Anchorage startup’s deal with BP sets stage for unusual North Slope plant

North Slope oil companies have for decades imported methanol from around the globe, shipping it by oceangoing tanker and then by truck, to prevent wells and pipelines from freezing.

Now, an Anchorage entrepreneur is on track to build a plant to make the antifreeze in Alaska for the first time, using abundant natural gas and water from the giant Prudhoe Bay oil field.

It's a rare opportunity to make an industrial product using local resources, said JR Wilcox, 40 and a former BP employee. Large amounts of the chemical are imported from as far away as Trinidad and China, he said.

"It's ridiculous," said Wilcox. "We've been moving methanol thousands and thousands of miles. But that's Alaska, resource-rich but not a lot of people, capital and ideas to make all these things happen."

His idea, penciled out at The Boardroom communal office space in recent years, has the backing of oil giant BP.

The Prudhoe Bay field operator signed an agreement with Wilcox's company, Prudhoe Bay Chemical, to provide methanol production services, according to a statement from BP emailed last week.

"This is an opportunity to support an innovative Alaskan company, which could improve the operating efficiency of the North Slope operations," BP said.

Wilcox plans to erect the nearly half-acre plant on a gravel pad built by the Alaska Industrial Development and Export Authority, a state agency. He hopes to start production in 2020.

BP and Wilcox declined to provide specific figures about their agreement, such as how much methanol will be made.

Wilcox stressed the plant will be a small "niche" facility, employing perhaps six people. Methanol, a highly toxic liquid that looks and smells like vodka, is the most commonly used chemical in the North Slope oil industry, he said.

Other oil producers can also buy the product, he said.

"This is a sort of mom-and-apple-pie business that allows them to sell gas, derive value and lower operating costs," Wilcox said. "I really believe the future of the North Slope is dependent on driving operating costs down. This is one example of how that can be done."

Oil industry observers say the benefits of the plan are obvious, though getting started won't be easy, given the towering costs at Prudhoe Bay.

"This is a significant deal if it happens," said Tim Bradner, editor of Alaska Economic Report.

It will be the first time in a long time that chemicals or fuels have been made on the Slope, Bradner said. Ultra-low-sulfur diesel fuel to power drilling rigs and vehicles has also been trucked to the fields for about a decade, creating roadway and environmental hazards when trucks overturn.

[Tanker-truck crashes and spills an increasing worry on Alaska highways.]

BP declined to explain why companies have historically shipped methanol to the Slope, rather than making it locally.

Bradner said building a methanol plant was likely too small an effort for a company like BP that focuses on producing huge amounts of crude oil daily. BP over the years might have found it easier to simply sign contracts with methanol shippers, he said.

Harold Heinze, former chief executive of Arco Alaska, a ConocoPhillips predecessor, said propane or other fuels could also be made locally to power Prudhoe Bay operations, if BP supported the effort.

"There's no doubt we should be able to make more things on the Slope," Heinze said. "But it is such a difficult environment. I wish him luck."

Wilcox said the idea of making North Slope methanol has been around for years.

He started studying it in 2014 after leaving Cook Inlet Energy, a small oil and gas company he co-founded. The company entered bankruptcy proceedings in 2015, a problem Wilcox said he didn't cause.

Wilcox's chemical business is teamed with minority partner Maverick Synfuels, a North Carolina firm that makes alternative fuels and chemicals.

Wilcox said lower industrial costs supported by in-state methanol production will help the state's economy and make oil production more valuable for the state and companies.

"It's a win all around," Wilcox said.