Months After Bad Faith Claims in St. James Project, Chemical Companies Head to Startup | New
ST. JAMES – Partners in a long-running project to build a $ 1.85 billion methanol complex in the parish of St. James have decided to put behind them a thorny legal dispute that has been ongoing for the last six months of 2020 to amidst bad faith allegations, cost overruns and construction delays. , court records show.
Based on the recently released permit files, it appears that the YCI Methanol One project is taking the first steps towards a production start-up that includes firing one of the boilers at the large River Road complex in the west. of St. James.
YCI, a partnership of Yuhuang Chemical Industries Inc. and Koch Methanol, plans to produce 5,510 tonnes per day of methanol, a stable chemical element for a variety of consumer products, but primarily plastics.
The plant has already created jobs for 100 permanent workers, including 23 from St. James Parish, and contributed millions of dollars in tax revenue, company officials said.
In July 2014, then-government. Bobby Jindal and other state and parish officials welcomed the arrival of Yuhuang Chemical Industries Inc., a subsidiary of Chinese chemicals maker Shandong Yuhuang Chemical Company, Ltd., to a 1,200-acre site. in the community of St. James as natural gas prices continued. attract new investment to the Mississippi River area.
The facility was one of the first of several large complexes proposed for the rural West Rim and North East Shore of St. James that have generated continued opposition from community and local and national environmental groups over the impact. of their pollution on mainly African-American communities. along the river.
Although construction began in 2017, the project received significant funding from China and encountered financial difficulties in 2018 until a major inflow of capital from Koch Methanol, a subsidiary of Koch Industries. The subsidiary finally acquired a 60% stake with new investments in 2019.
Various local and state officials said this month that they were unaware of the state of construction and start-up of the project, although workers have been seen there in recent weeks and have been visible for months.
Environmental regulators had said they hadn’t heard from either, and earlier this month state economics officials couldn’t say YCI officials had given them a limit. outside to “start operation no later than May 30, 2021”.
But new public records show that the State Department of Environmental Quality issued a six-month permit on Jan.5 allowing YCI Methanol to release small amounts of natural gas before a flare that would normally burn these types. gas discharge is operational.
Triggers are required, according to the company, to ignite an auxiliary boiler.
“YCI is currently working on the establishment and execution of the proposed methanol plan,” said a Dec. 30 permit application. “During this period, starting the Auxiliary Boiler may cause the release of natural gas.”
In recent months, the company has also received critical air permits that were amended after environmentalists challenged them a few years ago and a wastewater discharge permit after some activists suggested last year that the plant’s discharges raised concerns about the contamination of the drinking water systems of the Mississippi River. downstream.
In the final clearance decision, DEQ officials defended the discharge testing protocols YCI plans to use to protect public health.
Signs of a startup emerged as project partners found a way to end litigation in the business-friendly Delaware Court of Chancellery, which had been simmering since early summer.
In fact, a day before the aeration permit application for this boiler was filed with DEQ in Louisiana on December 29, a Delaware court officer dismissed the lawsuit between Koch Methanol and Yuhuang Chemical after stating that ‘they had reached a confidential settlement.
In the June lawsuit, Yuhuang Chemical accused Koch Methanol of a bad faith attempt to “usurp” its remaining 40% stake in the project by falsely claiming cost overruns in late 2019 and early 2020. which totaled over $ 38 million and twice committing a self-help loan provision of their contract to withdraw money from the project equivalent to those overruns.
Yuhuang alleged that the loans endangered their remaining property in the project, as they demanded that the company’s entire $ 400 million stake in the project be put as collateral. Yuhuang had claimed that the expenses were borne by Koch.
“As the majority owner and the party controlling the ongoing operations of the project, Koch has the information necessary to fully understand and classify these expenses,” Yuhuang’s lawsuit argued. “Koch doesn’t, as he prefers to take advantage of a helpless minority partner instead.”
In response, Koch Methanol denied any bad faith attempts to divest Yuhuang’s stake, but claimed that it had regularly had to take on a larger management and financial role, reducing Yuhuang’s breaks on its financial obligations and making losses. higher expenses to keep the project from running out. silver.
The company also accused Yuhuang of failing to fully disclose the financial status of the multi-million dollar project prior to Koch Methanol’s initial investment in 2018.
It is not known how the dispute was resolved, what is the status of the alleged shortcomings or what are the stakes of the two partners at this stage. Parts of the prosecution’s record have been sealed, and even significant parts of Koch Methanol’s responses to Yuhuang’s original allegations are redacted.
Koch Methanol officials declined to comment on the status of the project in light of their undisclosed legal settlement between the partners. Yuhuang Chemical did not respond to email requests for comment.
Construction of the plant has boosted up to 2,000 temporary construction jobs. Over the next 20 years, even after $ 300 million in property tax exemptions, YCI will pay St. James Parish nearly $ 110 million in property tax revenue, company officials said.