THE LINK: JULY 2024 38 Alyeschem in final engineering stage for $140M plant A plant that will manufacture methanol with North Slope natural gas will be under construction this year and in production in two years. That’s according to J.R. Wilcox, CEO of Alyeschem LLC, an Alaska-based company that plans a small petrochemical plant near Flow Station 3 in the eastern part of the Prudhoe Bay field. Alyeschem is in final engineering for its plant, which is expected to cost about $140 million and is co-located on a pad that also supports a small liquefied natural gas plant being built by Harvest Alaska, an affiliate of Hilcorp Energy. The two plants will share a 1,000foot pipeline that will bring natural gas from the nearby Flow Station 3. Fabrication of module units for Alyeschem to make the methanol will begin later this year, Wilcox said. The modules will be trucked to the North Slope when finished. Methanol is used by producing companies on the slope to provide freeze-protection of wells along with other uses. It is now imported from overseas and trucked to the slope. When completed, the plant will be able to make about 32,000 gallons of methanol per day and will have the ability to supply 100 percent of the demand for the chemical on the slope. An additional part of the process will be to make ultra-low sulfur diesel fuel on the slope, which is also now trucked up the Dalton Highway. The plant’s steam methane reformer will use field fuel gas and water to produce synthesis gas, which can be used to produce both methanol and hydrogen. The hydrogen can then be used to upgrade the high-sulfur diesel now made on the slope to the ULS fuel. Wilcox expects the Alyeschem plant to supply about 20 percent of the ULS market on the slope. What was critical for Alyeschem was the agreement by the Alaska Industrial Development Authority, or AIDEA, the state’s development finance corporation, to provide $70 million in funding, contingent on Alyeschem raising the other half of the $140 million needed for construction. AIDEA’s board agreed to the financing at its May 16 meeting. “This was key to our ability to do this,” Wilcox said. The financing includes an arrangement to pay AIDEA a per-gallon royalty on products from the plant as well as payments on principal and interest. “Alyeschem has site control, a gas supply contract, equity investors, major permits and front-end engineering and design completed. AIDEA’s investment was one of the final pieces needed to make this plant a reality,” Wilcox said. Investors include McKinley Alaska Private Investment LLC and BP Energy Partners LLC. AIDEA said the deal is expected to result in $2.39 million in annual income to the authority, and that will increase over time as output from the plant increases. Wilcox said Alyeschem will be able to expand with additional modules depending on future market demand. In addition to methanol and hydrogen the plant could make other chemicals to reduce costs and improve production through Enhanced Oil Recovery. A methanol derivative, DME (dimythyl ether) could have a role in enhancing development of large viscous and heavy oil deposits that exist on the North Slope. Methanol could also be a low-emission engine fuel for the slope. Wilcox said Alyeschem’s focus now is on products like methanol and ULS diesel that are in demand on the slope and which have to be brought north. “We see this as a kind of proof of concept, to show that chemicals can be made on the slope using the natural gas assets,” Wilcox said. In a statement, Gov. Mike Dunleavy has praised the plan. “The Alyeschem project is a game-changer for the North Slope. Using Alaska natural gas for local production of methanol and ULS diesel benefits Alaskans and our oil producers by reducing operational costs,” the governor said. — Tim Bradner Methanol plant to use natural gas from Slope
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