After two historic plants were given a make-over, methanol is back in full production and Canadian-based Methanex is reaping its two-decade long investment in Taranaki. By ALAN TITCHALL.
A Taranaki born-and-bred local, Brian is the New Zealand director of manufacturing for Methanex.
He came home from Canada one year ago to oversee the company’s biggest investment in Taranaki since it became involved in the Government-built (1980s) petro-chemical plants at Motunui and Waitara Valley, which it bought from Fletcher Challenge in 1993.
Methanex has spent $250 million in capital works projects bringing these 30-year-old plants into full production and making the country, on a per capita basis, one of the world’s largest methanol producers.
At one stage, around 10 years ago, as gas from the depleting Maui field became rationed, Methanex considered pulling out.
Was the decision to stay in New Zealand when gas supply looked grim a chance thing or a decision made on a safe prediction of more gas?
So management back then could have decided to pull the plug and turn the project into scrap metal as it did the gasoline making plant at Motunui?
“Well – we did in other places around the world. In Chile they have just moved the entire plant to Louisiana, which is in the process of being reassembled.”
Last year Methanex shipped its million tonne capacity plant from Punta Arenas to Louisiana on the US Gulf of Mexico coast at a cost of US$550 million to take advantage of the cheap natural gas now available from shale.
“We didn’t have plans to restart but nothing was set in stone, and we were fortunate that we always had gas to run Waitara Valley.”
In the beginning
At the time of commissioning in 1985, the two crude methanol units at the Motunui plant were the largest such units (called ‘trains’) in the world and with a design capacity of 2200 tonnes per unit per day.
It was part of the huge Motunui Synthetic Fuels Plant ‘think big’ project designed as the world’s first gas-to-gasoline commercial production facility converting natural gas to synthetic fuels and the world’s largest methanol (methyl alcohol) production facility. The cost was $1.4 billion (of overseas funds and debt) and it was the government of the day’s way of putting the newly discovered natural gas from the offshore Maui field and onshore Kapuni fields to good use, using a first-of-a-kind application of zeolite catalyst technology.
The fourth Labour Government, with an irrational distaste for Government-owned assets, quickly found reason to place the operation into private hands at a considerable loss to taxpayers.
The smaller, neighbouring, Waitara Valley plant was specially built in 1983 to convert Maui gas to distilled methanol for the export market.
Methanex Corporation, which today has 14 percent of the world’s share of methanol sales, took over the assets after Fletcher Challenge briefly bought a majority share in the Canadian company. Fletcher had taken over the plants in 1987 when the Labour Government under David Lange and Roger Douglas put them on the sharemarket.
Methanex Corporation bought Motunui and Waitara together as one operation in March 1993. The first methanol distillation unit was installed at the Motunui plant in 1994 and took a year to build. A second distillation unit quickly followed as export demand in Asia grew as predicted.
The original methanol to gasoline production facility at Motunui was taken out of production in late 1996 for economic reasons as prices fell around the world.
In the first decade of this century the two operations became challenged by a lack of natural gas feedstock as the Maui gas field depleted.
The original gasoline-making plant at Motunui was also dismantled in 2004 and sold to Korea as scrap metal.
Only the smaller, 530,000 tonne capacity Waitara Valley plant was kept operational and the parent company was close to shutting its Kiwi operations down altogether.
Then the decision was made halfway through 2008 – “restart the Motunui 2 unit”. It kicked back into operation in October that year after a refurbishment costing $70 million.
At the same time, the 530,000 tonne per year Waitara Valley plant was laid up (November 2008) as there just wasn’t enough gas for two units, but, along with the second unit at Motunui, was wisely kept in a state of ‘readiness’ for when more gas came online.
The methanol manufacturing director at the time, Dennis Addison, told Energy NZ magazine that the company had faith that recent gas discoveries and the expansion of the existing field would see supplies coming right.
World demand for the product was also growing, he said. Traditionally, methanol was used by the chemical market but by the end of the first decade there had been massive growth in using it in the energy sector for transport fuel, power generation and even domestic cooking. New Zealand is perfectly located to supply the ever-expanding Asian market.
In 2010 some $100 million was spent on refurbishing Motunui 1.
Addison told us back in 2009 that there had also been plans to restart Waitara, but the global financial crisis came along and methanol prices plummeted.
But there was hope. During 2009 methanol demand for direct fuel blending, dimethyl ether, and biodiesel grew at double-digit rates and China announced new national fuel blending standards for methanol use in vehicles.
Gas glorious gas
In September 2006 the Pohokura oil/gas field facility just west of the Motunui plant started commercial production using gas from an offshore field that had been discovered in 2000 by Fletcher Challenge. Now owned by Shell/Todd/OMV, by 2009 the field had become the largest gas producing field in the country, producing 42 percent of our total production.
In addition, Todd Energy had started to redevelop its onshore Mangahewa gas field in north Taranaki. It was also close to Methanex’s operations.
The restart of the Motunui 2 unit in 2008 and the lead up to full methanol production was only made possible through a 10-year gas supply contract Methanex NZ signed with Todd Energy that provides gas feedstock (in addition to other gas sources) until at least the mid-2020s.
Although the Mangahewa field is still in early development Todd was confident enough about supply to sign the 10-year gas supply deal.
Some 25 new gas wells are being developed on the old Mangahewa field, thanks to new drilling techniques and fracking, and there are ‘contingencies’ in place with the supply agreement if sufficient gas is not found.
Returning to full production
After the Motunui 2 plant was finished in 2008, Methanex then committed some $240 million to capital projects that included restarting the second (Motunui 1) methanol unit at Motunui after a major turn-a-round and the restarting of Waitara Valley.
After laying idle for some eight years, Motunui 1 restarted on schedule July 1 2012 after six months of refurbishing and upgrading the plant to a ‘new’ state.
The project involved more than 700 contractors and sub-contractors. Critical parts of the project involved rebuilding the ‘reformer’, and a new ‘deaerator’, which is used to remove oxygen and other dissolved gases from the feed water to steam-generating boilers. It is also a very large vessel about 20 metres long and weighing about 50 tonnes and, as a new modern design, had to be worked on overseas, although local engineers had the contract for the procurement, fabrication and installation.
Suffice to add, these capital projects involved many of the region’s top engineering, electrical, maintenance, insulation, cleaning and other support services.
By 2013 the two methanol production units at Motunui were up and running and then work began on restarting the idled, 530,000 tonne, Waitara Valley plant that hadn’t operated since 2008.
With over 400 workers on the site each day and over 500,000 man-hours, this restart project was completed in October 2013.
After that the number two unit at Motunui was shut down to carry out major refurbishments, including replacing equipment, over a 75-day period.
In 2012 Brian Ropitini came back to Taranaki from Canada where he had been the plant manager for Methanex’s methanol plant in Medicine Hat, Alberta.
He is very proud of the turn-a-round of the 30-year Motunui 2 unit late last year, the last in the capitalisation projects that will secure methanol production in this country for many years to come.
“Taking just 75 days, it was the biggest turn-a-round we have achieved. We had between 1200 and 1300 people on site for that work, so it was a major undertaking.”
The size of the job ‘exhausted’ local engineering services, and specialist skills were brought in from around the rest of the country, Australia and from Methanex’s own global resources.
The biggest challenge was getting the right mix of people here, he adds.
“When we have a year like we did last year, it places a strain on local resources. We were also competing for resources with other projects in development during the year as well.”
The original design of the plant in the early 1980s was very robust he adds and the plant had weathered well.
“Most of the work was very typical of what you normally do with a turn-a-round, including statutory pressure equipment and the opportunity of replacing aged equipment due for replacement, such as the reformer tubes which operate in extreme conditions.
“Some of the electronic systems were also upgraded, as automation has advanced over the past three decades.”
Good for Taranaki
Getting back into full methanol production has done wonders for the wider Taranaki community, let alone Port Taranaki, which handles the bulk of the 2.4 million tonnes (6500 tonnes a day) that is exported after the finished product is piped 25 kilometres from the plants. Methanex has its own storage facilities (next to the old power station that is being dismantled) and from there the methanol is shipped to Asia on its own specialist vessels.
A Business and Economic Research Limited (Berl) economic report commissioned by Methanex, and released in March last year, forecast that at full production the company will annually contribute $440 million to Taranaki’s GDP and $650 million to the country’s GDP. This includes generating 650 jobs in Taranaki (including 240 site staff, or about the same as 2002) and sustaining the equivalent of 1200 jobs directly and indirectly throughout the country.
Most of the workers are local and range from semi-skilled to highly professional and the entire gamut in-between, who all contribute to spending in the community, comments Brian.
Brian says bringing the three units back into full production has “all gone to plan” and it is “business as usual” as the company enjoys being back at full gallop.
“We haven’t been a three plant operation for a long, long time and it’s really just a matter of operating them correctly and looking into the future as to whatever else we need to do to keep them running efficiently.”
And if further big gas discoveries are made in the region?
“That would involve building another plant and there are no such plans at the moment, but if they made a big new gas discovery I think the company would really look at it from the view that Taranaki and New Zealand is a great place to be.”