AUSTRALIA’S SWEETWATER GTL PROJECT NAILS DOWN GAS SUPPLY

In January 2000 Methanex Corporation announced that Methanex is providing US$2 million toward the cost of the engineering work for the Gas-To-Liquids (GTL) project known as the Sweetwater Project which was first announced by Syntroleum Corporation on November 15, 1999. The German engineering firm Klockner Industrie-Anlagen GmbH is performing the engineering work. After completion of the engineering work, and subject to certain conditions, Methanex will provide approximately US$43 million of additional funding for a minority interest in the project. As announced in February 1998, Enron North America, a subsidiary of Enron Corporation, is also participating in the project.

The Sweetwater Project is a nominal 10,000-barrel per day plant that will employ the Syntroleum Process to convert natural gas into specialty chemicals such as lubricants, industrial fluids, paraffins and designer fuels.

In February 2000 Syntroleum Corporation announced that the $400 million Sweetwater plant would be built in Australia, that a $19-million license agreement was approved by the Commonwealth of Australia, and a $1.26-billion gas sales agreement was signed.

The facility will be located on Western Australia’s Burrup Peninsula about 4 kilometers from the North West Shelf Venture Liquefied Natural Gas plant. The nearest city is Darwin.

The Western Australia state government agreed to invest over $19 million in a general infrastructure package, which will include roadways and a desalination plant to which the project will supply steam and from which it will receive water.

Products could include methanol, hydrogen, normal paraffins (for ethylene production and waxes for candles), synthetic lubricants (polyalphaolefins) and drilling fluids, and some synthetic fuels (naphtha).

A final decision on the project is expected in 2002 and startup of the syngas facility is planned in 2005.

In March 2000 Shell Development Australia, Woodside Energy Ltd. and Methanex Corporation signed a letter of intent that specifies the key commercial terms for supply of approximately 110 petajoules of natural gas per year for the Sweetwater facility.

Shell and Woodside are partners in the Northern Australia Gas Venture (NAGV) which plans to deliver offshore natural gas to Australia’s Northern Territory. Shell and Woodside hold substantial interests in a number of discovered and potential gas fields in the Timor Sea off the Northern coast of Australia. Of these, the Greater Sunrise fields are being used as the base case for development against which other options are being considered. The NAGV, which was formed to commercialize these and other natural gas resources, is actively seeking additional customers for the gas.