DOE offers $2 billion loan to Lake Charles Methanol; Phillips 66 LPG export terminal completed

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US Department of Energy offers Lake Charles Methanol $2 billion loan

The U.S. Department of Energy (DOE) has offered a conditional commitment to guarantee loans of up to $2 billion to Lake Charles Methanol, to construct the world’s first methanol production facility to employ carbon capture technology in Lake Charles, Louisiana.

The captured carbon would be utilized for enhanced oil recovery (EOR) in Texas. This project would represent the first loan guarantee made under the Advanced Fossil Energy Project solicitation issued by the DOE’s Loan Programs Office.

If constructed, the project would also be the first petroleum coke-to-methanol facility in the U.S. By using petcoke as the feedstock and employing carbon capture, the proposed project will reduce emissions of carbon dioxide that would otherwise be released, the DOE said.

The Department’s Loan Programs Office has received more than 70 applications to its current solicitations for almost $50 billion in loans and loan guarantees, “which can allow projects to leverage additional private dollars for major infrastructure projects that will create thousands of good-paying American jobs and generate cleaner energy in the future,” said U.S. Secretary of Energy Ernest Moniz.

Overall, Lake Charles Methanol anticipates a $3.8 billion infrastructure investment for the project that will help to support the Gulf Coast economy by creating an expected 1,000 construction jobs and 200 permanent jobs in Louisiana. The project will also create roughly 300 jobs in Texas for EOR activities.

If it goes ahead, the plant will produce methanol, hydrogen, and other industrial gases and chemical products. The carbon dioxide captured from the petcoke gasification plant will be compressed for commercial pipeline transport. The captured carbon dioxide will be transported to oil fields in Texas for EOR, resulting in sequestration of 4.2 million metric tons of carbon dioxide annually. The project reduces greenhouse gas emissions by 36% compared to typical methanol facilities.

Phillips 66 Freeport LPG Export Terminal fully operational

Phillips 66’s Freeport LPG Export Terminal is fully operational. The company loaded its first contracted cargo on the Commander, a very large gas carrier that departed the terminal in Freeport, Texas, on December 16.

“The startup of the Freeport LPG Export Terminal is the culmination of a four-year effort to develop a new U.S. Gulf Coast natural gas liquids (NGL) market hub that also includes Phillips 66 Partners’ 100,000 barrel-per-day Sweeny fractionator and 7.5 million barrel Clemens storage facility,” said Greg Garland, chairman and CEO of Phillips 66.

“The new liquefied petroleum gas (LPG) export terminal gives customers the ability to place multi-grade LPG products directly into global markets through Port Freeport, which provides immediate blue water access with minimal congestion.”

The Freeport LPG Export Terminal can simultaneously load two ships with refrigerated propane and butane at a combined rate of 36,000 barrels per hour. Supply is sourced from the Phillips 66 Partners’ Sweeny fractionator and Clemens storage facility, which is connected by pipeline to the Mont Belvieu Hub.

The export facility was developed to satisfy the growing international demand for affordable U.S. NGL. Expecting U.S. production to continue to grow, Phillips 66 is actively evaluating additional NGL fractionation and infrastructure alternatives along the U.S. Gulf Coast.

Gulf Coast refiners cash in on rising Mexico fuel demand

U.S. Gulf Coast refiners are shipping record volumes to Mexico, to make up for its southern neighbor’s failure to expand its refinery network to supply its fast-growing economy, Reuters has reported.

The fuel trade could top one million barrels per day at times in 2017 as Mexico becomes increasingly dependent on the U.S. for strategic energy supplies, according to the report. This could provide more than $15 billion a year in revenues to U.S. refiners, it said.

According to Reuters, the United States’ net oil imports from Mexico stood at 1.45 MMbbl/d a decade ago. But the rise in Mexico’s fuel imports reflects an economy that has expanded for 27 quarters in a row but has been unable to increase its refining output to satisfy the parallel growth in energy demand.

“You’re getting very good values if you’re a Gulf Coast supplier,” Reuters quoted a source at one U.S. refiner as saying. “Freight has been dirt cheap too, so it’s doesn’t cost that much to move the barrels either.”