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Methanex CEO Bruce Aitken

Methanex Corp.

Thanks to the shale gas boom, the world's largest producer of methanol is expanding its manufacturing base to the United States. Vancouver-based Methanex Corp. has purchased land and is already preparing equipment for a new production plant in Louisiana.

"The advent of shale gas in the U.S. and Canada has really pushed natural gas prices to a level where you can manufacture a product like methanol and expect quite a profitable investment," said Bruce Aitken, Methanex's president and CEO, in an interview.

The plant in Geismar, La., south of Baton Rouge on the Mississippi River, will take over operations from a plant based in Chile that is sitting idle; Methanex owns four production facilities in the South American country, but only one is currently operational.

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The company is in the midst of tearing down one of the idle Chile plants, which will be shipped by sea to Louisiana at an estimated capital cost of $550-million (U.S.). When complete, the plant will be capable of producing a million tonnes of methanol annually, which would bring Methanex's worldwide production to six million tonnes a year.

In moving the facility – a process using three large ships that Mr. Aitken called an "engineering marvel" – Methanex forecasts"substantial capital savings." The new plant is expected to be operational by the end of 2014. The company estimated that building a new plant from scratch would take until at least 2017.

If natural gas prices remain low and the first plant is a success, Mr. Aitken acknowledged that "we certainly have in our mind" the possibility of relocating the second idle Chilean plant to North American shores.

Methanol is used in products from sealant and paint to plastic bottles and synthetic fibres; it's also a common laboratory solvent. Methane, the primary component of natural gas, reacts with water with the help of pressure and catalysts to produce methanol. With surging shale gas production driving natural prices down, a North American plant is a strategic investment for the chemical producer.

In 2007, Methanex announced that it would invest as much as $100-million in natural-gas development in Chile. Mr. Aitken estimated his company has invested closer to $150-million toward Chilean development since then, but that "we haven't struck a big find" to justify operating all four plants.

Methanex isn't the only chemical manufacturer to take advantage of the shale-gas boom this year – Royal Dutch Shell PLC announced in March that it had purchased land in Pennsylvania for a plant to process natural gas.

Editor's Note: An earlier version of this story incorrectly described operational difficulties faced by Methanex in Argentina, the number of operational plants it has in Chile and its forecast for worldwide production. This version has been corrected.

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About the Author

Josh O’Kane is a reporter with The Globe and Mail's Report on Business. Since joining the paper in 2011, he has told stories from New Brunswick to Nairobi. More

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