Public notification of Northwest Innovation Works' application to build a methanol production facility is posted outside the gates of the former Kaiser Aluminum property. The Port of Tacoma bought and cleaned up the property after the smelter halted work more than a dozen years ago. In 2014, Northwest Innovation Works signed a 30-year lease with the port to build a proposed 125-acre methanol production facility on the property. Drew Perine dperine@thenewstribune.com
Public notification of Northwest Innovation Works' application to build a methanol production facility is posted outside the gates of the former Kaiser Aluminum property. The Port of Tacoma bought and cleaned up the property after the smelter halted work more than a dozen years ago. In 2014, Northwest Innovation Works signed a 30-year lease with the port to build a proposed 125-acre methanol production facility on the property. Drew Perine dperine@thenewstribune.com

Local

Methanol proposal arrived in Tacoma after extensive Inslee courtship

By Derrick Nunnally

dnunnally@thenewstribune.com

April 09, 2016 02:34 PM

For nearly three years before a tsunami of public opposition arose against the methanol plant proposed for Tacoma’s Tideflats, Gov. Jay Inslee’s administration worked behind the scenes to help the project get moving toward construction.

The project took root in Olympia starting in March 2013 with a sales pitch as a promising business opportunity with global greenhouse-gas benefits, state records show. A mutual courtship ensued that officials say is routine.

“Our administration talks to hundreds of companies every year who might be interested in locating here,” Inslee said in a phone interview, “but equally important is our work to protect clean air and water.”

Now on pause because of criticism over its resource demands and potential environmental effects, the Tacoma methanol proposal’s future is uncertain.

Be the first to know.

No one covers what is happening in our community better than we do. And with a digital subscription, you'll never miss a local story.

Northwest Innovation Works, the company behind the project, has suspended its application for an environmental review and requested the Port of Tacoma to extend the feasibility period of its lease, which moves into its higher-rent construction phase May 1. Port commissioners have scheduled a vote for April 25.

Earlier in the project’s history, its backers discussed their goals openly with government, records show.

Administration officials, sometimes accompanied by Inslee, met with representatives from the China-backed company at least a half-dozen times. The project evolved before and during Inslee’s trade mission to China in 2013, aided by political veterans from prior gubernatorial administrations and from the state’s congressional delegation staff.

At least four potential sites for methanol plants were in play at various points before a lease proposal went to the Port of Tacoma that December.

The goal was to help secure a landmark foreign investment of more than $5 billion, along with up to 500 new permanent jobs in the state. Instead, the proposal attracted an outcry the governor said he had not foreseen.

“I hadn’t gotten deep enough into it to consider that,” Inslee said in an interview. “I think that what we’re seeing are some very legitimate concerns, and important questions are being asked about it. And I think all of those questions have got to be answered before this plant can, in fact, move forward.”

Inslee said he is “disappointed” by how Northwest Innovation Works has presented the methanol project.

“I had the expectation that a company that was making such a large investment would understand the need to have forthright conversations with the community to build credibility and trust and openness and have the information about water supplies and emissions and any safety concerns that would be necessary to give the community confidence,” Inslee said. “… That just has not happened.”

In an email Friday, a Northwest Innovation Works representative wrote that the company agreed that its communication could have been handled better.

“However, we don’t believe we are solely responsible for the tenor of the debate in Tacoma,” the statement added, “as it feels like the opposition to our project is less interested in having a thoughtful conversation than a one-way shouting match.”

Except for a few public displays of support, the state has taken a largely quiet role since the May 2014 lease approval started the proposal toward an environmental review. That application process remains on a temporary hold.

Records show how extensively administration officials worked with the company and China’s government to bring gas-to-methanol manufacturing to Washington.

“These projects may well not be a possibility were if not for our engagement with them, and the company is more than willing to say as much publicly,” state commerce director Brian Bonlender wrote in an April 2014 email titled “Methanol.”

In a video, Inslee called the project “a fantastic step forward.”

Washington would get tax revenues and jobs, and the chemical process would emit fewer tons of greenhouse gases in making methanol — for export to Asian plastics factories — than China’s coal-fueled plants put out. Those gases contribute to worldwide environmental degradation, including the acidification of Commencement Bay.

Bonlender and Inslee said the state’s role was to bring the project to the table so local officials could decide — using an environmental review overseen by Tacoma city government — whether the plants are a good fit.

The state, he said, had greeted the business proposal appropriately.

“It’s almost like a double negative,” Inslee said. “We didn’t tell them that we’re not interested in 200 jobs in our state.”

How methanol came to Inslee’s desk

Email records obtained by The News Tribune show the proposal arrived in Olympia with high-caliber names on board: an acquaintance from the governor’s years in Congress and a controversial Chinese political scion.

The acquaintance, California businessman Mike Tao Zhang, worked for Northwest Innovation Works. He introduced the project with a March 2013 email to Inslee staff member Sam Ricketts, who passed it along to other administration officials. Zhang wrote of “clean energy plants” slated for somewhere in the Pacific Northwest.

Attached were photos of what Zhang called “the good old time” he and Inslee had at a Washington, D.C., meeting in 2009, during Inslee’s time in Congress.

Zhang, who is no longer affiliated with Northwest Innovation Works, declined via email to answer further questions.

In the email, he wrote the joint effort of China’s government and the oil giant BP (which since has sold its interest) had made “good progresses (sic) in Oregon,” including meetings with then-Gov. John Kitzhaber about possible plants there. The company, he added, would rather build in Washington to save money on piping in natural gas.

He also dropped a heavyweight name: Jiang Mianheng, the son of former China president Jiang Zemin. A follow-up email identified Jiang Mianheng, then a top official within the Chinese Academy of Sciences, as “the sponsor of our company” who was headed soon to the United States to gin up business deals.

It did not mention a series of news stories the year before that identified Jiang Mianheng as a “princeling” whose connections had made him millions as a businessman.

Less than a month after the email was sent, the New York Times won a Pulitzer Prize for China-related stories the prize committee labeled a “striking exposure of corruption.” The series included a May 2012 report on how Jiang Mianheng had profited from his family name despite China’s laws to prevent leaders’ families from accumulating power and wealth.

Ricketts cited the president’s son’s involvement when he forwarded the methanol introduction along to other Inslee administration officials. Bonlender and Inslee said they do not recall encountering Jiang Mianheng during methanol discussions.

Within months, the project gained support. Another businessman on board early with the methanol plan, Mark Hsu, approached longtime acquaintance Nancy Biery later in 2013 with a request for help meeting Inslee’s team. Biery had served as Gov. Gary Locke’s director of external affairs and was a candidate in 2013 to chair the state Democratic party.

“He (Hsu) called me and said, ‘We’ve got this broad kind of project,’ much of which I didn’t even understand,” she said in a recent interview, “and said, ‘I want to present it to the governor’s office.’ 

She introduced Hsu to Inslee’s then-policy director, Ted Sturdevant. Hsu did not return a reporter’s email.

Records show that on Oct. 15, 2013, Schuyler Hoss, Inslee’s liaison for foreign governments, Bonlender and other administration officials met with representatives from Shanghai Bi Ke — Northwest Innovation Works’ parent company — in Inslee’s office.

A chart in the presentation’s slide show described the Northwest’s natural gas as a “stranded cheap resource.” Another slide said it could become more profitable if converted to methanol for export than if exported as liquid natural gas.

A month later, Inslee led the trade delegation to China to discuss the state’s international business concerns. Among the topics: apples, Almond Roca and methanol.

Government officials frequently undertake such trips. Former Gov. Chris Gregoire traveled on several, including a trip to China and Vietnam in 2010. Tacoma Mayor Marilyn Strickland is scheduled to return Sunday, April 10, from a 10-day trade trip to China and Vietnam.

In 2013, Inslee arrived in China later than scheduled because of a special session of the Legislature and missed a Nov. 15 trip to Shanghai, where the methanol proposal was presented in more depth to Bonlender and others.

After the trade delegation returned, plans moved quickly.

On Dec. 5, 2013, Bonlender wrote in an email that the Chinese enterprise might build two methanol plants, and that the shortlist of potential locations consisted of Kalama, Tacoma, Cherry Point and Longview.

Two weeks later, the “Pan-Pacific Energy Corp.” — an early incarnation of Northwest Innovation Works — filed a formal proposal with the Port of Tacoma to rent the former Kaiser smelter site on the Tideflats for a methanol plant.

Northwest Innovation Works president Murray “Vee” Godley said earlier this year that Tacoma’s deep-water port, access to gas and other utilities, and the availability of the Kaiser smelter’s former brown-field land were the reasons the company chose Tacoma.

Port of Tacoma CEO John Wolfe said in an interview he does not recall when in 2013 he first learned of Northwest Innovation Works’ interest in Tacoma.

Political connections

Also in late 2013, the enterprise’s Capitol clout had become evident.

Rick Desimone, the former chief of staff for U.S. Sen. Patty Murray and a veteran of Washington Democratic circles since 1990, signed on as a consultant and began emailing Inslee’s staff members to orchestrate meetings with the governor and others. Desimone said he does not recall how he came to be in contact with the project.

He reached out to Jay Manning, former head of the state Department of Ecology and chief of staff to Gov. Chris Gregoire, to join the effort.

Manning said in an interview that he discussed the idea in a series of conversations, but ultimately declined the invitation. He did send at least one email to Inslee administration officials helping to organize a meeting with the methanol backers.

He would not say whether he supports the project now.

He said Desimone is well-suited to shepherding the project into high-powered arenas.

“I don’t think the guys from China understood the lay of the land very well,” Manning said. “I think Rick was guiding them on that.”

In spring 2014, Northwest Innovation Works attracted wider public attention with the announcement of lease agreements on its Kalama and Tacoma sites.

An email from Bonlender that April 1, 10 days before Port of Kalama commissioners voted to approve the lease, asked Commerce Department staff members to look into the claims about the plant’s greenhouse gas emissions.

“I need to know if this is something we can’t do,” Bonlender wrote.

A staff member replied that he had “scoured the Internet this morning” but had not come up with “a truly informed answer.”

That May 1, the Port of Tacoma commissioners voted 4-0 to sign the methanol lease with Northwest Innovation Works. At the meeting, State Sen. Jeannie Darneille, D-Tacoma, voiced concerns about the plant.

She later scheduled a one-on-one meeting with Inslee over it, which she described recently as “collegial,” thoughit did not allay her fears the methanol plant would do more harm than good.

“In his mind, I believe that he thinks it’s good for us to be investing in the environment if it’s helping another country,” Darnielle said of Inslee. “What I don’t think he understood was the magnitude of the proposal.”

Inslee said he appreciated Darnielle’s concerns over the Tacoma-area environment. He said his initial methanol conversations predated the fall 2015 announcement the plant would double in size.

“I know that Pierce County is extremely sensitive to that, and with good reason, given the experience with Asarco,” Inslee said, “and I think it’s for extremely good reasons that people would be demanding of getting answers to those questions.”

While the Tacoma methanol propsal remains on hold, a draft of the proposed Kalama methanol plant’s environmental review is open for public comment until April 18.

Bonlender said that in both cases, local agencies will exercise appropriate authority over whether the project should get permits.

“With my job, I need to bring opportunities to communities, and that’s my role,” Bonlender said, “and if they choose that that’s not the right opportunity for them, that’s fine.”

 

 
 

 
 

 
 

Derrick Nunnally: 253-597-8693

Tacoma methanol plant: From proposal to pause

March 19, 2013: Northwest Innovation Works representative Mike Zhang sends Sam Ricketts, director of Gov. Jay Inslee’s office in Washington D.C., an email about a “plan to build some clean energy plants in the Northwest.”

Oct. 15, 2013: At a meeting in Inslee’s Olympia office, administration officials, including Commerce Department director Brian Bonlender, discuss the methanol proposal with Zhang and other backers of the plan. Inslee is not present.

Nov. 15, 2013: During a trade mission to China, Bonlender and other state officials visit Shanghai and meet with officials from Northwest Innovation Works’ parent company.

Dec. 6, 2013: Inslee meets in his office with Northwest Innovation Works officials to discuss potential construction of a gas-to-methanol plant in Kalama, Cherry Point, Longview or Tacoma.

Dec. 19, 2013: A formal proposal for the gas-to-methanol conversion plant is filed with the Port of Tacoma.

January 2014: Northwest Innovation Works announces plans to build plants at the Port of Kalama and near Clatskanie, Oregon.

May 1, 2014: Port of Tacoma commissioners approve a lease agreement with Northwest Innovation Works to build a methanol plant on the former Kaiser aluminum smelter site on the Tideflats.

Feb. 19, 2016: Northwest Innovation Works announces that it has asked Tacoma officials to pause the environmental review process needed to get permits to build the plant.