Port of Kalama takes step closer to methanol plant

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A proposed methanol plant at the Port of Kalama advanced another step Wednesday evening when port commissioners signed a four-part lease agreement with Northwest Innovation Works.

In January, the Chinese company announced plans to build two natural-gas-to-ethanol refineries along the Lower Columbia at the same time, with the second to be located at Port Westward near Clatskanie, Ore. Northwest Innovation said the combined projects would be a $3.6 billion investment and create about 480 permanent jobs and 2,000 construction jobs over the next five years.

The methanol produced in Kalama will be exported to Asia, including Dalian, China, where it will be used as feedstock to produce olefin, a common ingredient in the manufacturing of cell phone covers and other everyday products, the Port of Kalama said in a news release.

The lease agreement includes four parts: a right-of-entry agreement, lease of premises, water services agreement and a dock agreement. Signing the agreements also starts the clock on specific milestones the company must meet. For example, the right-of-entry agreement, which gives Northwest permission to access the port property, gives the company 18 months to complete engineering, geotechnical and land title studies.

"My thanks go to Northwest Innovation Works for all of the work they've done in putting this lease document together. This was by far the most enjoyable lease negotiation I've been through, especially for a project at this scale," port Executive Director Mark Wilson said.

The agreement is for 30 years, with five 10-year options beyond that, Wilson said.

Northwest Innovation Works has a number of international partners, including the Chinese Academy of Science, a ministry-level agency of the Chinese government focused on research and technology, the Port of Kalama said. It's also backed by H&Q Asia Pacific, a Silicon Valley private equity firm.

Northwest Innovation doesn't make lease payments until construction is about to start. Those payments will be $24,800 monthly for the first two years, $49,725 a month for the following three years and $128,345 each month thereafter.

Some adjustments to those payments will be made when officials determine exactly how many acres Northwest will lease, Wilson said.

With signed agreements now in place, Northwest Innovation Works expects to begin its study and permitting process in the next few weeks.

As for the proposed Clatskanie plant, the project will see some forward movement soon as well. Company representatives said they expect to begin the state permitting process — specifically looking at air and wetlands requirements — within the next few weeks.

The Columbian contributed to this article.