Alyeschem Aims for Big Impact With ‘Tiny’ North Slope Methanol Plant
The private equity-backed company is building the first project of its kind to serve Alaska’s Prudhoe Bay oil producers
Wall Street Journal
Private equity-backed chemical company Alyeschem plans to build Alaska’s first methanol production plant, a small project that state authorities expect will benefit both regional oil producers and the environment while taking advantage of abundant water and natural-gas supplies at the Arctic site.
Backed by private-equity firms BP Energy Partners in Dallas and Anchorage-based McKinley Alaska Private Investment, Alyeschem is developing the roughly $150 million project on Alaska’s North Slope, home to Prudhoe Bay, the largest oil field in North America, to serve energy companies operating there.
In addition to methanol, Alyeschem’s plant will produce low-sulfur diesel for use in engines, said JR Wilcox, Alyeschem’s founder and chief executive
Methanol helps prevent freezing and the accumulation of solid hydrates that can plug gas-compression equipment and limit pipeline flow, and it acts as a solvent and corrosion inhibitor. Prudhoe Bay operations have long relied on methanol imported from the Caribbean and Asia by sea to Anchorage and then hauled hundreds of miles north.
“We know the demand is there because we’ve been using methanol that’s been imported from outside the U.S. for decades,” said Randy Ruaro, executive director of Alaska Industrial Development and Export Authority, or AIDEA. “We know there’s a need for the product.”
The state development agency earlier this year pledged as much as $70 million to finance the methanol plant. The project also got a boost from an agreement that Alyeschem struck with energy company ConocoPhillips, one of the largest operators in Prudhoe Bay. Wilcox said Conoco will buy methanol and diesel from Alyeschem while supplying the plant with natural gas and carbon dioxide—oil-extraction byproducts that are crucial ingredients of methanol.
“Conoco is a partner on both sides. They are a supplier and consumer,” Wilcox said. He expects to make similar deals with more local oil-and-gas producers in the future, he added.
Alaska restricts flaring of natural gas, a common way to dispose of the volatile substance, but a lack of pipelines limits shipments to markets. So energy companies over the years have stored huge volumes of gas underground, and that can provide methanol feedstock, according to Wilcox and Ruaro.
“We have trillions and trillions of cubic feet of natural gas waiting for use,” Ruaro said.
The plant is expected to begin operating in 2027 and produce a daily average of roughly 32,000 gallons of methanol and 63,000 gallons of diesel. That volume makes it “tiny compared to most of the chemical plants that get built in the world,” Wilcox said.
But since shipping is by far the largest component of imported methanol’s cost, a local source could offer significant savings to users even if it couldn’t match the prices charged by bigger, more efficient plants, he said.
“The logistic costs to move things into the North Slope of Alaska are so large that it makes sense to build a smaller plant that wouldn’t be efficient if it was competing in the global market,” Wilcox said.
But Alyeschem is expected to generate other benefits, including from the hydrogen it will produce as a byproduct of making methanol. Some of the hydrogen will be used to produce diesel from regional heating oil, Wilcox said.
“We have a surplus of hydrogen compared to what’s necessary to make the methanol. We can use it to remove the sulfur from the Arctic heating fuel and make ultralow sulfur diesel,” he said. “It’s a very synergistic process.”
Alyeschem is developing its plant as increased oil-and-gas activity in Alaska raises concerns about the environment. AIDEA’s Ruaro said the project’s “multiple winners” include the environment, as it will reduce carbon emissions from methanol-hauling trucks and ships. It will also create jobs and lower costs for local energy companies, he said. “It is the model AIDEA wants to replicate in other projects, whether they’re a methanol plant or something else,” Ruaro said.
“It’s the shared financing with the private sector, the development of Alaska’s natural resources and the benefits of producing something in Alaska versus outside.”