DoE offers $2bn conditional loan to first methanol CCS project
The US Department of Energy (DOE) has granted a "conditional commitment" to back up to $2bn in loans to Lake Charles Methanol to build the world's first petroleum coke-to-methanol plant at Lake Charles, Louisiana. If it gets the go-ahead, the facility will create methanol, hydrogen and other chemicals, as well as capturing carbon for use in enhanced oil recovery in Texas. The plant could sequester 4.2 million metric tons of carbon dioxide annually, and may reduce greenhouse gas emissions by 36% compared to traditional methanol facilities.

The US Department of Energy (DOE) offered a conditional commitment to guarantee loans of up to $2 billion to Lake Charles Methanol, LLC to construct the world’s first methanol production facility to employ carbon capture technology in Lake Charles, Louisiana. The captured carbon would be utilized for enhanced oil recovery (EOR) in Texas. This project would represent the first loan guarantee made under the Advanced Fossil Energy Project solicitation issued by the Department’s Loan Programs Office (LPO).

If constructed, the project would also be the first petroleum coke (petcoke) to methanol facility in the US. Petcoke is a byproduct from oil refining. Methanol is one of the world’s most widely-used industrial chemicals in applications from paints and plastics, furniture and carpeting, to automotive parts, windshield washer fluid and fuel blending. By using petcoke as the feedstock and employing carbon capture at the project, the proposed project will reduce emissions of carbon dioxide that would otherwise be released.

This conditional commitment represents a major milestone in the Department’s efforts to scale up carbon capture utilization and sequestration and continue American leadership in advanced fossil energy technologies. The Department’s Loan Programs Office has received more than 70 applications to its current solicitations for almost $50 billion in loans and loan guarantees, which can allow projects to leverage additional private dollars for major infrastructure projects that will create thousands of good-paying American jobs and generate cleaner energy in the future. —US Secretary of Energy Ernest Moniz

Overall, Lake Charles Methanol anticipates a $3.8 billion infrastructure investment for the project that will help to support the Gulf Coast economy by creating an expected 1,000 construction jobs and 200 permanent jobs in Louisiana. The project will also create roughly 300 jobs in Texas for EOR activities.

The proposed plant will produce methanol, hydrogen, and other industrial gases and chemical products. The carbon dioxide captured from the petcoke gasification plant will be compressed for commercial pipeline transport. The captured carbon dioxide will be transported to oil fields in Texas for EOR, resulting in sequestration of 4.2 million metric tons of carbon dioxide annually. The project reduces greenhouse gas emissions by 36 percent compared to typical methanol facilities. Overall, the project captures 77% of all carbon dioxide produced by the facility.

The offer of a conditional commitment is an important step towards issuing a loan guarantee to support construction of the project. The Department will continue to monitor the project’s development and work to reach final agreement before closing the loan guarantee.

The Department’s Loan Programs Office (LPO) supports a large, diverse portfolio of more than $30 billion in loans, loan guarantees, and commitments, supporting more than 30 closed and committed projects. The projects that LPO has supported include one of the world’s largest wind farms; several of the world’s largest solar generation and thermal energy storage systems; and more than a dozen new or retooled auto manufacturing plants across the country.