Three natural gas-to-methanol plants are set to come online by 2020, increasing by 45 percent the United States capacity to produce the alternative fuel.

The fuel, used to power vehicles in China and to produce petrochemicals, is expected to further drive demand for natural gas.

"Three new plants expected to come online in 2019 and 2020 have a combined nameplate capacity of about 3.3 million metric tons per year and would increase total U.S. methanol capacity to 9.4 million metric tons per year," the EIA said Thursday in a report.

"Methanol can be used directly as an alternative transportation fuel - China, in particular, uses methanol this way - or blended into motor gasoline abroad to increase combustion efficiency and reduce air pollution," the EIA said. China generally obtains methanol, once known commonly as wood alcohol, from coal.

The gas to power the plants will come from the Permian Basin in western Texas and eastern New Mexico. Proximity to the Gulf Coast allows many of these plants to export to China.

One new methanol plant, the 5,000 mt/d Natgasoline methanol plant in Beaumont, Texas, began operating in June. It is the largest in the country and has been consistently running above nameplate capacity. It consumes an estimated 0.15 Bcf/d of natural gas.

During 2019 and 2020, two new methanol plants on the Gulf Coast are expected to begin operating. Big Lake 1, owned by GX2 Energy and Methanol Holdings, Trinidad, is expected to enter service during the third quarter of 2019 in Louisiana. The Big Lake facility will convert dry natural gas into methanol, which may then be converted to motor gasoline.

In addition, the Yuhuang's St. James 1 methanol plant is expected to start operating in mid-2020 and would be the second-largest methanol facility in the United States.

Methanol may also power ships. In December, the NYK shipping line said it would soon introduce its first methanol-fueled chemical tanker to be built by Hyundai.

Methanol plants are among the most natural gas intensive industrial end users as they use gas both as feedstock and to process heat to produce the alternative fuel. The Energy Information Administration forecasts that new methanol projects will help drive growth in industrial natural gas demand through 2020.

Unlike ethanol, which is alcohol derived mostly from corn or sugar cane and is similar to alcoholic beverage for human consumption, methanol can be extremely toxic if consumed.

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