Manufacturing fuels and plastics from natural gas is a fundamental element of the energy transition. It also captures the arbitrage between low-volatility natural gas prices and high-volatility crude prices while producing attractive cash flows. Moreover, the ZeoGas EPC approach and partners inherently mitigates the risk of missing budget and timelines in construction.
ZeoGas is employing a reference plant design strategy – we are replicating the most recent design, also on the US Gulf Coast. Our PAMCO MegaMethanol plant will be the 15th time this plant design has been constructed and put into service, and the third time a MegaMethanol plant has been built on the US Gulf Coast. This eliminates the need for costly FEED engineering and avoids the surprises that usually entails.
Air Liquide and ABB have worked together to varying degrees on the other two US Gulf Coast MegaMethanol plants, eliminating the surprises that develop with EPC parties working together for the first time on a new technology.
Air Liquide and ABB will each be provided LSTK packages for their scopes of work integrated into an overall LSTK contract with Wood to construct the plant. By working together to develop the Basic Engineering Package and LSTK price up front, the risk of unfavorable budget and timeline variances is dramatically reduced.
Operating Economics – attractive and durable
Operating cash flow of our PAMCO MegaMethanol plant are in excess of 25% of the not-to-exceed construction budget modeled at a significantly higher than current natural gas price and lower than current methanol price. At today’s actual prices and at the targeted EPC price, EBITA is in excess of 35%.
There is a substantial and durable arbitrage between low-volatility natural gas and high-volatility crude, to which methanol is highly correlated. However, there are no forward markets for methanol, gasoline or plastics. The only way to capture that arb is to own and operate the plant.
Methanol demand growth has consistently been 2-3 times the global economic rate with all major market analysts publishing reports of a durable short supply.
Several international locations experience a negative balance of trade by selling their oil to refiners and then buying it back as refined fuels. Many of the countries are also long on natural gas. A ZeoGas plant in their country will provide their people with cleaner fuels and also bolster their trade accounts.
The manufacturing of methanol and then gasoline or plastics is streamlined, efficient and low emission. The two primary emissions are CO2 from a single source and excess steam, both of which will be captured and either recycled or used for co-gen.
Whether the methanol is used directly as a fuel or blendstock, or if it is a feedstock to manufacture gasoline, the emissions and particulate profile of the resulting combustion is a small fraction of that from gasoline refined from crude oil.
In countries where associate gas is being flared, this natural gas can be instead used to make clean fuels to be used locally, dramatically improving local air quality.