Methanex inks deal with Chesapeake for natural gas at Geismar plant

Oklahoma-based Chesapeake Energy Corp., the nation’s second-largest natural gas producer, will supply natural gas for Methanex Corp.’s methanol plant under development in Geismar. Methanex announced earlier today it has reached a 10-year deal with Chesapeake. The supply will begin with the startup of the plant, which is expected to occur in late 2014. The contract is uniquely structured so that the price of natural gas is linked with the methanol price. Both the entities will share the risks and benefits arising from the methanol price changes over the tenure of the agreement. Vancouver-based Methanex is the world’s largest supplier of methanol to major international markets. A Methanex official also commented today on the possibility of the company’s locating a second plant in Louisiana, which has been rumored before. “Having a 10-year contract in place for 1 million tonnes of methanol production per year reduces our exposure to short-term natural gas price fluctuations, which will lower the natural gas price risk for the site if we decide to relocate a second plant to Louisiana,” says John Floren, Methanex president and CEO. “We expect to make a decision during the first half of 2013 on whether to proceed with a second relocation project.” Read more about today’s contract announcement here.