Talking Point

It is quite clear that methanol is the choice of monohydric alcohol for biodiesel production. In spite of methanol pricing sitting at essentially the second-highest level in history at just over $1 per gallon as the base contract barge price for approximately 420,000-gallon orders FOB U.S. Gulf Coast, methanol is the economic choice for biodiesel.

The FOB Gulf Coast barge price is the basis in establishing railcar and truck pricing for biodiesel plants all over the United States and Canada. Simply take the barge price and add an upcharge to cover the expense and handling of a 7,500-gallon truck or a 29,000-gallon railcar versus a 420,000-gallon barge. Then add the freight cost in getting from the ocean marine terminal to the consumer's location. Of course, there are additional methods of delivery incorporating inland terminals and river barge movements, which would add terminal and throughput costs plus the truck freight from the inland terminals to the customer.

The base price for methanol is quite high today compared with the 40- to 80-cent-per-gallon range from 1999 to 2004. The barge price rose over $1.50 per gallon in early 1995 when there was a perceived shortage of methanol caused by the large MTBE requirement for reformulated gasoline under the Clean Air Act of 1990. This past August, the Gulf Coast contract barge price was $1.03 per gallon, and it is poised to go higher in September and beyond.

Why Is Pricing Relatively High?
Very simply, the supply and demand balances of a global commodity, alcohol, will dictate pricing if raw material costs don't. Today, the global supply/demand balances are very tight. Methanol production has essentially closed down in North America, and supply comes from locations where there is much cheaper natural gas, the raw material needed to produce methanol. This will remain the case until, and if, liquefied natural gas (LNG) begins moving around the world in cryogenic ships, which could possibly affect the placement of future methanol facilities.

The price of methanol remains at a high level with global supply/demand balances tight around the world for the following reasons:

--An acceleration in the closure of high-cost plants in both North America and Europe

--The lengthening of time from a methanol plant's initial concept to actual start-up and the continuous production available to the global market

--New "mega" methanol plants have a larger, and sometimes more negative, impact on global availability when they are shut down unexpectedly, which can lower the "effective capacity" of the global plants close to 87 percent, which is below the heretofore-used figure of 90 percent of the plant's nameplate capacity

--Huge capacity additions in China are creating an equally huge increase in demand for methanol as a future vehicle fuel to partially solve the growing energy crisis in China.

There is little doubt in anyone's mind that this country no longer calls its own shots when it comes to methanol production. Rather, the United States is part of the much larger global supply and demand for methanol. In spite of the new growth for methanol in biodiesel and the current strong demand going into other derivatives, the loss of most of the MTBE market and no new derivative plants planned for the future means modest growth at best for methanol in the United States. With only two new global plants scheduled for completion in Iran and Oman between now and early 2009, reliable supply and an infrastructure to move methanol from plants around the world through marine terminals to biodiesel plants in the United States should be the key part of any analysis by a new consumer. Our effort at Vitusa Products is to help educate the biodiesel market as much as we can so that each new methanol consumer can make the best decision for their plant or requirement.

The Safe Handling of Methanol
In addition, and of greater importance, Vitusa Products desires to help drive forward the education process of the Biodiesel industry and its personnel in the safe handling and storage of methanol. It is a hazardous chemical and it requires great care to avoid accidents. As part of this continuing process, the following information is only the beginning to the Safety and Handling of Methanol. Every new biodiesel plant should have a tireless effort to learn about methanol and obtain all the information that they can about its proper handling and storage.

Methanol Safety & Handling
• Establish comprehensive handling procedures and a storage and handling system that assures the safe receipt and transfer of methanol. This would include clearly labeled tanks, pipes and hoses. Dedicated transfer systems should be used, if at all possible, to avoid cleaning and potential contamination. All areas must be secure from unauthorized access.

• Storage tanks should be at least mild steel as copper alloys, zinc, aluminum or plastic are not acceptable. Plastics can be used for short term storage but are not recommended for long term storage due to the potential for deterioration. All containers and transfer systems must be designed in accordance with proper engineering standards and in compliance with all legislative requirements.

• Dikes should be used with storage tanks to reduce fire risk and larger spills.

• Storage tanks should have control devices including but not limited to level gauges, vents and pressure release valves. Vapor recovery may also be necessary depending on local codes.

• Ventilation systems in all confined areas are necessary if airborne concentrations could reach explosive limits. Use only spark free equipment.

• Proper grounding of trucks or railcars and storage tanks is necessary with carbide tipped clamps. Use dip tube filling to minimize static electricity.

• Piping should be mild steel without screwed connections. Non-ferous materials are not acceptable. Temporary rubber hoses used for unloading should have an internal wire for strength and electrical continuity.

• All pumps and motors should be rated for methanol service under local and national codes and must be grounded.

• Vapor from storage tanks should be controlled using pressure vacuum relief valves, flames arresters or vacuum breakers. Inert gas, such as, dry nitrogen, can be used to prevent vapor spaces. Overflow pipes are not recommended. Painting tanks white will reduce heat and vapor losses.

• Establish storage tank cleaning and maintenance procedures following all local regulations. The following suggestions are for general guidance and they should initiate a more complete and rigid guideline:
--Partially fill and flush the tank 3-4 times with water.
--Open top and bottom manways for natural ventilation. On large tanks, install air moving devices.
--Tank or vessel must test "gas free". Before entry, check for safe oxygen and combustible levels.
--When unattended, manways should be blocked to prevent entry by unauthorized personnel.
--No one should enter any confined space without a safety watch in place.
--At least two escape routes should be provided from all storage and handling areas.

• All personnel involved with the handling of methanol should be aware of its hazards including, but not limited to, the following:
Flash Point--
54 degrees Fahrenheit (12 degrees Celsius) Closed
60.1 degrees Fahrenheit (15.6 degrees Celsius) Open

Flammable Limits--
6.0 (V/V) percent lower
36.5 (V/V) percent upper

Exposure Limits--
TLV-TWA 262 mg. m³ (200 PPM)
TLV-STEL 328 mg. m³ (250 PPM)
Since human exposure can occur by inhalation, ingestion or absorption, personal protective equipment (PPE) should be used. Adequate ventilation is necessary and should mechanical means be used, only spark proof fans should be used.

• All personnel should possess a thorough knowledge of the properties of methanol, symptoms of methanol poisoning, first aid, fire safety and the protection of the environment.

W.L. Lewis is vice president of Sales and Methanol Market Manager for Vitusa Products Inc. He can be reached at [email protected] or (704) 364-3007.