Rendering of what methanol plant would look like. Northwest Innovation Works
Rendering of what methanol plant would look like. Northwest Innovation Works

Business

Study lays out economic impact of methanol plant

April 13, 2016 06:30 AM

UPDATED April 17, 2016 07:56 AM

The backer of a methanol plant for the Tacoma Tideflats has released an economic impact study that shows the plant will be an economic boon for the region during its five-year construction phase.

Once it’s up and running, the Northwest Innovation Works plant will support jobs above the living wage, the report states.

The study, conducted for Northwest Innovation Works by ECONorthwest, says the company expects local spending of $1.3 billion of the $3.6 billion cost of the plant in 2018 dollars. ECONorthwest is a consulting firm with 41 years’ experience in economics, finance and planning.

That local spending — which includes labor, materials and other contractors — will cause more spending by governments, businesses and workers to the tune of $2.2 billion in a nine-county region during the five-year construction period, according to the report.

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Company President Vee Godley said in a phone interview that the area has an ample supply of qualified workers.

Once the plant is built, its value will offset the taxes that property owners will pay to various state, school and local taxing districts by $106.6 million in the project’s first 10 years.

“It puts money back into homeowners’ pockets and business owners’ pockets,” Godley said.

The value of the plant as a property tax payer cannot be underestimated, said ECONorthwest senior economist Bob Whelan.

“This would be by far the largest taxpayer in Tacoma,” Whelan said. “For the county, it’s six times larger than what Boeing pays, which is the largest taxpayer in the county.” The report does account for the state tax break.

The plant aims to convert natural gas into methanol. Once in that form, it will be shipped to China to make olefins, a precursor to many plastic products.

Godley said the plant will employ 260 workers once it’s fully operational. Workers outside of the company would also support in shipping methanol to China.

“It’s a lot of good jobs,” Whelan said. “These are a lot of high-paying manufacturing jobs.”

The company said it expects the Port of Tacoma to see an additional 70 vessel calls to the Blair Waterway. Tug boat operators, marine fuel stations and pilots to guide the vessels through Puget Sound would support the plant’s operations, the study states. The port currently sees around 1,100 ship calls per year, said Port of Tacoma spokeswoman Tara Mattina.

An early plan to barge methanol into Puget Sound from two other Northwest plants has been scrapped as too expensive, Godley said Wednesday.

“We have no anticipation of bringing barges to that site for secondary loading,” Godley said.

Though the company has not lifted the pause on environmental review, its analysis shows a construction start in late 2018.

The methanol plant would also pay $17.7 million in sales taxes to the city and state when it buys natural gas and other goods and services. Nearly $8 million of that would go to city of Tacoma coffers.

The 20-page document also outlines nearly $19 million per year that the Port of Tacoma would receive via wharf fees and lease payments.

Northwest Innovation Works will spend $30 million per year on payroll, according to the report. Most of those 260 workers would work on methanol production, including various plant operators. Other jobs include maintenance staff, executives and laboratory workers. Jobs would pay on average $78,131.

Whelan said the median wage — where half of workers makes more money and half of workers makes less — would be $66,830 in 2018 dollars. The analysis says a living wage in Pierce County in 2018 would be $51,578.

Godley said Northwest Innovation Works is securing 10- to 20-year agreements with Chinese buyers and is confident in the methanol market well into the future.

“We are extremely sure that this market would sustain it or we would not be pursuing” the plant, he said.

Heywood Sanders, a professor of public administration at the University of Texas at San Antonio, said construction jobs are temporary and like a “sugar high” for the local economy.

“The construction impact is not of real ongoing importance,” Sanders said.

Sanders said the source of the information for ongoing operations is from the company itself and does not analyze similar methanol projects.

“It’s like, ‘Hey, I think this is a great idea, and this is my guess at how great it’s going to be so you should take that at face value,’” Sanders said.

Whelan said ECONorthwest was better off using the client’s numbers because it knows what it wants to build.

“You want to be as accurate as possible,” he said. The job numbers Northwest Innovation Works used for the study are reasonable. “Nothing sticks out as being unusual at all.”

When asked about the negative economic impacts of the plant — such as lower property values associated with nearby industrial development — Whelan said that was not in the scope of this study.

“What you are asking about is a cost-benefit analysis,” Whelan said.

Such impacts would be studied if Northwest Innovation Works chooses to continue with environmental review. The city of Tacoma had planned to weigh the negative impact on property values, enhanced emergency response and environmental damage against the benefits of job growth and tax revenues, according to the city’s draft scope of work document for environmental review.

Kate Martin: 253-597-8542, @KateReports