Could Methanex and Kitimat LNG partner up?

Kitimat LNG needs customers to supply natural gas, Methanex needs natural gas, put the two together and we could have some great potential. Methanex Kitimat operations ceased productions in Nov. 2005 due to the high cost of natural gas in North America. http://www.methanex.com/investor/newsreleases/2005/pressrelease083005.html

I remember reading the Methanex Kitimat facility, was economically/strategically located to provide methanol and ammonia to North American markets. However, rising natural gas costs caused the plant to shutdown. Methanex Kitimat is providing condensate terminal services to Encana and continueing to import methanol. Encana has the option to purchase the site.

http://www.methanex.com/investor/newsreleases/2005/pressrelease092005.html

Quote: “In addition, the agreement provides EnCana the option to buy from Methanex, and Methanex the option to sell to EnCana, the Kitimat site (excluding the methanol and ammonia facilities), within the five-year term of the agreement.”

Now as you can read from the exert, the possible sale to Encana does not include the methanol and ammonia facilities. Now this leaves me with the conclusion that the site could produce methanol/ammonia again someday. This leads to the question, could Kitimat LNG supply Methanex with cheap enough natural gas to run the Kitimat facility? This is a question that an expert would have to answer. However, the size of the Kitimat LNG facilty is significantly larger than domestic supply demands, allowing me to believe that they are seeking some sort of commercial facility to consume the remainder. If you compare the size of Kitimat LNG to WestPac’s proposed LNG terminal in Prince Rupert, there is a large difference. The Kitimat LNG facility most definitely monsters over WestPac’s terminal. Methanex has access to cheaper natural gas markets in South America, now if they could import natural gas from these markets, and regasify through Kitimat LNG they could possibly run the Kitimat Methanex facility. This idea may not be feasible what so ever, however it would be worth while investigating further. I’m gonna have a whole grochery list of things for the city council to investigate by the end of the month.

Just a thought,

Mark

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