Chinese to build $1.85 billion shale-gas chemical plant in U.S.

Chemical plant
Source: DollarPhotoClub

Yuhuang Chemical Inc., a Texas-based unit of China’s privately-run Shangdong Yuhuang Chemical (Group) Co. Ltd., plans to build a $1.85 billion methanol plant with per day production of 5,000 tonnes in St. James Parish of Louisiana State, according to Reuters.

Methanol – cheaply produced from shale gas – is predominantly used in making other chemicals. About 40% of methanol is converted to formaldehyde, and from there into products as diverse as plastics, plywood, paints, explosives, and permanent press textiles.

Other chemical derivatives of methanol include dimethyl ether, which has replaced chlorofluorocarbons as an aerosol spray propellant, and acetic acid. Dimethyl ether (DME) also can be blended with liquified petroleum gas (LPG) for home heating and cooking, and can be used as a diesel replacement for transportation fuel.

The new plant, located south of Baton Rouge, Louisiana, and set to be completed in 2018, will mostly produce methanol for export to China, where it will be used in production of downstream chemicals. Approximately 20 to 30 percent of the produced methanol will be sold in North America.

“This facility’s location fits well with our strategy to leverage the advantage that natural gas feedstock provides,” Charlie Yao, CEO of Yuhuang Chemical, was quoted in a press release from office of Louisiana State Governor earlier in July.

China Huanqiu Contracting & Engineering Corp., a engineering subsidiary of China’s top energy group CNPC, will be responsible for the engineering work, according to the company press release.

A Shandong-based official with Yuhuang Chemical’s parent company declined to say how Yuhuang would finance the investment.

The parent company, chemicals producer Shangdong Yuhuang Chemical (Group) founded in 1986, had fixed asset of 9.5 billion yuan ($1.5 billion) and revenues of 22.4 billion yuan in 2012, according to the company’s website.

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