South marriage, north expansion?
Should Methanex succeed in Louisiana partnership, it would better the chances of a Medicine Hat plant expansion
Hatters keeping a hopeful eye on a major industrial expansion project for Medicine Hat may be heartened if they hear wedding bells by the end of the year.
Methanex CEO John Floren told a conference call with investors on Thursday that the search for a strategic partner for the company’s Gulf Coast expansion is well advanced and he would prefer a deal is place by the end of 2018.
“We’re just about at the getting married stage,” said Floren, regarding talks with undisclosed potential partners that could reduce the company’s investment in a third plant in Louisiana.
“We’re getting close, so don’t expect us to be dancing with six or seven, maybe two.”
The comments came as the company released its thirdquarter financial report, and after statements earlier this year that cutting costs could mean a $1.3-billion plan to expand local facilities may be rejuvenated.
The company announced last spring it had acquired land adjacent to its Geismar, La. plant site and would move ahead with advanced planning for a third plant there ahead of a six-year-old proposal to twin the plant in the Hat.
At the same time though, Floren said bringing in a major partner to complement the project could reduce the company’s investment to a point where the Medicine Hat project could move back up the development queue.
Candidates could be major companies that supply feedstock natural gas or use methanol in production, either to add operational efficiency or be willing to take off production.
“We’re looking for a strategic partner, not cash,” said Floren. “We don’t have a drop-dead date ... if we’re not successful we think the project is very attractive and we’ll pursue it on our own.”
The company has dedicated between US$50 million and US$60 million to advance engineering work for Geismar 3, but a final go-ahead decision is not expected until mid-2019.
The company also told the News it did not participate in the latest round of the Alberta government’s Petrochemical Diversification program, which offers royalty credits to companies exploring new facilities or plant expansions, because the program’s timetable didn’t match up with the company’s current capital plans.
Methanex has also been working on relatively low-cost capital projects that have seen existing facilities in Chile restarted thanks to new natural gas supply agreements in the region.
General maintenance and turnaround budget remains unchanged at US$175 million until the end of 2019.
The company’s analysis of the thirdquarter results states profits stayed near to record-setting levels — an adjusted net income of US$143 million in the three months ending Sept. 30.
The nine-month unadjusted earnings were $874 million, an all-time high, as the company maintained record production and sales while prices rose with higher prices.
“We’ve had an outstanding first three quarters of the year, and we’re extremely pleased with our performance,” said Floren.