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Yuhuang Chemical’s multiphase, $1.85 billion methanol plant in St. James Parish is on track for a late 2016 groundbreaking despite uncertain market demand for methanol, a spokesman for the Chinese company says.

Jerry Oliver, vice president of U.S. manufacturing operations, says a contract has been signed with Amec Foster Wheeler for the plant’s design and construction, with design about 30% complete as of June. Oliver discussed the project at the Petrochemical Engineering & Construction Conference in New Orleans.

Despite the postponement of other methanol projects, due in large part to a sustained drop in oil and natural gas prices, Yuhuang expects to begin producing methanol at the site by early 2019.

“Our plan is to produce 4,000 to 5,000 tons per year at the plant, and add another 15,000 tons over the next 10 years,” Oliver says. “The idea is to become a major player in the market.”

A later phase to construct a second methanol unit—similar to the first unit in design and scope—will begin in 2019. Oliver could not say when a planned third phase for a methane derivatives chemical plant might begin.

Yuhuang Chemical finalized the deal for the 1,300-acre property last August. It first announced the project in July 2014.

The plant represents the largest grassroots, greenfield project by a Chinese company in the U.S. and is a sign of changing Chinese-U.S. relations and strengthening business ties between China and Louisiana.

“Louisiana provided them with some comfort that this would be a place where they were welcome,” Oliver says, explaining why the company selected a Louisiana site over one in Texas.

“Your governor at the time did a wonderful job of making them feel like they were going to be part of the community, and in providing the right incentives,” Oliver adds. “I’m not saying Texas did a bad job, but obviously Louisiana did a better job because the sites in Texas were pretty good.”

The Yuhuang plant will be managed primarily by a U.S.-based team that understands the area’s business climate, Oliver says.

“They’re going to let us run as a business that has to work in the U.S.”

Originally published in the third quarter 2016 edition of 10/12 Industry Report