Koch Methanol, St. James Parish

Koch Methanol Acquires Majority Ownership Stake in St. James Parish Methanol Joint Venture 

Koch Methanol Investments, LLC and Yuhuang Chemical Industries Inc., a wholly owned subsidiary of Shandong Yuhuang Chemical Company, recapitalized YCI Methanol One, LLC (the "Joint Venture") in 2018.  As a result of this transaction, Koch Methanol is the indirect, majority owner and managing member of the Joint Venture, which is constructing a $1.85 billion methanol production facility in St. James Parish, La.

"Koch Methanol values the Joint Venture's leadership team and the hard work being done by its employees, and believes in the significant opportunities being created," said Jim Sorlie, Vice President of Koch Methanol Investments. "Consequently, Koch Methanol has decided to acquire a larger equity stake in the Joint Venture."

As part of its original investment, affiliates of Koch Methanol received the exclusive methanol offtake rights from the new facility – expected to be as high as 1.7 million metric tons per year – as well as the rights to construct, own, and operate the methanol terminal assets to facilitate the outbound flow of methanol via marine, rail, and truck logistics.     

"This is an exciting new step in the project, and Koch Methanol's increased investment in the Joint Venture shows its confidence in the hard work being done by YCI leadership and Joint Venture staff," said Charlie Yao, CEO of YCI. "We look forward to continuing our work with Koch Methanol, vendors, and the local community on this important and exciting project."

Louisiana delivers in Yuhuang Chemical’s search for strategic location

Through Yao’s insights into the state and with the company’s recent introduction to the Louisiana Economic Development team, Yuhuang Chemical soon learned of Louisiana’s unbeatable combination of major pipelines, ports, rails and highway corridors; the state’s access to ample, affordable supplies of natural gas; and Louisiana’s impressive performance on national business climate rankings. The state also featured low operating costs and significant workforce advantages for Yuhuang’s potential investment.

The state’s strong business climate and the available resources it provided proved to be a difficult opportunity for the company to pass on. Still, Yuhuang had specific site requirements for its new investment, such as finding the appropriate site for a planned deep water dock.

After several searches failed to produce the specific requirements the company needed, Yuhuang nearly resorted to its original plans for Texas, and a forfeit of the benefits of locating in Louisiana.

In a matter of days, however, a key piece of property along the Mississippi River in St. James Parish went up for sale. Upon hearing this news, LED officials quickly brought it to the attention of Yuhuang leadership. As it turned out, this property precisely fit the requirements that Yuhuang requested. The company officials quickly returned to Louisiana to make the purchase.

LED crafts convincing deal to officially recruit Yuhuang

Though the company did purchase the strategic property along the Mississippi River, Louisiana still had to compete for the project. By this point in the process, Texas also had a vested interest in recruiting the project, and still jostled with Louisiana to court Yuhuang.

To secure the project in St. James Parish, Louisiana offered the company an incentive package that included the comprehensive workforce solutions of LED FastStart®, ranked the No. 1 state workforce training program in the U.S. Additionally, the state offered Yuhuang two performance-based grants: $9.5 million to be paid over five years to offset infrastructure costs associated with the site, and $1.75 million to be paid over 10 years to partially defray the costs of riverfront access and development. Fully understanding the infrastructure and logistical needs of Yuhuang, LED’s customized package gave Louisiana a competitive edge over other states.

Yuhuang commits to Louisiana, announces new methanol project

Yuhuang’s plans for a Texas investment were nearly a reality, but over the course of five months, the company realized the tremendous benefits of investing in Louisiana. Thanks in part to LED’s rapid response to meet the company’s requirements, Yuhuang leadership joined with state and local leaders in July 2014 to announce a $1.85 billion investment in St. James Parish, Louisiana, to develop a world-scale methanol manufacturing complex on the Mississippi River. This project represents the first major foreign direct investment by a Chinese company in Louisiana.

The company secured an option to purchase more than 1,100 acres for the three-phase project. The first two phases of the project will be methanol plants, which are expected to reach an annual capacity of 3 million metric tons per annum of methanol. The third phase will include a methanol derivatives plant that will produce intermediate chemicals. The project’s methanol will be marketed both domestically and internationally with some exported by ocean going vessels for use in the parent company’s production of downstream chemicals in China and the remainder shipped by barge and rail to North American customers.

Yuhuang Chemical announced it would ultimately create 400 new direct jobs in Louisiana, with construction set to begin in 2016. The company is expected to utilize Louisiana’s Quality Jobs and Industrial Tax Exemption programs.

“Building a new world-scale methanol unit in Louisiana is Shandong Yuhuang’s first major step in becoming a global player in the petrochemical industry,” said Yao. “While the company has long been highly regarded in China as one of its primary contributors to the industry in Asia, this Louisiana operation represents the company’s commitment to significance on the world petrochemical platform. Louisiana was the right choice for our company to locate our first operation in the United States. This facility’s location fits well with our strategy to leverage the advantage that natural gas feedstock provides.”

Yuhuang breaks ground ahead of schedule on first Chinese project in Louisiana

Though initial plans did not call for construction to begin on Yuhuang’s first phase until 2016, the company purchased the 1,250 acres, plus options to acquire an additional 50, in St. James Parish, and had the official groundbreaking on the methanol complex in September 2015. State officials, along with Chairman Jinshu Wang of Shandong Yuhuang Chemical Company and Yuhuang Chemical CEO Charlie Yao, turned ceremonial spades of soil for the launch of the methanol manufacturing complex.

The company licensed methanol technology from Air Liquide Global E&C Solutions and, upon completion of front-end engineering and design work in June 2015, selected Amec Foster Wheeler as the engineering, procurement and construction contractor for the project.

“Yuhuang Chemical Inc. selected Louisiana for our project for a number of reasons: outstanding selection of greenfields for large development; working with the team at LED and the incentives the state offered; the supportive community in St. James Parish; and a business-friendly environment ultimately made our decision straightforward,” Yao said. “The establishment of relationships in the communities in which we operate is important to myself and the YCI team. We want to be a good corporate citizen, a good neighbor, and a partner in the community. Our groundbreaking ceremony today is an important milestone for our company and the St. James community. YCI is committed to the development of a world-scale manufacturing complex in St. James Parish, and we look forward to a long business relationship with both the parish and the State of Louisiana.”