TEXAS CITY  — Chinese firms considering the county for a possible multibillion-dollar methanol plant secured leases on the property near the Texas City Dike where the plant would be built.

The project would be on the 900-acre Shoal Point peninsula, which is near the Port of Texas City across the ship channel from the Texas City Dike.

The $4.5 billion plant is to be developed by the Chinese firms of Connell Group of China and Sino Life Insurance Co. through their U.S. arm, Fund Connell USA Energy and Chemical Investment Corp.

While a positive sign, Texas City has yet landed the project, said C.B. “Bix” Rathburn, CEO of the Galveston County Economic Alliance.

Texas City is in competition with a site near Donaldsonville, La., for the plant.

County Judge Mark Henry is confident the Texas City location will come out on top.

"We have met on several occasions with the Chinese group and each meeting is more serious," Henry said. " I'm happy the group has taken such a serious interest in Galveston County and we will continue to sell our position as their "best location" for this project."

The Shoal Point leases with the city and the Texas General Land Office allow the Chinese partners to continue due diligence to determine which of two U.S. sites would get the project.

The city and county are working on economic incentives to help lure the project, and the state may also offer some help.

It is projected that during construction, which could begin as early as next year, the project would generate 1,000 direct jobs. Indirect construction jobs could top 200, officials said.

It is estimated that as many as 500 people would work at the facility.

The plant would have the capability of producing about 7.2 million tons of methanol annually and would ship almost all of the feedstock chemical to China. The company also is building several ships to make the trek from the Gulf of Mexico to China.

Each of the ships will be the new generation of Post Panamax.

The 1,000-foot long ships are specifically designed to traverse through the Panama Canal, which will be expanded by 2016.

Part of the Texas City project would include the construction of a deep-water port facility at Shoal Point to accommodate those ships.

Fund Connell USA Energy will pay the city $200,000 for the two-year development lease, Texas City Mayor Matt Doyle said. The partnership would pay a similar amount to the state for its portion of the site, Doyle said.

The county judge said he is looking to maintain a balance with incentives.

" We've talked about a phased approach to abatements that offers financial incentive without leaving county taxpayers empty," Henry said. "I don't have the exact numbers, but it's basically a percentage of investment achieves a greater percentage of abatement, but there's no scenario where there are no new taxes to the county."

The state, through the General Land Office, controls about 600 acres of the site, with Texas City controlling the remaining 300 acres.

“The company will immediately begin evaluation of the site as well as the permits required to operate the proposed (plant),” Rathburn said.

Methanol is a chemical feedstock that is produced using natural gas, of which the state, the Upper Texas Coast in particular, has an abundance, because of fracking.

“The abundant sources of natural gas in the Gulf Coast region and the expansion of the Panama Canal in 2016 make this location attractive for the production and exporting of methanol in large quantities as feedstock for the growing petrochemical production capacity in China,” Sinolife Chairman Zhang Jun said.

As the partnership looks at moving forward, county, city and state officials will be looking at what needs to be done to land the project.

Last week, economic development officials meet with Gov. Rick Perry’s office.

Doyle said the city already has a general outline of the economic and in-kind incentives it would offer. He expects that outline will change “hundreds of times” before any deal is secured.

The trick, he said, would be to balance what is fair to the company and property taxpayers. That is why the traditional tax abatement may not be part of the city’s package.

Texas City in recent years has instead used targeted tax rebates to lure businesses to the city. Such agreements give companies a similar incentive, but are based on the actual taxable value of the project.

Rathburn said that while the company indicated it would like to make its final decision by the second quarter of 2015, he wouldn’t be surprised if a decision comes sooner.

The deal originally came to the county alliance from the governor’s office. Perry’s office reached out to Gartman, who brought in Rathburn to help on the project. Gartman retired as CEO of the county alliance two months ago but is still working on this project.

Doyle remarked how quickly the project went from a suggestion to agreements in five months.

“I give all the credit to Bix, who has worked really hard to make this deal come together,” Doyle said.

Access to natural gas and ports with the capability of taking advantage of the soon-to-be-expanded Panama Canal have, of late, made Texas and Louisiana attractive to Chinese chemical firms.

On Monday, Chinese-owned Yuhuang Chemical Inc. announced plans to build a $1.85 billion methanol plant in St. James Parish, La.

Mainland Editor T.J. Aulds may be reached at 409-683-5334 or tjaulds@galvnews.com.

The project would be on the 900-acre Shoal Point peninsula, which is near the Port of Texas City across the ship channel from the Texas City Dike.

The $4.5 billion plant is to be developed by the Chinese firms of Connell Group of China and Sino Life Insurance Company through their U.S. arms Fund Connell USA Energy and Chemical Investment Corporation.

While a positive sign, Texas City has yet landed the project, C.B. "Bix" Rathburn, CEO of the Galveston County Economic Alliance, said.

Texas City is in competition with a site near Donaldsonville, La., for the plant.

The Shoal Point leases with the city and the Texas General Land Office allow the Chinese partners to continue due diligence to determine which of two U.S. sites would get the project.

The city and county are working on economic incentives to help lure the project, and the state may also offer some help.

It is projected that during construction, which could begin as early as next year, the project would generate 1,000 direct jobs. Indirect construction jobs could top 200, officials said.

It is estimated that as many as 500 people would work at the facility.

The plant would have the capability of producing about 7.2 million tons of methanol annually and would ship almost all of the feedstock chemical to China. The company also is building several ships to make the trek from the Gulf of Mexico to China.

Each of the ships will be the new generation of Post Panamax.

The 1,000-foot long ships are specifically designed to traverse through the Panama Canal, which will be expanded by 2016.

Part of the Texas City project would include the construction of a deep-water port facility at Shoal Point to accommodate those ships.

Fund Connell USA Energy will pay the city $200,000 for the two-year development lease, Texas City Mayor Matt Doyle said. The partnership would pay a similar amount to the state for its portion of the site, Doyle said.

The state, through the General Land Office, controls about 600 acres of the site, with Texas City controlling the remaining 300 acres.

“The company will immediately begin evaluation of the site as well as the permits required to operate the proposed (plant),” Rathburn said.

Methanol is a chemical feedstock that is produced using natural gas, of which the state, the Upper Texas Coast in particular, has an abundance.

“The abundant sources of natural gas in the Gulf Coast region and the expansion of the Panama Canal in 2016 make this location attractive for the production and exporting of methanol in large quantities as feedstock for the growing petrochemical production capacity in China," Sinolife Chairman Zhang Jun said.

As the partnership looks at moving forward, county, city and state officials will be looking at what needs to be done to land the project.

Last week, economic development officials meet with Gov. Rick Perry’s office.

Doyle said the city already has a general outline of the economic and in-kind incentives it would offer. He expects that outline will change “hundreds of times” before any deal is secured.

The trick, he said, would be to balance what is fair to the company and property taxpayers. That is why the traditional tax abatement may not be part of the city’s package.

Texas City in recent years has instead used targeted tax rebates to lure businesses to the city. Such agreements give companies a similar incentive, but are based on the actual taxable value of the project.

Rathburn said that while the company indicated it would like to make its final decision by the second quarter of 2015, he wouldn’t be surprised if a decision comes sooner.

The deal originally came to the county alliance from the governors office. Perry's office reached out to Gartman, who brought in Rathburn to help on the project. Gartman retired at CEO of  the county alliance two months ago but is still working on this project. 

Doyle remarked how quickly the project went from a suggestion to agreements in five months.

“I give all the credit to Bix, who has worked really hard to make this deal come together,” Doyle said.

Access to natural gas and ports with the capability of taking advantage of the soon-to-be-expanded Panama Canal have of late made Texas and Louisiana attractive to Chinese chemical firms.

On Monday, Chinese-owned Yuhuang Chemical Inc. announced plans to build a $1.85 billion methanol plant in St. James Parish, La.

Mainland Editor T.J. Aulds may be reached at 409-683-5334 or tjaulds@galvnews.com.

(11) comments

Richard Worth

Pros

1. Jobs
2. Tax Revenue, depending on how much TC's rulers have to capitulate. It's not the bending over backwards that gets you, it's the bending over forwards...

Cons

1. The complex will be 100% built by illegal aliens. Just like Texas' highways. Everyone will look the other way. If you disagree, you really haven't been paying attention.
2. Environment. Chinese companies operate under little to no environmental law. Texas ain't exactly "Earth Friendly" itself. Combine the two, and you can likely kiss the shrimp and oyster industry goodbye.
3. China is Communist in name only now. Wages may not be what everyone is drooling over.

As always, I hope that I am 100% wrong. But...

I am worried.

Ron Shelby

Would be interesting to know the backstory on what the feds thought about this proposal from a long term security standpoint.

Andy Aycoth

They probably have already decided to build. They are just waiting to see what kind of free money that they can get in the form of tax abatements.

DonnieB

A 4.5 bil investment? Sounds good to me! That means more jobs for the future plant, and any related contractors in the area. They will need major infastructure development, rail, roads, pipelines, docks, you name it. That's positive across the board on that issue. And depending on how much of the island they use, there could be more companies wanting to develop on Shoals Point. Plus you have an increase in tax revenue for the city, county, and state. As far as it being a chinese comp wanting to ship all product made in the USA back to china, I like the sound of that. For too long american companies went to china to make product to be all sent back here. It's about time that is being reversed! And if they don't stay, another company will buy it and may sell the product here.
And RonShelby, I don't see it as a security issue when we have several methanol plants being built on the Gulf Coast. They are all being built to ship the product to asia and other parts of the world, because of the high profit margin off of nat gas prices here vs asia or saudi.
And Tifosi, you have no idea what your talking about. It will include a dock, which means it's controlled by the coast guard, which means you need a TWIC card, which means no illegals can work there. On the environment, it will be a new plant from the ground up, which means it is not grand-fathered like the current ones in TC, which means it will follow current strict environmental rules, which will cost them more than they think it will. And on the wages, they may not be along the lines of Marathon's, but it will be high I would assume.

George Croix

Right now, it's just a lease.
Like that other company had that never built here.
IF anything further comes of it, I'm reasonably certain that Shoal Point will not be sold to the Chinese to become a part of the People's Republic of China, so U.S. environmental regulations, good or bad, will be watched closely for compliance by agents of the U.S. The Coast Guard also takes a dim view of anything not doing everything that a MARSEC facility designation says it should...they have no sense of humor at all about deviations.
IF the facility is built, not to worry...milking local industry has a long and successful history in T.C., despite a few recent setbacks where the cash cows objected to being milked down to 'udder' dry, so there's no reason to think that the lessons learned will be lost dealing with any new facility.
Although, one wonders if the Chinese were made to realize that city government is not their worst potential financial nightmare, it's local citizens (heck, even ones not local...WAY not local...) 'harmed' by methanol, or noise, or Something, guided by both local 'advocates', and their own, personal, malfunctioning moral compasses. I wonder if Donaldsonville, L.A., has a number of people greater than their total population ready to claim injury or harm, and if they have locally, and active, an equivalent to our own area 'advocates' in scope and deed(s)? Sure would be interesting if that turned out to be the deal breaker for this area - wouldn't it?
No matter what tax breaks might be offered, there would still be more money coming to the area than there is now, and, if successful, more to come.
Wages at a new methanol plant would ALL be higher than at the current facility that land was leased for, and then never got built, as they would be higher than the wages being paid at the LNG facility in Galveston that never came to be.
Looks like, at this point, the future of the facility depends on what the outcome of the word IF, is...
Here's hoping for some good jobs, 40 hour a week ones, for the local folks...

Dwight Strain

More jobs for the willing and able and benzene checks for the rest of us.

George Croix

There are still thousands of 'harmed' people hoping for their benzene checks.

Odd, after being literally soaked in the stuff on multiple occassions and working in close proximity to it for decades, and even once accidentally ingesting some, the only negative effect I've ever suffered as an inability to put together a paragraph without typing errors and missspelllings...
Any of you local panic purveyors for profit interested in taking my case...[whistling]

Gary Scoggin

Let's all hope it happens. Good paying jobs - they will have to pay comparable wages to the other plants in order to hire people.

I've visited some plants in China and have found them to be well built and well run with pollution controls comparable to what you would find in the US. And new plants built here will be subject to some of the strictest environmental standards in the world.

And, as DonnieB points out, cheap natural gas here ($5-6/mcf, delivered by pipeline) versus China ($15+/mcf, delivered as LNG) makes a project like this a winner.

As far as the ambulance chasing issue goes, south Louisiana has it's share of greedy lawyers and deadbeats too, so hopefully that won't be a deciding factor.

DonnieB

And as for the freeloaders that rent the houses right next to the plant in hopes of a 'benzene check', why are those homes still there? Why has the refineries not bought up all that property within a certain distance from the plant? It would be a couple million for the property versus hundreds of millions, or billions, for a lawsuit. I'm not understanding the logic there. Everything between Texas Ave and the refineries, should be owned by the refineries, or other related industries, like fab shops or supply companies. But no, they will keep the cycle going and let freeloaders move right next door to the refinery, just waiting for a big payout.

Gary Scoggin

DonnieB - Amoco and then BP were very aggressive in buying these properties for many years. Look at how many vacant lots thee are between Fifth Ave S and Texas Ave. but not everyone is willing to sell and some are tied up in probate, etc.

But the best option remains not to have emission events in the first place.

Andy Aycoth

This will be the biggest deal since Amoco, then Pan American came to town.

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