A3
THE DAILY ASTORIAN • MONDAY, APRIL 22, 2019
Kalama methanol plant may be misleading public
Pitched to combat
climate change
By MOLLY SOLOMON
Oregon Public Broadcasting
Nearly four years ago,
Washington Gov. Jay Ins-
lee touted a new company
that was coming to Kalama
to revolutionize the metha-
nol market.
On that sunny August
day on the banks of the
Columbia River, Inslee
spoke alongside city and
county leaders, business
people and executives from
NW Innovation Works , a
Chinese-backed company
looking to build three mas-
sive natural gas to methanol
plants in southwest Wash-
ington state.
“I think this bodes well
for Washington’s future,”
Inslee told the crowd.
The governor praised
the creation of hundreds of
family-wage jobs, millions
of dollars in local tax reve-
nue, and the plant’s biggest
selling point: the methanol
it created from natural gas
could help clean up China’s
plastics industry.
The project has been
pitched by its developers
and the governor as one way
to combat climate change.
They say making methanol
from natural gas in plants
that use renewable power
could eventually displace
many of China’s dirtier
coal-based plants.
“This is a fantastic step
forward, because the carbon
savings will be equivalent to
taking millions, perhaps 6
million cars, off the road,”
Inslee said in a promotional
video at the time.
But
the
climate
change-crusading
gover-
nor running for president
may not have know that
NWIW was selling a differ-
ent story to investors — one
less focused on producing
cleaner methanol for plastics
and more on an opportunity
to buy into a new methanol
supply chain to fi ll China’s
insatiable appetite for fuel.
Documents obtained by
Oregon Public Broadcasting
show that NWIW is saying
one thing to state regulators
while eyeing China’s fuels
market. As recently as Jan-
uary 2019, PowerPoint pre-
sentations shown to poten-
tial investors in the Kalama
facility detailed the compa-
ny’s apparent intent to burn
their methanol for fuel in
China.
This directly contradicts
what the company has been
publicly emphasizing for
years, that its end product
would only be used for ole-
fi ns, the building blocks of
plastic.
Resisting fossil fuel
Washington has increas-
ingly resisted the fossil fuel
industry that has descended
upon the state in recent
years.
Environmentalists
have especially scrutinized
energy projects looking to
export fuel.
If a project like the one
in Kalama were to go down
that path, it could call into
question the project’s envi-
ronmental impact analy-
sis, as well as qualify for a
more stringent regulatory
path . Fierce local opposition
already shuttered plans for
NWIW to open a Tacoma
methanol plant, and plans
for another in Port West-
ward are on hold.
In a March 2018 Power-
Point presentation shown to
Satori Partners Inc., a U.S.-
based investment group
with experience doing busi-
ness in Asia, NWIW lays
out a proposal with a very
different product. More
than a dozen pages discuss
burning methanol as “clean
fuels for industries and
transportation.”
One slide features a ship
carrying “liquid sunshine”
and refers to the metha-
nol produced in Kalama as
“clean crude” and “conve-
nient LNG.”
NW Innovation Works
The proposed site at the Port of Kalama where NW Innovation Works is proposing a 90-acre methanol plant.
Ashley Ahearn/KUOW
A grain ship on the Columbia River at the Port of Kalama, which could one day also host a methanol plant.
In the 26-page presen-
tation, only one slide is
devoted to methanol-to-ole-
fi n production or plastic
materials. That narrative
fl ies in the face of every-
thing developers have told
the public — and state regu-
lators in the middle of deter-
mining whether the project
moves forward.
“Obviously the rea-
son that they’re not tell-
ing people, or going out of
their way to say
it’s not for fuel,
is because that
makes the green-
house gas anal-
ysis less favor-
able to them,” said
Dan Serres, con-
servation direc-
tor of environ-
mental group Columbia
Riverkeeper, referring to
the company’s most recent
environmental review that
is supposed to take into
account the cradle-to-grave
emissions of the project and
its end product.
“This changes the analy-
sis quite signifi cantly if this
isn’t going into the plastics
manufacturing
industry,”
Serres added.
Columbia Riverkeeper
has challenged earlier per-
mits issued to the company
and has been vocal oppo-
nents of the Kalama meth-
anol plant, along with other
fossil fuel industries that
have eyed the Northwest for
potential sites.
The documents were
shared with Oregon Pub-
lic Broadcasting by Colum-
bia Riverkeeper and Satori
co-partner Steven Tarace-
vicz, who says he and his
Shenzhen,
China-based
partner were approached
by NWIW to invest in the
Kalama project in late 2018.
Taracevicz said his com-
pany was approached by
NWIW leadership, includ-
ing current CEO Simon
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Zhang and the compa-
ny’s former Chief Finan-
cial Offi cer Edward Sappin,
who authored the leaked
presentation.
Despite
presentation
slides that show an arrow
on a map from Kalama to
images of Chinese trucks
and cars in Asia, NWIW
maintains all methanol pro-
duced at the Kalama facility
will only be used for plastics
and materials. A company
occasions, project backers
have voiced their intention
to bring natural gas-created
methanol into China’s fuel
market.
Wu Lebin, chairman of
the Chinese Academy of
Sciences Holding Co. , the
main backer of the Kalama
project, has publicly said the
fuel will be burned as feed-
stock for fuel and industries.
In an April 2017 China
Daily report, Lebin told
‘IF YOU ARE TAKING METHANOL
AND USING IT AS A TRANSPORTATION
FUEL, THEN YOU’RE BURNING IT. ’
Greg Dolan, CEO of the Methanol Institute
offi cial acknowledged that
there is a demand for meth-
anol as fuel but said that’s
a “farther down the road”
conversation.
Both PowerPoint presen-
tations were sent by Tarace-
vicz to Columbia River-
keeper six weeks ago.
“This is certainly the
most concrete piece of evi-
dence that they really do
consider this a fossil fuel
export project,” said Colum-
bia Riverkeeper attorney
Miles Johnson.
Voiced their intention
Speculation that the com-
pany’s proposed Kalama
refi nery could tap into the
methanol fuel market is not
entirely new. On multiple
reporters about his com-
pany’s $2 billion metha-
nol plans, using the Kalama
plant as evidence that China
is investing heavily in
North American shale gas
“in order to commercially
extract methanol for use as
an environmentally sustain-
able motor fuel.”
Lebin went on to say
his company is building
“a supply chain for metha-
nol, potentially China’s next
alternative industrial and
transport fuel,” according to
a December 2017 article in
Reuters.
NW Innovation Works
also sponsored a two-day
workshop at Stanford Uni-
versity in 2017 on methanol
production titled “Oppor-
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tunities and Challenges for
Methanol as a Global Liq-
uid Energy Carrier.” Con-
ference reading materials
fail to even mention using
methanol to create olefi ns
or plastics, again downplay-
ing a point that is a major
talking point when the com-
pany talks about its plans
for the Kalama facility.
More recently, Lebin’s
bio for an upcoming busi-
ness conference for inves-
tors
describes
NWIW’s Kalama
facility as “one of
the most innova-
tive clean energy
projects in the
nation” that will
provide methanol
“to China as clean
feedstock for pet-
rochemicals and fuels.”
NWIW confi rmed the
PowerPoint slides were
indeed created by the com-
pany and presented to inves-
tors. However, they say
mention of fuel was merely
“educational” and that the
methanol plant in Kalama
was still on a pathway to be
used for materials.
“Our desire is that the
intentions and commitments
for the materials use and
pathway for NWIW Kalama
project methanol be unam-
biguous,” Kent Caputo, the
company’s chief operating
offi cer and general coun-
sel, wrote in an email to
Oregon Public Broadcast-
ing . “Contractual and regu-
latory obligations and over-
sight can and should be put
in place and enforced to
ensure compliance with the
intended and limited materi-
als, such as methanol-to-ole-
fi n, outcome.”
Over the past decade,
China’s appetite for metha-
nol has grown considerably.
Today, China is the world’s
largest market for methanol,
consuming anywhere from
60 million to 68 million met-
ric tons per year, according
to market analysts from S&P
Global Platts. That’s more
than half the global demand.
“That makes it a very
important market from a
global perspective,” said
Esther Ng, senior editor for
S&P Global Platts’ petro-
chemicals desk. Ng says the
country’s domestic methanol
production is about 58 mil-
lion metric tons per year. The
rest — the other 2 million to
10 million metric tons — is
made up through imports.
“So China is always
looking out for new sources
of methanol,” she said.
China uses methanol for
primarily two things: to con-
vert into olefi ns for plastics
and other materials or as a
fuel for transportation and
industries.
“We’re using methanol
now in industrial boilers
used to run manufacturing
facilities, pharmaceutical
plants, hotels and apartment
complexes,” said Greg
Dolan, CEO of the Metha-
nol Institute, a Washington
D.C.-based industry group.
Dolan says methanol is
appealing to the Chinese
government,
especially
when used to create prod-
ucts. By transforming the
methanol in a plastic mate-
rial, it traps the carbon from
being released and reduces
further greenhouse emis-
sions. But he says that idea
begins to get lost if the meth-
anol is instead used as fuel.
“That’s an important dis-
tinction,” Dolan said. “If
you are taking methanol
and using it as a transporta-
tion fuel, then you’re burn-
ing it. Methanol will reduce
a lot of emissions compared
to gasoline or diesel. But it’s
still a fuel that’s burning,
and those produce green-
house gas emissions.”
Under review
The debate over how
much greenhouse gas emis-
sions are released from the
Kalama project and the
ultimate use of its meth-
anol are at the heart of a
study requested by the state
Shoreline Hearings Board.
NWIW hired a consultant,
California-based Life Cycle
Associates, to complete a
241-page cradle-to-grave
analysis that was included in
the draft supplemental envi-
ronmental impact statement ,
which is under review.
The study concludes that
the Kalama facility’s use
of liquifi ed natural gas and
the facility’s use of renew-
able energy would result in
a reduction of global green-
house gas emissions of
between 9.6 million and 12.6
million metric tons per year.
A large part of that hinges
on the belief that this plant
would displace coal-based
methanol and would only be
used to create plastics.
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