Developer: Hydrogen-to-methanol project near Terminal 1 ‘on track’ pending permits, financing

Linda Miller, a project representative, told the Port of Lake Charles board on July 22 that a proposed hydrogen-to-methanol plant adjacent to Terminal 1 has its off-take agreements in place and is advancing permitting, contracting and financing.

Miller said the project will capture CO2 and ship it to Denbury, now owned by Exxon, and that natural gas supply arrangements are in place with BP while Sempra will build the pipeline. She described a land-lease option with the port that would become a 40-year lease with two 10-year extension options if executed.

On permitting, Miller said the state environmental agency (LDEQ) has requested additional air-quality modeling after the public-comment period closed May 1; she said the project expects issuance of the air permit followed by a 30-day appeal window to Louisiana courts. She noted the EPA appeal window has passed.

Miller said the Department of Energy’s earlier approach delayed DOE-backed financing because the DOE wanted regulatory clarity on recently passed tax credits and the update to the project EIS; as a result the team has prioritized bank financing. "Morgan Stanley has been our equity," Miller said, and Sumitomo and Santander are structuring banks in the financing syndicate. The team plans to launch outreach to additional banks once initial green-light approvals arrive.

On remaining schedule and contracting steps, Miller said equipment and EPC contracting timelines have stretched since COVID and cited a contractor bankruptcy (Zachary) in the region as a risk the team addressed through contract structure. She said equipment bids are expected in September and the project is working toward a close before the end of the year.

Miller also described tax-credit pathways the project is evaluating: a claimed eligibility for the so-called "45V" tax credit (noting draft regulations remain unresolved) and an alternative reliance on existing 45Q carbon-credit rules; the latter, she said, is established but offers less value. "We have all of the off-take agreements for the sale of methanol done," Miller said, and added the primary near-term challenges are final project cost, interest-rate levels and tax-credit regulatory clarity.

Board members asked questions about contractor risk, the timing of financing, and whether funding will be in place to enable a ground lease. Miller said the financing strategy has shifted from DOE to a bank-led approach and that the team expects financing to follow construction contracting. The presentation closed with Miller thanking port staff for support.

The board did not vote on the project at this meeting; further permitting and financing milestones were described as the next material steps.