Houston (Platts)--24Jan2013/1245 pm EST/1745 GMT
Chesapeake Energy and Methanex have signed a 10-year supply deal under which Chesapeake will supply the natural gas needed for Methanex's 1 million mt/year methanol plant in Geismar, Louisiana. "This contract will enhance our ability to reliably supply quality product to our U.S. customers for at least the next 10 years," John Floren, president and CEO of Methanex, said in a late-Wednesday joint statement by the companies. "The agreement is structured so that the natural gas price is linked to the methanol price, and both Methanex and Chesapeake will share in the risks and rewards resulting from the changing price of methanol over the decade of this contract. "Having a 10-year contract in place for 1 million tonnes of methanol production per year reduces our exposure to short-term natural gas price fluctuations, which will lower the natural gas price risk for the site if we decide to relocate a second plant to Louisiana," Floren added. Article continues below... Request a free trial of: Gas Daily Gas Daily offers the most detailed coverage of natural gas prices at interstate and intrastate pipeline and pooling points in major U.S. markets. Gas Daily keeps you informed about complex state and federal regulations that affect competition in the gas industry.
Chesapeake Energy and Methanex have signed a 10-year supply deal under which Chesapeake will supply the natural gas needed for Methanex's 1 million mt/year methanol plant in Geismar, Louisiana. "This contract will enhance our ability to reliably supply quality product to our U.S. customers for at least the next 10 years," John Floren, president and CEO of Methanex, said in a late-Wednesday joint statement by the companies. "The agreement is structured so that the natural gas price is linked to the methanol price, and both Methanex and Chesapeake will share in the risks and rewards resulting from the changing price of methanol over the decade of this contract. "Having a 10-year contract in place for 1 million tonnes of methanol production per year reduces our exposure to short-term natural gas price fluctuations, which will lower the natural gas price risk for the site if we decide to relocate a second plant to Louisiana," Floren added.
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Gas Daily offers the most detailed coverage of natural gas prices at interstate and intrastate pipeline and pooling points in major U.S. markets. Gas Daily keeps you informed about complex state and federal regulations that affect competition in the gas industry.
Gas deliveries will begin at the startup of the plant, expected by the end-2014, according to the statement. The largest producer of methanol in the world by capacity, Vancouver-based Methanex is expected to make a decision during the first half of 2013 on relocation of a second plant. Oklahoma City-based Chesapeake is the US' second-largest gas producer.--Colleen Barry-Goodman, colleen_barrygoodman@platts.com --Edited by Richard Rubin, richard_rubin@platts.com
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