Canada geese forage on the site of the former Kaiser Aluminum smelter. The 125-acre site of a proposed methanol production plant is temporarily being using by Auto Warehousing Company as a Foreign Trade Zone for imported cars. Drew Perine dperine@thenewstribune.com
Canada geese forage on the site of the former Kaiser Aluminum smelter. The 125-acre site of a proposed methanol production plant is temporarily being using by Auto Warehousing Company as a Foreign Trade Zone for imported cars. Drew Perine dperine@thenewstribune.com

Local

Some answers to the methanol-plant questions fueling impassioned debate

By Derrick Nunnally

dnunnally@thenewstribune.com

February 27, 2016 06:00 AM

Intense public scrutiny of a China-backed company’s plan to build the world’s largest methanol plant in Tacoma’s Tideflats shows no sign of abating despite a pause in the regulatory process.

Northwest Innovation Works has asked the city of Tacoma to put review of the plant on hold, citing vocal public opposition. The company says it will restart its application to build the facility after several months of public outreach.

Meanwhile, groups on each side of the debate over the plant are moving ahead with their causes.

Concerned observers and avowed opponents of the plant each sponsored informational meetings Thursday night and collectively drew more than 300 attendees. Also last week, the Normandy Park and Des Moines city councils joined Federal Way’s in opposing the plant.

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For its part, Northwest Innovation Works representatives asked a legislative committee Wednesday to allow the proposed plant to use a sales-tax exemption to build and operate the $3.4 billion facility. The methanol company is also awaiting a Port of Tacoma decision on whether to postpone the date on which their lease moves into a higher-rent construction phase.

Northwest Innovation Works has not given a specific timeline for when it will ask the city to restart consideration of its proposal. Tacoma officials have said that if the proposal is restarted — or a new plant proposal is submitted — the city likely will start a new 45-day period to plan the environmental review and would carry over the more than 1,000 comments the city has already received about the potential plant.

During this pause, The News Tribune will examine aspects of the methanol proposal in-depth to help inform public discussion.

In this first installment, we attempt to answer some frequently asked questions about the basics of the proposal, from its status to the science behind the facility.

Q: What’s the official status of the methanol plant proposed for the Port of Tacoma?

A: Right now, the plan is on hold, which doesn’t mean it’s dead.

The plant’s proposer is paying $8,000 a month to keep its lease alive on the Port site where it wants to build the 110-acre methanol plant and 15 acres of storage tanks.

If built, the plant would synthesize natural gas and steam to manufacture 20,000 tons of methanol a day — a little over 7 million tons annually — for export to China, and would keep up to 300,000 tons in the storage tanks while it awaits shipment. Northwest Innovation Works has a 30-year lease on the site but needs to get a series of permits approved to build anything. The city was in the early stages of making an environmental review of the proposal when the company asked to pause the process.

It’s unclear what Northwest Innovation Works’ specific timeline is for restarting its application. Via email, a company spokeswoman declined to clarify a press release that said officials would spend “months” on public outreach before their next move. In the release, company president Murray “Vee” Godley wrote that “further dialogue” is coming with area residents.

“This will provide us an opportunity to share more details about our proposed project, discuss the environmental and safety procedures we are planning, and hear directly from the public about their concerns, as well as receive input on further innovations,” he wrote.

An organizer of Red Line Tacoma, one of several citizens’ groups opposing the plant, said its own public education and organization efforts will continue as long as the proposal remains alive.

Whenever the company comes back to the city to restart the process, things will pick up more or less where they left off — near the start of a yearlong analysis of the project’s environmental consequences.

Comments already made over the scope of the environmental review will remain part of the project record, said Ian Munce, the city’s chief planner. His department will decide how many more public meetings to hold for further input after the company asks to restart the process.

Once the scope of the environmental work is set, Tacoma will hire a consultant to carry out the review, checking out the topics of concern the city sets out. Northwest Innovation Works will have to pay the consultant’s fees. The draft version of the consultant’s findings will come up for public review — and debate — a few months later. After that, permit applications can be filed with state, federal and local agencies, each of which can approve, deny or require changes to the plant.

The draft version of the city’s environmental review plan runs 14 pages and is available on the city’s website.

It includes concerns expressed by hundreds of residents on how the methanol plant would affect air quality in the city and Puget Sound, disaster risks, worker and resident health, water and other resources, land use, and its effects on fish and other wildlife, among other considerations.

Q: What is Northwest Innovation Works?

A: It’s a company that proposes to spend a total of $7 billion building gas-to-methanol plants in Tacoma, Kalama and at Port Westward, Oregon, near Clatskanie. All the methanol produced is to be exported to the port of Dailan and other sites in China, to be converted into olefins for manufacturing products, including plastics.

Northwest Innovation Works is owned by the Shanghai Bi Ke Clean Energy Technology Co., a Chinese company 44 percent owned by the Chinese Academy of Sciences Holdings, an arm of China’s government; 43 percent owned by Double Green Bridge, a private Hong Kong-based holding company owned by executives of Northwest Innovation Works’ parent company; and 13 percent owned by Johnson Matthey, a British chemical technology company. A minority share originally held by BP has been sold and split between the other investors.

Q: Why is Northwest Innovation Works proposing to come to Tacoma?

A: The methanol market in China is booming, but China doesn’t have a good supply of natural gas from which to make methanol.

Tacoma sits close to a high-volume natural gas pipeline and has a deep-water port. The port also has more than 100 acres of available industrial-zoned property formerly occupied by the Kaiser Aluminum smelter and access to high-volume utility connections.

Q: Why can’t the company make its methanol in China instead?

A: China has a number of methanol plants that use coal, but China doesn’t have an ample supply of natural gas, so that would have to be imported.

Northwest Innovation Works says its manufacturing process will require 504 million cubic feet of natural gas per day, or 184 billion cubic feet per year.

Moving enough natural gas on tanker ships across the Pacific to make that much methanol would require converting it to liquid natural gas, then using massive tankers to ship that across the Pacific.

That process would be cost-prohibitive and involve building a large new LNG facility, according to Dave McCaskill, vice president of methanol services with the energy analyst Argus DeWitt in Houston.

“Current thinking is that it is cheaper to build in the US (or anywhere else with more attractive feedstock costs) and ship it to China,” McCaskill wrote in an email. “What makes Oregon/Washington so much more attractive is location. It’s just a straight shot over to China.”

Q: What is methanol?

A: It’s a colorless and almost odorless form of alcohol that was first isolated in the 17th century.

Methanol is poisonous for humans and animals to ingest.

There are several processes that can be used to make it by synthesizing carbon monoxide and hydrogen.

Historically, wood, coal and methane — the main component of natural gas — have each been used as fuel for making it, along with steam. Other names for it include wood alcohol and methyl alcohol.

Q: What are methanol’s uses?

A: Industrial, mainly.

It is used in a number of consumer products, such as antifreeze and windshield wiper fluid. Some countries, notably China, have used it as an additive for auto fuel. Methanol is a central component of formaldehyde. It can also replace coal or petroleum in making olefins — a key ingredient in manufacturing plastics — to make the process emit less greenhouse gases.

Q: How would the Tacoma plant compare to other methanol plants?

A: Its output of more than 7 million tons a year would be the largest in the world.

One of similar size has been proposed for coastal Texas by Fund Connell USA, a different Chinese-rooted company. Existing methanol plants each produce fewer than 2 million tons a year, according to industry observers. A cluster of seven plants in Trinidad collectively puts out 6.5 million tons a year.

The proposed Tacoma plant is not an exact comparison to any of these because they use different processes, Godley said.

What Northwest Innovation Works wants to build in Tacoma, as at the Columbia River sites, is a scaled-up version of a plant that has operated since 1994 in North Laverton, Australia, a suburb of Melbourne.

Johnson Matthey, the British company that holds an equity stake in Northwest Innovation Works, developed the production process that facility uses to produce 80,000 tons of methanol per year, an amount the Tacoma plant’s full-capacity output will equal in four days. Its methanol is used to make formaldehyde in Australia.

Godley said the proposed plant’s process limits emissions by replacing an industrial-scale gas burner with a heat exchanger. It uses electricity instead of gas in some processes, among other technical alterations, to chemically transform natural gas with steam into methanol.

He said this process means a “very, very significant reduction in emissions profile” compared to what existing plants — even the others that use natural gas — emit per ton of methanol produced.

McCaskill said most methanol plants require 30,000 cubic feet of gas per ton of methanol produced. According to numbers Godley provided, the Tacoma plant’s process means it will consume 25,200 cubic feet of gas per ton, 84 percent of what other methanol plants require on a per-ton basis.

The size of the Tacoma facility’s total output, however, means it would use more natural gas each day than any other methanol production plant.

Q: What resources will the Tacoma plant require?

A: Aside from the real estate adjoining the Blair Waterway, the plant would use electricity and water from Tacoma Public Utilities, and natural gas from a connection to the Williams Company’s northwest pipeline.

Tacoma Public Utilities does not have enough power supply to provide the 450 megawatts the methanol plant would require when it starts up, said Robert Mack, the utility’s deputy director for public affairs.

The system’s total average daily demand in 2015 was 551 megawatts, and the WestRock mill on the Tideflats was its largest power customer, with an average 2015 use of 43.6 megawatts. The methanol plant would require more than 10 times that at startup and use 400 megawatts on average when running at full production, Mack said.

By law, TPU is required to provide enough power for any permitted demand in the city. This means the utility or Northwest Innovation Works would have to buy more electricity on the open market.

It’s unclear what that would cost, or whether the net effect of an increased demand on the regional power grid’s supply would carry over to the cost of power for other customers, including residential users.

TPU Director Bill Gaines said in October that he would recommend the methanol plant cover any cost increase. Godley told a Port commission meeting Feb. 18 that residential electric rates “will not rise due to the methanol plant.”

The water demand is easier to account for. Tacoma Public Utilities has enough capacity to provide the 10.4 million gallons of water per day the plant would use, even though it would be a significant addition to Tacoma Water’s 2015 usage of 53 million gallons a day for all customers. Mack said the system’s largest single water user in 2015 was the WestRock mill, which used 15.65 million gallons per day.

Although Tacoma Water has drawn some water from wells as recently as the 2015 drought, its primary supply comes from the Green River, which is estimated to supply an average of 72 million gallons a day by itself. On average, Tacoma Water uses about 54 percent of the Green River water it holds rights to, state Department of Ecology spokesman Chase Gallagher said.

“It sounds like the city has a lot of room to grow,” said Gallagher, “and it looks like their water-right plans for the future could handle a proposed usage like this.”

Mack said that Tacoma Water bills could conceivably fall for the utility’s other customers if the methanol plant comes through, because the utility would be making money by selling capacity it doesn’t currently use.

Connecting the natural gas supply the facility needs would require construction work beyond the port.

Federal statistics indicate that a gas-carrying capacity exists in the pipeline that enters Washington at the Canadian border town of Sumas and curves through Pierce County to provide the 184 billion cubic feet a year the Tacoma methanol plant would require. Northwest Innovation Works would have to negotiate with Williams Northwest Pipeline, the owner, to get the gas.

No agreement has yet been inked on that, said Williams spokesman George Angerbauer.

Connecting the Tideflats site to the regional pipeline would require laying about 10 miles of new pipe through unincorporated Pierce County, the Puyallup tribal reservation and the cities of Sumner, Puyallup, Fife and Tacoma, according to official filings.

Q: What agencies have to sign off on permits to build the plant?

A: There are 18 permits required for the plant, according to the company’s preliminary count.

Among them, Tacoma decides whether to grant a permit for shoreline development and a construction stormwater permit.

At the state level, the Department of Ecology must issue a water quality certification, and the Department of Fish and Wildlife issues a hydraulic project approval. The U.S. Army Corps of Engineers controls two permits: a section 10 permit for construction in navigable waters, and a section 404 permit concerning the fill material the plant would put into the water, both of which could involve a Coast Guard review of waterway operations.

The Puget Sound Clean Air Agency would also have to issue a permit that takes into account the plant’s impact on air quality.

Decisions on those permits are to be guided by the findings of the environmental review of the plant, which Tacoma city officials are handling.

For the gas pipeline to fuel the plant, Northwest Innovation Works’ filings say that Northwest Pipeline GP, a Williams subsidiary, will be responsible for permits and construction.

 

Proposed pipeline to Port of Tacoma

 

Q: What is the plant doing about the earthquake and flood risks of being on the Tideflats?

A: Godley said the location’s vulnerabilities will be accounted for.

“We hire the experts here in the region who understand exactly what the site conditions are,” he said, “and then under federal mandated and regulated guidelines, you design for those parameters.”

Harold Smelt, surface water management manager for Pierce County, said the plant footprint is “high and dry” on FEMA maps from potential flooding of the Puyallup River, which would drain into the Hylebos and Blair waterways the plant site lies between.

However, he provided maps of estimated inundation from tsunamis caused by earthquakes on the Seattle Fault and two places on the Tacoma Fault. Only one of the three maps does not show the site inundated.

Peter McDonough, a Salt Lake City-based expert in gas engineering and seismic hazards, said there are a series of safeguards an industrial site can take to attempt to handle earthquake and flood risks. Storage tanks, he said, are at risk of rupture during a major seismic event and generally need high enough berms to keep liquid spills contained. An underground pipeline is generally safe because it can move with the earth around it, he said.

“There's really no reason that a facility cannot be built to safely withstand an earthquake, or a flood for that matter,” McDonough said, “if they know what could happen.”

Q: Can a methanol spill into Puget Sound be cleaned up?

A: The Methanol Institute, a trade group, has a 207-page manual on its website about safe handling of the chemical. Here’s what it says about cleaning a spill:

“It is not practical to recover methanol from spills into natural bodies of water, such as rivers, lakes, and oceans.”

The document goes on to say that “Methanol is not persistent in the environment, and when released onto surface waters, soil, and groundwater, it will readily dilute to low concentrations, allowing native soil or aquatic bacteria to biodegrade it in a relatively short period of time.”

Melissa Malott, executive director of Citizens for a Healthy Bay, said a methanol spill into the Sound would harm fish if they encounter the methanol in the water before it dilutes or dissipates. Eventually, evaporation and degradation would break it down, but would also take oxygen out of the water in doing so.

The rate at which it degrades depends on where it was spilled. A 2010 report by the government of Alberta, Canada, found that methanol’s half-life ranges from a few days in bacteria- or oxygen-rich environments to 245 days in groundwater.

Malott said that under the Clean Water Act, Northwest Innovation Works would bear responsibility for spill cleanup, including making a plan and having resources available.

Q: Is methanol flammable or explosive?

A: It can be.

In a Feb. 11 presentation at the University of Washington Tacoma about the plant, Center for Urban Waters science director Joel Baker said a methanol flame is nearly invisible, and that it will only catch fire when it is above 54 degrees.

“Yes, it burns,” Baker said. “Not quite as flammable as gasoline, and it contains half the energy content of gasoline.”

Methanol fires and explosions have occurred. Often, this is because methanol vapor caught a spark from elsewhere. There’s evidence of this in forms small and large, from racetrack fires involving methanol fuel spills to industrial accidents.

In 2006, a 3,000-gallon methanol storage tank at a Florida sewage plant exploded, killing two workers and injuring a third. A U.S. Chemical Safety Board investigation found that “a cutting torch on a roof above the methanol storage tank accidentally ignited vapors coming from the tank vent. The flame flashed back into the storage tank, causing an explosion inside the tank.”

The methanol in the Tacoma plant’s storage tanks won’t be pressurized, so they would be at risk of fire but not explosion, Baker said. The natural gas coming in via pipeline would be pressurized.

Q: What’s the risk of an explosion at the plant ?

A: The plant hasn’t been fully designed yet, so it’s impossible to know that with any degree of certainty.

The city plans to make explosion risk part of its environmental review, according to the draft version of its plan. The document specifies “a comprehensive analysis of the adequacy of federal, state, and local emergency response capabilities to address spills, explosion and/or fire along the pipeline route, at the site, and during transfer for shipping purposes.”

It also notes that risks associated with the refinery’s closeness to the proposed 30-acre Puget Sound Energy liquid natural gas plant and railroad tracks will be assessed.

Q: What are the plant’s air emissions going to be?

A: The city’s environmental review will evaluate that in-depth.

Godley said the plant’s only emissions will come from its 3-4 industrial-scale boilers.

“That’s the exact same emissions stream that comes off your gas stove, because we’re burning gas,” he said.

According to the Northwest Innovation Works website, emissions “will include carbon dioxide, carbon monoxide, nitrogen oxide, sulfur dioxide, volatile organic compounds and fine particulate. These are the same pollutants that come from any natural gas combustion—from a residential gas furnace to a natural gas power plant.”

Emissions of each of those appear on the yearly pollution inventory the Australia Department of the Environment keeps on the smaller methanol plant Coogee Chemicals operates there. The Tacoma facility would use the same process on a larger scale, Godley said.

The Australian government also reports emissions of metals including lead, arsenic and cadmium, as well as sulfur dioxide from that plant. Its greenhouse gas emissions are not regularly tracked, said Terry Sefton, a spokesman for the Environmental Protection Agency of Victoria, Australia.

A 2003 analysis of the Australian methanol plant found that a little over 0.75 tons of the greenhouse gas carbon dioxide were emitted for every ton of methanol the plant produced. That’s about the amount of carbon dioxide a typical passenger car emits in two months of average American driving, according to the Environmental Protection Agency.

At the Australian plant’s rate of emissions, one day of the Tacoma facility’s production of 20,000 tons of methanol would produce the same carbon dioxide emissions as driving 3,191 typical cars for a year.

Godley said the Tacoma facility would have a newly-devised emissions process that produces less pollution per ton than any other methanol plant.

“Within the confines of this process, we are truly a generational step ahead of the other emissions that any other plant will perform,” he said.

Aesthetically, the company says its plant would be seen but not smelled. The Northwest Innovation Works FAQ page says the plant “will not have an odor.”

Regular operations would emit clean steam into the air, Godley said. And as at most chemical plants, the plant would also need to run its flaring system — which would shoot fire from its exhaust pipes — to burn off waste material whenever it is started or shut down. Godley said that is expected to happen “less than one flare time per year, if you look at (it) historically.”

The city’s draft environmental scope indicates that the emissions produced by increased large ship traffic to the methanol plant will also be taken into account.

The number of ships needed could range from 48 per year to more than 80, depending on the size of ship used, city records say.

The company is still working to determine what size tankers all involved ports can handle, Godley said.

“They would range anywhere from 60,000 tons displacement up to around 150,000 tons displacement,” he said. “And it’s that big a range because we just don’t know yet.”

The largest ship ever to berth at the Port of Tacoma, the ZIM Djibouti, has a gross tonnage of 114,000 tons.

Q: What are the economic benefits of the plant, both for the region and for its owners?

A: Several factors aren’t yet known.

Before plans were put on hold, Godley said the company was working to provide an economic study that would show, among other factors, the average wages for its construction and operations jobs. We also don’t know the plant’s tax impact, exact effect on area utilities costs and other governmental costs.

These factors are known: Northwest Innovation Works anticipates a permanent need for 260 employees and a peak of 1,000 workers during of its construction period. That peak would be reached twice during construction, for a total of roughly 18 months, Godley said.

According to commodity prices posted by Methanex, a competing methanol maker, the price of methanol in the first quarter of 2016 in Asia is $255 per ton. At that price, the expected full-production annual output of the Tacoma plant would sell for $1.86 billion a year.

When construction begins, the plant’s rent payments to the Port of Tacoma will amount to about $3.2 million a year for the 90 acres at the heart of the site.

The plant’s lease sets its eventual full rent payment to the Port at about $10 million per year: $6,000 per month per acre of its main site, and $8,000 per month for each acre beyond that. The exact amount depends on several factors, including a land survey that hasn’t been completed and yearly change in the Consumer Price Index.

Among other issues still in flux are the taxes the plant will pay.

A bill pending in the Legislature is aimed at stripping the methanol plant of a sales-tax exemption for the purchase of manufacturing materials. Under current law, the state Department of Revenue estimates the Tacoma plant would get $200 million in breaks from state sales taxes during construction, and another $15 million in annual state tax benefits after it is built.

Q: Who supports building it here, and why?

A: The Port of Tacoma voted 4-0 to sign the lease to build the plant and has publicly supported the concept as a way to put a large waterfront industrial site back into business.

Gov. Jay Inslee called the plant a “milestone for our clean energy future” when it was announced in 2014. Its natural gas process creates fewer emissions than having the Chinese use coal to make methanol, a process that creates pollution that affects Americans. He said in January the jobs it would create are a benefit. Members of several labor unions have publicly supported the plant, citing the construction jobs it would create.

The Tacoma Chamber of Commerce and the Economic Development Board of Tacoma-Pierce County have each said the plant would bring economic benefits.

Q: Can the Tacoma methanol plant be stopped?

A: It doesn’t have permits yet, so its construction is not assured. There are several potential roadblocks that could stop the plan.

If the company can’t make the requirements to obtain the permits to build and run its plant, it will either have to modify its plans to meet those requirements — by changing its volume or process to reduce air emissions, for example, if air quality becomes a sticking point — or abandon the project. Tacoma’s environmental impact study plays a large role in whether permits will be issued, because a range of government agencies will rely on its findings.

Northwest Innovation Works could back out. The company would pay $1.8 million, including rent already paid, if it cancels the lease before the construction phase begins. The company has asked to postpone that deadline, which is currently May 1. The Port can cancel the lease only for cause, such as if the company stops paying rent or becomes insolvent.

Papers have been filed for a potential ballot initiative that would require a city vote over projects that would use more than 1 million gallons of water per day, but its outcome is uncertain.

A Tacoma city councilman said the site could be rezoned to bar a methanol industrial facility — which could invite a court challenge — but no steps toward that have been taken.

Q: Why aren’t Tacoma’s elected officials taking more public stands on the project?

A: City planning staff are responsible for the environmental review of the proposal and, ultimately, for considering whether to permit the plant’s construction.

At a Tuesday meeting, Mayor Marilyn Strickland said that City Council weighing in could lead to the fairness of the process being challenged in court.

“What we’re saying is we cannot influence what staff is doing,” Strickland said at the meeting. “They need to do this objectively. Regardless of whether or not you support the methanol plant, staff have a responsibility to look at this completely objectively based on facts, based on science and based on potential impact.

“Now, that doesn’t mean that the questions raised are not legitimate,” the mayor continued, “and they will be answered, but this body’s job is not to sit here and take a position and stand up and say, ‘I forbid you to build this’ or to pass a resolution 9-0.

“And even if we did those things, we would have no legal standing in the process. It won’t change the outcome. But our job is to make sure that we have something that has integrity and is neutral.”

Q: What has the proposed plant site been used for, and can anything else be done with that property?

A: From the 1940s until 2000, the site contained an aluminum smelter, but it’s now vacant.

The Port of Tacoma purchased the Kaiser Aluminum site in bankruptcy court in 2002 and spent almost a decade and more than $30 million cleaning up buildings and pollution from smelter operations.

It still qualifies as a public “brownfield,” but port officials say it is now ready for reuse by the heavy operations consistent with the rest of the working waterfront. The Port’s long-term plans call for expanding shipping and industrial uses within its 2,500-acre footprint, and 125 open acres with deepwater port access and industrial zoning qualifies as an asset.

The methanol plant, said Lou Paulsen, port strategic operations director, fits the bill for the tenant the public entity wanted to place there: an industrial operation that would not require truck or train suppliers and did not appear to leave problematic levels of pollution in its immediate area that would taint the land further.

“One of the considerations for us was that we spent nearly $33 million on this site,” Paulsen said. “We’d be crazy to bring somebody on that would risk recontaminating it.”

Derrick Nunnally: 253-597-8693, @dcnunnally