In mid-July, China-based chemical firm Shandong Yuhuang Chemical announced plants to build a methanol-manufacturing unit in Louisiana as part of a project worth an estimated $1.85bn. The investment is expected to create 400 direct jobs with average salaries of $85,000 plus benefits.
“Louisiana was the right choice for our company to locate our first operation in the US,” said Charlie Yao, CEO of Shandong Yuhuang Chemical. “This facility’s location fits well with our strategy to leverage the advantage that natural gas feedstock provides.”
The company has secured an option to purchase more than 4 square kilometres for the venture, according to Louisiana Economic Development (LED), the entity in charge of attracting and facilitating investments in the state. The company will export most of the methanol produced at the facility for use in its parent company’s production of downstream chemicals in China, while the remaining 20% to 30% will go to North American customers. LED estimates that the project will lead to the creation of more than 2700 jobs in south-east Louisiana, including those in the construction industry.
To secure the project, Louisiana offered the company two grants as part of its incentive package. More than $9m will be paid to Shandong over five years to offset infrastructure costs and more than $1m will be paid over 10 years to partially cover the costs of necessary riverfront access and development.
The project is one of a number of mega projects that have been launched in the state in the past two years. In July 2012, Methanex, a Canadian supplier and distributor of methanol, decided to move its methane plant from Chile to Ascension Parish in Louisiana, at a cost of $550m. Later in the same year, Sasol, a South African chemical and energy company, announced its intention to built a gas-to-liquids and ethane cracker complex in Lake Charles for an estimated $16bn to $21bn. (The project was later postponed pending a final investment decision, which is expected by the end of 2014). In January 2013, Magnolia, a US-based subsidiary of Australian energy company Liquefied Natural Gas Limited, announced that it would invest more than $2bn in a liquefied natural gas site in Lake Charles.