TORONTO ,May 28-Methanex is likely to restart its mothballed 470,000 tonne/year methanol plant at Medicine Hat in Canada s Alberta province in early 2011 due to favourable feedstock natural gas prices, an analyst said on Friday.
With North American gas prices remaining around $4/m Btu, Methanex should be able to strike a deal on medium term gas prices to run the plant profitably, John Cummings, a Toronto-based Canadian petrochemicals analyst, said in a report to clients.
The company had mothballed the Medicine Hat plant in 2001.
Methanex officials were not immediately available for additional comment. However, the company had repeatedly said it was considering a restart at Medicine Hat.
According to Cummings, Methanex should be able to strike a medium-term gas supply contract for around five to six years, enabling it to run Medicine Hat as a flexible plant that could be started up or idled, depending on market conditions.
With a final decision on the restart expected this summer, it would take some six months to put the plant back into operation, Cummings said.
Since the company would not want to restart the plant during the Alberta prairie winter, a restart was likely for next spring, he said.
The bulk of the plant s output would be sold to local customers in Alberta, with the rest going to markets in the northwest US, he said.
On balance, Methanex would also save ocean freight costs incurred in supplying those markets from its production in Chile, Cummings added.
In a related report, investment firm Raymond James said this week that Methanex may restart idled methanol capacity in Chile sooner than most expect, because of new natural gas finds there.
As this [Chile gas] exploration builds momentum, we believe it bodes increasingly well for the eventual return of idled capacity at Methanex s 3.8m tonne/year Chilean hub, the firm said in a research note.
Methanol s production complex in Chile had been hampered since 2004 by curtailments from gas suppliers in Argentina.
With North American gas prices remaining around $4/m Btu, Methanex should be able to strike a deal on medium term gas prices to run the plant profitably, John Cummings, a Toronto-based Canadian petrochemicals analyst, said in a report to clients.
The company had mothballed the Medicine Hat plant in 2001.
Methanex officials were not immediately available for additional comment. However, the company had repeatedly said it was considering a restart at Medicine Hat.
According to Cummings, Methanex should be able to strike a medium-term gas supply contract for around five to six years, enabling it to run Medicine Hat as a flexible plant that could be started up or idled, depending on market conditions.
With a final decision on the restart expected this summer, it would take some six months to put the plant back into operation, Cummings said.
Since the company would not want to restart the plant during the Alberta prairie winter, a restart was likely for next spring, he said.
The bulk of the plant s output would be sold to local customers in Alberta, with the rest going to markets in the northwest US, he said.
On balance, Methanex would also save ocean freight costs incurred in supplying those markets from its production in Chile, Cummings added.
In a related report, investment firm Raymond James said this week that Methanex may restart idled methanol capacity in Chile sooner than most expect, because of new natural gas finds there.
As this [Chile gas] exploration builds momentum, we believe it bodes increasingly well for the eventual return of idled capacity at Methanex s 3.8m tonne/year Chilean hub, the firm said in a research note.
Methanol s production complex in Chile had been hampered since 2004 by curtailments from gas suppliers in Argentina.
