol.

Methanex's Motunui site was originally a Muldoon-era Think Big project. It opened in 1986 to make synthetic petrol.

- Taranaki Daily News

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