Methanol can be used as a transportation fuel, but currently, its main use is as an intermediate chemical in the production of other chemicals. Global annual methanol production capacity is 12.8 billion gallons (20% in North America; 28% of consumption in U.S.).
Methanol synthesis is a well-developed commercial process and methanol is produced almost exclusively (90%) from syngas derived from natural gas. Syngas is a gaseous compound consisting mostly of carbon monoxide and hydrogen and is produced from the gasification of feedstocks at high temperatures under conditions where the amount of oxygen is less than what is needed for complete combustion. Syngas can be produced from many feedstocks including natural gas, petroleum products, coal, and biomass.
Today, all commercial production of methanol from syngas uses low temperature and pressure processes using copper catalysts. Methanol catalysts are commercially produced by a number of manufacturers. The two major challenges to the design of methanol converters (reactors) is the need to remove the large amount of heat produced during methanol synthesis, and achieving high conversion rates. Numerous methanol converter designs have been commercialized.
U.S. spot market prices for methanol ranged from $0.20 to $1.50/gallon between January 1993 and October 2001 with price fluctuations due to methanol demand and supply conditions, and the price of natural gas.
Most of the capital cost for methanol production from natural gas is for the production of the syngas. Production of methanol from biomass is estimated to be $0.30/gallon to $0.55/gallon higher than with natural gas.