China Plans to Construct Huge Methanol Plant in Shale Gas-Rich Texas to Meet Rising Domestic Demand

Chinese firms, Connell Group of China and Sino Life Insurance Co are looking to build a huge methanol production and deep-port export facility in the shale gas-rich US state of Texas.

Fund Connell USA Energy and Chemical Investment Corp, the US arms of Connell Group of China and Sino Life, have secured a lease on a 900-acre property at Shoal Point in Galveston Country, Texas, for the purpose.

The companies will begin engineering pre-design and feasibility studies at the site, and are targeting to confirm the project by mid-2015.

"The abundant sources of natural gas in the Gulf Coast region and the expansion of the Panama Canal in 2016 make this location attractive for the production and exporting of methanol in large quantities as feedstock for the growing petrochemical production capacity in China," Sinolife Chairman Zhang Jun said in a statement.

At peak level, the facility will have a capacity to convert up to 560 million cubic feet of natural gas into methanol daily, and would produce 7.2 million tons of methanol a year for export to China, making it one of the largest such plants in the world.

The facility is expected to create up to 500 new jobs and as many as 200 ancillary on-site contract jobs. It would also provide 1,000 jobs during the multi-year construction phase.

The companies would construct a new deep-water port facility to enable passage of big vessels from the Gulf of Mexico to China through Panama Canal, the expansion of which is due to be finished in 2016.

Methanol, which is used to manufacture essential products such as plastics, solvents, refrigerants, pigments and paints, is produced from natural gas. Demand for methanol is rising in China due to its population explosion and substantial economic growth.

The fracking boom in the US has made Texas a natural gas rich state with abundant and cheaper supply, and the world's second-largest economy is looking to capitalise on the advantage.

"In various points of business, including energy, there is a great need for methanol plants, not only here in Texas, but also in California. It is not unusual to see a lot of foreign investments coming to the United States," the China Daily quoted energy markets analyst Alan Lammey as saying.