Missed opportunity in methanol?
Published: Thursday, December 2, 2010Published: Thursday, December 2, 2010.
Carolyn Seepersad-BachanCarolyn Seepersad-Bachan
As the Government attempts to kickstart the economy so that it shakes off the stagnation that seems to have befallen us, one of the main things that ministers can and should be doing is listening to every possible new idea and exploring every investment opportunity. Listening and exploring new ideas and investment opportunities should be government policy because no one can tell whether the idea that was dismissed as foolishness turns out to be the next Google or the investor knocking on the Minister’s door happens to have the cure for cancer. The need to be receptive and open-minded to possibilities struck me last month when I got a call from someone who said that he represented Deo van Wijk, who wanted to speak with me.
Out of the recesses of my memory, the name was connected to the petrochemical industry as someone who had been involved in the setting up of the methanol plants. I agreed to see Mr van Wijk. When I went to see him, I learnt that he was in Trinidad for six days, staying at the presidential suite at the Hilton and that he was attempting to see the Minister of Energy or some official who would at least listen to his proposal. It turns out that Van Wijk had formed Saturn Methanol, the company which was responsible for Titan Methanol, a 2,500 metric tonne per day methanol production facility at the Point Lisas Industrial Estate, which broke ground in 1998 and began production in 2000. The total capital cost of the project was in excess of US$300 million. After Saturn Methanol’s success with Titan, Saturn Methanol began the development of its Atlas methanol project, (located in Trinidad), a 5,000 metric tonne per day methanol production facility, also at Point Lisas.
Atlas Methanol was to be the first world-wide facility using a new process developed by Lurgi AG and Saturn Methanol which enabled methanol production facilities to exceed the up to then maximum 2,500–3,000 metric tonne per day limits. He says the reason Atlas experienced technical problems at start-up was because the Methanex engineers had no experience with the Lurgi technology, which was new, but were accustomed to ICI technology, which does not use oxygen in the process. The Atlas plant needed to be started up fast unlike the ICI process, he says. Atlas’s rated production made it the larg est methanol plant in the world when it was commissioned in 2004. He considers Atlas, constructed using Lurgi technology, to be the best methanol plant ever built. Van Wijk said he developed Titan with “no money” and that he was forced to sell Saturn Methanol to Canadian methanol producer, Methanex, in 2000 because he “ran out of money.” Saturn, which owned ten per cent of the Titan methanol plant plus the marketing rights and 52 per cent of Atlas, was sold for US$36.5 million.
As a condition of the sale of Saturn Methanol to Methanex, Van Wijk was required to sign a ten-year non-compete agreement which kept him out of the methanol business until March 31, 2010. Asked if he thinks Methanex took advantage of him, he answered simply: “Yes.” It seemed to me, listening to him as he smoked his cigarettes, with the butt of the Dunhills pinched off, that he had spent one to two years thinking about how to return to the methanol business. The non-compete clause ended on March 31 and soon after that he was prepared to start talking about a new way of making methanol, for which he has the sole global rights, and which he thinks will substantially transform the global methanol industry. This new technology would allow Van Wijk to construct a methanol plant the same size as Atlas but which will produce 10,000 metric tonnes per day, which is twice as much product as Atlas. This new methanol technology, called Giga Methanol, will be built without a reformer, which is between 20 and 25 per cent of the cost of a methanol plant.
Because the plant is producing twice as much methanol at the same size and cost of construction, it’s cost of production would be half that of the most efficient methanol plants in the world. While Atlas’s installed cost is US$600 per metric tonne, Giga's would be US$300. The same technology can be applied to the production of ammonia. Therefore, it seemed to me, the breakthrough is in the process technology. Mr Van Wijk is interested in making a US$15 billion investment in Trinidad and Tobago over a ten-year period. This investment has the potential to create 50,000 sustainable, permanent jobs and up to 5,000 jobs in construction. The complex of plants, using methanol and ammonia as the starting blocks, would be able to make a large number of downstream products including acetic acid, cellulose acetate, acrylic acid, polypropylene, hexamine as well as a number of products like DIMI and diesel.
For this investment, Mr van Wijk needs 5 trillion cubic feet of natural gas over the 20 year lifespan of the complex to produce the methanol which will lead to the long list of petrochemicals that are possible. To produce the ammonia, that will be part of the process, will require an additional 3 tcf of natural gas over 20 years. Most importantly, the complex would be able to produce 3 million tonnes of super high-grade, no sulphur, low aromatic, high octane, gasoline by way of a methanol to gasoline process. This would require an additional 5 tcf of natural gas over 20 years. He has done his business plan using an assumed price of natural gas of US$2.25 per mmbtu. He estimates that the process and the complex would be able to produce gasoline at US$1.40 per gallon and this includes a 35 per cent rate of tax plus an assumed 15 per cent return on investment.
Given the fact that gasoline sells in the US at US$2.25 per gallon, the potential for profit with world oil prices at US$80 per barrel, is considerable. One metric tonne of methanol would produce about 400 kilogramms of gasoline. The process has the potential to lead to geo-political change in the world as it would reduce US dependence on imported oil from hostile places, says van Wijk. He was in Trinidad for six days last month attempting to meet with the Minister of Energy and the Prime Minister. He failed. At the Hilton, he said that if he did not get to see any officials, he was not coming back here. He has since withdrawn that position but says he is will continuing to work on similar projects in the US and Russia and hoping that a T&T official will get in touch to at least talk to him about the project.
http://www.guardian.co.tt/node/624
