Methanex locks in natural gas for Geismar plant

01 25, 2013 by The Advocate

Methanex Corp. has locked in a long-term supply of natural gas for its million-ton methanol plant in Geismar through a 10-year contract with Chesapeake Energy Corp., the companies announced Thursday.

Methanex is moving a methanol plant from Chile to Geismar.

The contract reduces Methanex’s exposure to fluctuations in gas prices, which lowers the risk if Methanex decides to relocate a second plant to Louisiana, Methanex President and Chief Executive Officer John Florien said in a news release. Methanex expects to make a decision on the second plant during the first half of the year.

Under the deal, natural gas prices will be linked to the price of methanol, so both companies will share the risks and rewards from methanol price changes.

Methanol is a feedstock used to make plastics, textiles, paints and plywood.

Vancouver-based Methanex is the world’s largest supplier of methanol to major international markets. Oklahoma-based Chesapeake is the second-largest producer of natural gas.