Methanex Corporation (MX) Earnings Call Transcript & Summary

We're going to get started. So thank you all for attending our Investor Day here in Geismar, Louisiana and a special welcome to the investors and analysts joining us virtually. We appreciate that this is a major time commitment, particularly for those who are here with us in person. Well, thank you. We hope that you'll find the presentations today for myself and the other members of our executive leadership team to be useful in expanding your understanding of our company. I want to remind everyone that our remarks today may contain forward-looking statements and non-GAAP measures. You can refer to the slide at the end of the presentation, which has been posted on our website for more information. Before we move into the detailed presentations, I would like to start with a brief overview of our strategy, a look back on what we have delivered over the past 10 years and the investment thesis looking forward. Methanex represents an investment in the global methanol market leader. We have the leading market share, cost competitive assets and a franchise value that is difficult to replicate. Our vision of global methanol leadership has been our unwavering goal since the company's inception in 1992, and we've had a clear and consistent strategy to achieve this. Through the strategic pillars of leadership, operational excellence and low cost, we create a sustainable competitive advantage of unmatched security of supply to our customers. Our strategy was tested in 2020 when the world was shut down by the COVID-19 pandemic. We learned some -- in the lessons during that challenging time, including that our strategy works even under pressure. I'm very proud of our global team and how they work together under difficult circumstances to ensure that the company continue to operate and deliver value to shareholders. I'm happy to say that we've come out of the experience as a stronger and more resilient organization. As the industry leader, we are committed to growing with the market. Our highly advantaged G3 or -- Geismar 3 or G3 project will allow us to maintain our market share and significantly increase our cash generation capability. Vanessa James will discuss the competitive advantage that we have gained from our market leadership, about 13% market share is roughly double the size of our next largest competitor. Another key aspect of our market leadership is having a global presence across all markets. And Rich Sumner and Kevin Henderson will talk too. Our global supply chain gives us enormous flexibility and agility to deliver on our commitments to our customers. Although size is important, we believe that its leadership that is more impactful as this allows us to lead all aspects of the methanol industry, including market development, safety, product stewardship and sustainability. We are proud to be the leaders in safety and sustainability in our industry and are committed to reducing our assets, carbon intensity by 10% by 2030 amongst other sustainability initiatives that will be discussed later this afternoon. I wanted to take this opportunity, look take a quick look back to see where we've come as a company over the past 10 years. We have improved our safety performance to be in the top quartile and have enhanced our reliability. Improved safety and reliability performance, coupled with the relocation of G1 and G2 to Geismar, the 2 low capital and high-return growth projects with our G1 and G2 debottlenecks and the Chile IV restart has driven strong produced sales growth. For 2022, we expect to continue strong production of approximately 7 million tonnes. Later this afternoon, Kevin Henderson will discuss the strategic initiatives that the company is currently pursuing in the areas of safety and reliability. Reliability is important as it enable us to provide secure supply to our customers, lower our CO2 intensity and enhances profitability as the last tonne produced is always the most profitable. I strongly believe that safety and reliability go hand in hand. Over the past 10 years, our growth in low-cost production assets and robust pricing has driven record EBITDA for the company. Our excellent track record of capital discipline and accretive capital allocation has allowed us to return over $2 billion to shareholders and invest approximately $3 billion to grow the business. Looking forward, I want to lay out the compelling thesis to invest in Methanex, a leading global pure-play methanol producer. First, we are the leader in the industry with a positive long-term outlook. The methanol industry is forecast to experience demand growth, limited supply additions in the next 5 years, which drive a favorable industry outlook. The supply-demand dynamics should support pricing. We believe G3 will start commercial production when the industry needs supply. Being the leader in the methanol industry allows us to be the supplier of choice to our top-tier global customers as we can offer them quality product and security of supply because of our global asset portfolio, dedicated shipping company and local customer services. Our asset portfolio has strong cash flow generation capability over a range of methanol prices. That cash capability will grow significantly with the addition of G3. We also have the potential to further increase that capability with improved gas availability in Trinidad, New Zealand and Chile. We have a strong track record of disciplined capital allocation. We are committed to returning excess cash we generate to shareholders after maintaining our business and growing where it makes sense. We are -- as the world transitions to a low global -- low carbon economy, we are well positioned in the industry with a product that will continue to be needed as a path to be low or zero carbon. We have innovative opportunities for our existing asset portfolio as well as for new projects to lower our greenhouse gas emissions. We have dedicated resources in place to ensure that we are well positioned to continue to lead in the low-carbon economy. We believe Methanex represents excellent value for investors with attractive growing free cash generation capability with G3 coming online. I hope you enjoy the presentations today, and I'll be back at the podium to answer questions at the end of the afternoon. With that, I'll now turn the podium over to Rich Sumner, our Senior VP, Marketing & Logistics, to give a market update and talk about our competitive advantage of security supply.

Thanks, John, and good afternoon, everyone. Today, I'll be discussing a number of topics. First, I'm going to start with key industry fundamentals. On the demand side, we'll look at the current makeup of demand, what's -- what we're seeing around demand growth in 2021-2022. And then I'll discuss some of the new and emerging applications for methanol as a low emission fuel. On the supply side, we'll take a look at firm capacity additions and then combine that demand and supply into how that translates into tight industry balances going forward. Finally, we'll take a look at what we see as Methanex unique leadership position in the industry and how we achieve that. First, let's start with demand. We currently estimate the market's about 85 million to 90 million tonnes. And we split the market into 3 broad segments. The first is traditional chemical applications. The second is MTO or methanol to olefins. And the third is energy-related applications. Traditional chemical applications makes up 50% of demand. And this includes products like formaldehyde, acetic acid, methyl methacrylate, silicone and others that goes into a broad and diversified set of consumer and industrial products. MTO makes up about 15% to 20% of demand. That's really 11 plants -- world-scale plants in China that each consume 1.5 million to 2 million tonnes of methanol in the production of ethylene and propylene, which then is used in the -- further into production and through the olefins chain. Energy-related demand makes up the remaining 30% to 35% of demand. And about 2/3 of that goes into well-developed fuel applications like MTBE, which is an oxygen in gasoline and then the production of biodiesel and then about 1/3 of that is in the new and emerging applications that I'll speak to you in the slide. In terms of demand growth into 2021 and into 2022, we've seen strong demand in traditional chemical applications. By their nature, they tend to grow at GDP rates. And we've seen strong GDP growth around the world, underpinned by strong consumer demand. For energy-related demand, transportation fuels have also been stronger post-pandemic. And that, combined with high energy prices as well as supportive emissions, regulations, is helping fuel demand for those applications. On the MTO side, we saw high operating rates through 2021 until late into the fourth quarter when operating rates declined for a number of different factors, one of those being energy restrictions imposed by the Chinese government. Since that time, we've seen those restrictions removed and the MTO industry is operating around 80% to 90% rates, which is consistent with historical operating rates. And we also expect to see a 1.8 million tonne MTO unit, the Bohai unit in North China starting up in the second half of 2022. So overall, we've seen strong demand. And obviously, we're continuing to monitor a lot of the global economic headwinds that are out there to see what that's going to -- what impact that could have on forward demand growth. This graph -- sorry, here if I've got -- anyway. I'll say over a 5-year period, taking a 3% growth rate, we would see the industry needs about 14 million tonnes of new supply to balance the market. Now I wanted to take a closer look at these cleaner-burning applications. So I'm going to focus on 3 of those. The first one is thermal applications in China. As part of China's policies to improve air quality, we're seeing methanol being used to displace coal in industrial, commercial and residential boilers, kilns and furnaces. And we're also seeing it being used in residential and commercial cooking stoves as a cooking fuel. We would estimate that today, there's about 4 million to 5 million tonnes of demand into those applications in China. And then secondly, I wanted to highlight methanol being used as a vehicle fuel. It's really being used both as a cleaner burning fuel, but also as a substitute for imported diesel and gasoline. This is going to be achieved through low-level blending, which has been adopted in China, and it's also being looked at in India as well as various countries in Europe and Latin America. This can also be achieved through M100 fuels. Geely, who is one of the largest automobile manufacturer in China, has developed both car and heavy-duty truck technology for M100. And today, this technology is supported by various national ministries in China, especially for inland provinces where it's high-cost gasoline and diesel. So today, we would -- Geely has launched taxi fleet programs in various cities across China. We would say there's about 30,100 vehicles operating today. And they also just launched their first fleet of heavy-duty trucks, which is 1,000 trucks. So there's about 0.5 million to 1 million tonnes of demand into those applications. And lastly, I just want to talk about methanol marine field, and I'll get more in detail on the next slide on the marine field. But over time, the IMO has placed more stringent emissions requirements on the marine industry. That started with SOx and NOx emissions. And now as part of their own greenhouse gas strategy, they've set targets around CO2 reduction. That's 40% by 2030 and 70% by 2050. And when we look at the attributes for methanol as a fuel, methanol reduces SOx in particulate matter up to 95% and NOx up to 80%. And because there's various proven pathways to reduce the carbon footprint of methanol all the way to zero, it's been increasingly looked at by the marine industry. And a bit more -- a bit of history on the marine side. As part of meeting these cleaner emissions, Methanex, Waterfront Shipping, MOL and our partners including MAN engine developed the first methanol dual-fuel chemical tanker technology. We've been operating these vessels since 2016. And this has really put us in a leadership position there from a technology perspective, the vessels are on their third generation. And we're in a lot of discussions with a lot of shipping companies in relation to this application. We expect this to continue to gain interest and momentum. So you'll see here we say that there's 65 dual-fuel vessels within the 2025 to 2026. These are vessels, including our own 19 vessels, that are actually on order and will be in the water by those dates. It's -- you'll see the big name here, obviously, is Maersk. Maersk has 13 container ships on order. And we're starting to see a lot of interest across different segments in the marine space, containerships, dry bulk, ferry, cruise lines, tug and barge all looking at that. And then what we see also is the OEMs beyond MAN, Wartsila, Rolls-Royce, Caterpillar, all developing methanol dual-fuel technology to meet their customer needs. And just last week, CMA CGM, who is a top 5 container shipping company in the world, just ordered 6 new dual-fuel container ships and those would consume around 200,000 to 300,000 tonnes of methanol operating at 100% of the time. So a very, very exciting area. Methanex is doing a lot to [ suffice]. From a project perspective, we're involved with the FASTWATER project in Europe, which is in a consortium with the Port of Antwerp and ABC on doing demonstration retrofits of various vessels. We're also sharing a lot of operational and technical experience with various shipping companies that are interested in the application. On the bunkering side, we're working with the Methanol Institute to promote the availability of methanol at all major ports in the world and also the ease of bunkering. In 2021, we did -- we partnered with the Port of Rotterdam and Vopak to do the first methanol demonstration bunkering. And obviously, on the supply side, we're in real discussions with shipping companies on supply, whether it be conventional methanol availability as well as lower carbon alternatives. So a very exciting area, and we're actively developing this. Now switching from demand to supply outlook. This graph shows supply additions. Over the past few years, and then I look forward to capacity additions in the next 5 years. And when you look at the forecast of firm supply, beyond G3, there's really no capacity additions in the Atlantic markets. And we really have good visibility on this, given the typical project development cycle. So when you look beyond G3, really the additions to the industry is coming from Malaysia, a project in Malaysia, China and Iran. When we think about Iran, there's a lot of uncertainty as to the timing of those projects as well as the amount of actual supply that we'll see. Since 2018, Iran has brought on a number of world-scale methanol projects, and we've seen those operate at a very intermittent basis, look at relatively low operating rates. We believe that's for a number of reasons, natural gas restrictions, plant technical issues, utility issues. So the amount of supply that become highly uncertain. So this means firm new capacity additions are likely to be insufficient to meet growing demand. And the industry would need to operate at higher rates to balance the market. There are a number of other projects in the Middle East, Africa and Russia, but we feel a lot of those are at very early stages. So this next slide puts together industry demand using a 3% growth rate and supply using only firm capacity additions. And the yellow line is what would be required in terms of increasing operating rates in the industry to balance the market. You can see there's a meaningful increase required. This would have to come from various jurisdictions, via China, Iran, Trinidad, Europe, among others. And there's obviously a lot of limitations to the capability of doing that, whether it's high cost or constrained feedstock, geopolitical issues, technical issues or other constraints. So when we see the industry balance going forward, we look at it as a really tight market and the one that highlights the attractiveness of bringing G3 into the market today. One last point on the market I wanted to make is -- sorry, is in relation to the olefins market and the impact on MTO and MTO affordability. So the olefins market has gone through a period of demand outpacing supply, and that's really on the back of capacity additions that were added. We're -- our plants that we're committed to back in the 2013, '15 period where we had really high oil pricing in a very tight olefins market. Those supply additions have come into the market. And even though we've seen a run-up in energy prices, we're still seeing quite a squeeze on olefins margins over the past few years. And when you look at Wood Mac's view of industry supply and balances in the olefins market, you see that the demand/supply balance gets much healthier to a balance and then actually moves and reverses into more of a demand outpacing supply. So we think that, that actually provides a relative oil pricing, more support to ethylene and propylene prices going forward and MTO affordability. And then finally, bringing it back to methanol pricing. So this is just a really illustrative snapshot of the industry cost curve. Just make a few observations. It's a relatively steep cost curve, which is represented on the right-hand side by high-cost marginal coal production and natural gas production in China. Our assets are well positioned at the mid- to low end of the cost curve, which allows us to operate at all points in the cycle. And at higher energy pricing, we believe that it better supports MTO affordability as well as affordability into other energy applications, these new and emerging technologies. Now I'll bring it back to Methanex and Methanex's industry leadership position. So as John said, we're the world's largest methanol producer and marketer with about 13% of total merchant market on global sales. This slide shows demand and our regional global sales reach with major positions in all regions in the world. So this is only possible through our global integrated supply chain. And that really starts with our methanol assets, regionally diversified in New Zealand, Chile, Trinidad, U.S., Canada and Egypt. And then together with Waterfront Shipping, which is now 60%, 40% JV with MOL, we operate 30 dedicated time charters that flexibly delivered from our manufacturing sites into our marketing regions. Within each marketing region, we have our offices that are managing an extensive network of terminals and also managing our in-region logistics capabilities with our long-standing service providers. All this allows us to really tailor our -- we're a global company, we're able to tailor needs to our customers in different countries, locations and also delivery mode, be it vessel, barge, pipeline, rail truck. We today, sell in approximately 30 countries to 150 customers and well over -- have well over 500 actual delivery points or ship to locations in our network. So this globally integrated businesses allows us to have scale to manage an efficient, reliable supply chain. And together with our commitment to run responsible care all through the value chain, we're able to meet our customers' needs for safety, quality and reliability anywhere in the world. It's why we believe we're the preferred supplier to major consumers in the methanol markets. We also think this has created a franchise that's very difficult to replicate. And obviously, we continue to invest and improve as really our one team execution that's at the heart of the success. And lastly, just before we move into the wrap up, I wanted to mention Waterfront Shipping. It already noted, it's a key part of our integrated supply chain. We're really excited about the involvement of MOL. They now own 40% of Waterfront Shipping. It's a 30-year relationship and they bring to over 200 years of shipping experience, which we think is going to be great for our shipping business. And then we'll be operating 19 dual-fuel vessels which -- and what we're looking forward to is really advancing with a world leader, methanol as a low-emission marine fuel. And just to wrap up with some key points. So really emphasizing demand growth forecasted to outpace capacity supply and capacity, higher operating rates needed to balance the market. Higher energy pricing supporting MTO affordability as well as affordability of these new and emerging applications and really that we continue to invest in our global integrated supply chain, which we think gives us a competitive advantage as a leading supplier to the industry. Thank you. Now I'll turn it over to Kevin.

Good afternoon. I'm going to start with responsible care. And one thing about responsible care is it's not just safety, responsible care is an ethic and it covers all parts of our business. The responsible care is all about your management. Overall, it's a management system, it covers employee training, it covers engineering systems, it covers off safety programs, environmental programs in all aspects. And we've been verified with responsible care by -- since 1997. We're the first company in the world to verify all our companies around the globe. What you've seen here in Geismar around safety and behaviors and things, you will see at every single one of our plants. It's a consistent approach across our organization. Just talking on these few topics that I've got there. So personal safety is core to our business. We want people to come in every single day and leave at the end of the day, exactly the same way that they came with all their bits and parts and everything in the same place. So it's really core to us and our business, and we strive for perfection in this area on a continuous basis. Next area is environment, and we meet all our local requirements and regulations in every jurisdiction, and we don't have a varying standards from one region to the other. It's consistent across the whole organization, and we continuously upgrade our existing assets to continue to meet all those expectations. So it's not relying on how that plant was built or using that as an excuse. We continue to improve across the organization. Process safety is fundamental. I mean, process safety is these big events that could really damage our plants or hurt people or things like that. So we've had a lot of focus in this area. We've completed safety case analysis of all our assets around the world, and we continue to improve in the area of process safety. A responsible care culture is a key element of Methanex. If you talk to people within the company, they'll say, responsible care is a glue that holds our company together. It's an ethic and everybody believes in it. And everybody has goals around responsible care on their annual goals. So we believe it. We live it and we continue to strive to improve in this area. And one of the codes within responsible care is stewardship and accountability. So we work with all of our suppliers. We work with all of our terminals. We work with the shipping companies. We share practices around and safety with methanol. We go out and we do training -- fire training with our emergency response companies. We look at routing to make sure it's the safest route. So all those things are core to what we do. And the other areas around community involvement. We have community advisory panels in every jurisdiction that we have. And we meet with them, we talk about how our business is going, what are the risks. When we build a new facility like Geismar 3, we involve our unit advisory panel, where they look at the risks. We make sure that we don't impact our neighbors or impact them to as minimal amount as possible. So as I said, safety is our #1 priority, and occupational safety is one of those metrics. So you can see over the years we continue to improve in our occupational safety area by measurement of recordable injuries. Our recordable injuries is measuring after the fact, and we want to be more proactive. So we have programs in place that continue to push us to improve and those programs are things like leadership presence. We have a goal of all of our leaders to be out into our facilities on a regular basis, continuing to push that bar higher and continuing to have higher and higher expectations on -- in the area of safety. The other thing we've done is we've introduced a hazard recognition program. That hazard recognition program is around getting out there all our employees, all our leaders looking for those hazards where we could have somebody get injured and remove those before something happens. The other thing we have is a program called switch on to responsible care. And that's all about capturing their hearts and minds and getting people involved in what's important to them? Why do they come to work every day? Why do they want to be safe? What are those things important? Their family, their sports, whatever it might be, what's important to them and think about that before they make a decision. And the other area of big focus has been contractor management. We've really stepped up our game with regard to contractor management, with regard to evaluating them, with regard to who do they bring on site, what are their qualifications. Recently in Egypt, as an example, the team interviewed every single person that was coming on -- that's coming on that site for a turnaround so that they could understand what's their qualifications, do they understand, do they work safely. So it's really stepping that bar up in this area. Another metric we use is potential or severe injuries. And these are injuries that somebody could have a debilitating injury, so they have a lifelong injury that they're going to have to live with, where they don't have the same mobility or the same use of their body that they might have had before or somebody could actually be killed. So these are what we call PSIF, so potential severe injury or fatalities. So we focused on these, and we started looking at, okay, are there events that are happening that these things could happen? And we do a detailed dive on these in order to make sure that they're not going to happen. We put things in place to prevent them from occurring in the future. So our PSIF number continues to come down and that's because we're focusing on it. And again, that's being more proactive and not being reactive to the things after they occur. So our whole program is trying to get to be more proactive, more -- let's do something about it before it happens versus waiting for it to happen. As I mentioned, process safety is critical to our business. We've implemented a robust safety process safety program. And you can see our Tier events are down. They're still not down to 0 where we want to be, but you can see that we're consistently we have about one Tier 1 event each year. And our Tier 2 events have come down dramatically over time because of that focus that we're giving. And now we're going down to what we call Tier 3 events, and we're increasing our focus on all of those incidents in order to lower that bar even further and hopefully get to 0 across the whole organization. And when we do have a tier event, we do learn from it. So we do a deep -- detailed deep dive on these peer events. And you may have remembered, in 2019, we had a significant event in Egypt, where we had a steam header that ruptured on us and did significant damage to our facility. That incident, we went back and looked at how the design was at that plant, how it was built, and we took those learnings from that, and we've applied it across our organization. So everything we learn has gone into the G3 project to make sure that it doesn't happen there. And we also shared that incident outside Methanex because we don't want this to happen to someone else. So it's all about learning and development and improving the organization. Again, another area of focus for us is environmental. We continue to stay focused in this area. And you can see that our major incidents and serious incidents have dropped off dramatically, and we're really talking about the minor incidents now. And we're getting into the detail and starting to assess every single little leak that we have, understand how do we prevent them occurring because we can stop them at that point. It's less likely that we're going to have bigger events in the future. So again, another area of continuous focus for us. So a little bit about our plants. I think you're -- most of you are aware of our plants that we have and we operate. So I will start with Geismar. We have Geismar 1 and 2. And those plants were built at 1 million tonnes each, so 2 million tonnes of capacity. And we debottleneck these by importing CO2. And earlier on, we talked about the Geismar 1 and 2 are hydrogen rich, and we import CO2, and we're able to make more production. So we're now 2.2 million tonnes per year there. These plants originally were in Chile as Chile 3 and 4, and we moved them up here and they were commissioned in -- both of them came on stream in 2015. These plants are some of our best operating plants. Energy efficiency on the Geismar 1 and 2 are around 35.5 gigajoules per tonne, and that's kind of mid-cycle numbers. And our new G3 facility is going to be about 31.4 gigajoules per tonne, which will be one of the best in the world. So Geismar is extremely attractive facility for us. The next plant is Medicine Hat. Medicine Hat's 640,000 tonnes. And again, this is an area where we -- was our first CO2 injection. Again, it's a steam methane reforming facility with excess hydrogen. And we inject CO2 from a neighboring CO2 plant into our process, and we've been able to bump up our production. That plant was originally built at about 480,000. And so we've been able to debottleneck it up to 640,000. So significant improvement across that plant. That plant is backed up with a long-term gas contract into the next decade. So it's well positioned. New Zealand, we currently have our 2 larger plants operating there, and they're producing around 1.5 million metric tonnes per year. We do have the potential to expand that production in a number of ways. If we got a little bit higher CO2 gas or if we got -- we were able to restart the Waitara Valley plant, so we could get potentially that site up to 2.2 million tonnes of production. It would take significant capital to get the Waitara Valley plant up. So we would need a long-term gas contract. That facility there is backed up with methanol sharing gas contract up through the end of the decade. Trinidad plants are both oxygen-based. And just backing up Medicine Hat is around 38 gigajoules per metric tonne, and New Zealand is around 41 gigajoules a metric tonne. Trinidad, we have 2 oxygen-based plants. So these were our first oxygen-based plants. The Titan plant, which is down right now, is 36 gigajoules a metric tonne. So we can get it back up. It's one of our more efficient plants within our fleet. And the Atlas plant is around 37 gigajoules per metric tonne. Now these are kind of mid-cycle numbers, beginning of catalyst, still operate better and perhaps a little bit less efficient at end of cycle. The Egypt plant, we have excellent gas availability and lots of gas exploration in that country. So we're -- it's one of our -- probably one of our best plants in our fleet. It's 37 gigajoules a metric tonne. And a lot of the technology that it is being installed into G3 came from the Egypt design. So the ATR is same design, their synthesis loop is same design. Fired heater is actually Chile designed, but we take all the best from all of our assets, and we combine them and learn and grow as a company. And then the Chile plant, we restarted the Chile IV plant back in 2021. And we did have some growing pains with operation with that plant and was more around -- I think the understanding of that plant and our people learning and developing, and now where we operated, I would say, very well. In fact, it's operated at 100% reliability for over the last year or so. So the team is doing really well down there. We have confidence we're going to continue to get more and more gas. We are operating at about 65% rate. We will be for the winter only gas for Chile I this winter, and we expect gas from Argentina in the beginning of the summer this year, their summer. Chile I is around 38.5 gigajoules a metric tonne, and Chile IV is around 37.5 gigajoules a metric tonne. So that's it for the plants. So emission intensity, what are we doing to reduce emission intensity? The biggest impact that we're going to have is the start-up of Geismar 3. Geismar 3 is much lower emission intensity. And we -- it's around 0.4 tonnes of CO2 per tonne of methanol and our fleet average is around 0.62. So this is going to bring down our intensity and help us to achieve our goal of 10% reduction by 2030. Now that's not going to be enough to get our number down. We do need some other things to happen, and it's a combination of things. So one is we need to operate our plants reliability -- reliably. The biggest impact on emissions is unreliable operation. Every time you cycle the plant, you have to go through a warming process, you flare a lot of gas, you're inefficient in those early stages of operation. And that's our biggest impact to CO2 emissions that we can directly control. So we've done a lot of focus on emission intensity or, I should say, reliability improvements. And -- so that's one thing that we're doing. And we also measure our CO2 emissions on a daily basis now and reported on a daily online basis in every location. So every facility can look and see how are they performing? And when they do something in the plant, they will see immediately what that impact is to CO2 emissions. So we've kind of brought it home a little bit rather than looking at just efficiency, we also talk about it in CO2 emissions. We are looking at improvements in our existing facilities. Now we've always continuously improved and always looked at ways to add value to the business. But now what we've done is we've gone back and taken another visit on this in the current environment to see, is there some opportunities. And we have identified a few. We think that we possibly got in the range of about 200,000 tonnes of CO2 that we could reduce on an annual basis through ongoing improvements in our facilities. And a couple of those that we've moved forward, we've done a couple of gas recovery projects in our Trinidad facility. And we are looking at doing a retray in our New Zealand distillation columns, which will allow us to operate on 2 distillations versus 3 distillations which would improve it by about 0.5 gigajoules a tonne production. So there's a number of things. There's some power generation things we're looking at and some -- also some additional methanol recovery opportunities in our -- in some of our purge gases it could add some more tonnes and reduce our intensity. But again, will that get us to our 10%? We certainly -- we need that. The other thing we're looking at is carbon capture and storage. So right now, we're in the feasibility stage. There's a number of different technologies. It's basically all aiming solution-based. It depends on the type of solution and the efficiency of that solution for the different flue gases that we have, but there's a lot of work to be done there. And then how do you integrate that into your facility? Like how do you get it recovery and how do you get the best out of that? So there's a lot of work to be done there. And I know there's been a lot of questions around dollars and dollars per tonne and things like that, but it's kind of early days for us on that. And we certainly don't want to give you something that we can't stand behind. There's also a couple of things. There's pre-carbon capture and post-carbon capture. So you'll have heard of green hydrogen, green hydrogen is kind of call it a pre-carbon capture. So you're -- and these are basically big hydrogen plants. So you make more hydrogen through your reforming process, and then you take some of that back as fuel. So you have no CO2 emissions coming off your stack. So that's basically pre-carbon capture. Post-carbon capture is when you take your flue gas and you run it through an naming system and you remove the CO2 in that area. But both require utilization or storage of that CO2 of some form. So we're working through what's the best approach for us. And then the last thing we're looking at is new technology. So as you saw with Geismar 3, there is an improvement in technology. And I would say current new technologies of combined reforming facilities get very close to what our Geismar 3 plant is and maybe slightly better than what our Geismar 3 plant is, but we are looking at our own design that could potentially get us to even lower numbers. So instead of like the 0.4 number of CO2 -- tonnes of CO2 per tonne of methanol, we could get down into that 0.23 tonnes of CO2 per tonne of methanol. And if you had green power, you could effectively get down to close to 0 on the CO2 per tonne of methanol. So lots of the things we're looking at. That design has about -- so if you look at the 0.4 today. If you just go to without the green power, that's a 43% reduction in CO2 emissions. It uses 11% less gas and about 50% less water. So that's something that we're looking at and that's kind of end of the decade before we know whether we could do that. And that's using -- sorry, that's using -- we'll trial some of that equipment in our facilities so that we can actually utilize it in a new plant design, if the location and situation fits. Again, you'll be evaluating that against building a plant right off the shelf, if you want, or kind of current existing with carbon capture instead. So it will be what's the best option for us. As I mentioned, reliability helps to drive emissions intensity, and our goal has always been to get to 97% or better. And last year, we achieved that. It was probably our best performance since, I think, 2009. So a significant improvement in our performance on an ongoing basis. Again, this year, we're above 97%. We benchmark ourselves against industry. And the last benchmark we did, I think, industry -- and this is kind of your -- when I say your better performing people in industry. So we benchmark against that group and ongoing reliability for them was around 93%. So we're running at that 97% plus. So -- and how did we get there? We have global teams. So we investigate and look at all our incidents that we might have that impact reliability. It's our capital management program. Are we putting our capital in the right places? It's looking at all of our assets and making sure that we're proactive and repairing and improving the plant where we can in order to reach these reliability targets. And then we have a group of global experts to support our team, and they're providing knowledge in the areas of process engineering, water treatment, rotating equipment, turnarounds, electrical instrumentation and operations and static equipment. So it's a very solid team, and they're looking at our plants all the time on how do we improve. And everything that we learn in our plants and everything that the standards that we create are then used and incorporated in a new plant, such as G3. So we've got Methanex project standards or that we use in our plants. So whenever we're making a change within the plant, we use them. And for a new plant, G3, all of those were transferred over and incorporated in the design. So hopefully, that achieves an even better operation of Geismar 3. So just to recap. Safety is our top priority. You will hear it from the top all the time. I mean John will say it continuously. Safety is the most important thing that we do and it impacts everything that we do. If we have a safety event, it impacts. It impacts our costs. It can have so many impacts to the public. It impacts our reputation. So it is, by far and away, our top priority. And as I said, everybody has this as the goal -- is their own personal goal. We have an advantaged asset portfolio and Geismar 3 is going to add to that. Geismar 3 is a fantastic project. And I know you guys had a chance to look at it. But coming from my side, I'm very excited about it. It's got great technology in it. It's going to be a super asset. And we're pursuing initiatives through reduce emissions. We've always been conscious of efficiency and trying to operate our plants well. And this has just kind of raised the bar for us as to how can we improve even further. Thank you.

I think we were going to have a break, but I think we've decided in the interest of time for -- I know some peopl have traveled commitments we're going to carry on through. So -- but please if anyone needs a bio break, just carry on. So good afternoon with that. So over the last 30 years as a company, we have continued to build on our vision of global methanol leadership. To the point where we are today, the clear global leader in a growing industry, and we continue to build our company around our strategic pillars of low-cost operational excellence and market leadership. I think you've heard from Rich and Kevin today in terms of many of the elements that contribute to our global market leadership, including our reliable operations and our globally integrated supply chain. So we believe our competitive advantage would be difficult, costly, take many years, if not impossible, to replicate the capabilities that we've developed over the 30 years while we've been in business and what makes us pretty unique as a chemical commodity in this space. So our singular focus on methanol has allowed us to develop what we call differentiated capabilities to enhance value, lower our operating costs, particularly in the area of logistics and ultimately be the supplier of choice to our customers. So from a corporate development perspective, the construction of the G3 advantage world-scale 1.8 million tonne project as well as embedding ESG into our strategies. They are the key focus areas that we have within corporate development today as we build on our global methanol leadership. A lot of conversation, obviously, at the moment around gas. So it's worth highlighting our gas strategy, which is a key part of our low-cost pillar. And it's based on the principle of ensuring that we can continue to operate our plants profitably through all points of the methanol cycle. So there are 2 approaches that we have to gas strategy across our asset portfolio. So in our manufacturing locations outside of North America, that's New Zealand, Trinidad, Chile, Egypt, all our gas contracts are linked to methanol prices. So with the focus on ensuring that we operate profitably through all points of the methanol price cycle. So we share the upside with our gas suppliers when methanol prices are higher. And conversely, when methanol prices are at a lower point, we pay a lower gas costs. So these long-term gas contracts obviously provide cost flexibility through the cycle, but they also create alignment with our gas producers around the world in terms of we share in the upside and in a higher-priced methanol market. So for our North American assets being Geismar and Medicine Hat, we talk about North America in its entirety. Given the very liquid gas markets and the fact that commodity price linked gas contracts are not standard, we have taken a strategy of pursuing an active gas hedging program in place to manage that gas price risk. So the strategy here in the simplest terms is to ensure that at our minimum operating rates, we can continue to operate our plants at all times. So that's the basis of the 65% hedging policy that we put in place to ensure at a minimum, we can continue to operate all those plants. So it's an active rolling hedging strategy, and we have various levels of hedges layered in through the next 10 years. People ask, well, what's the price that you hedge it? And I would say what we do is, it's based on a delivered cash cost target that allows us to deliver into our markets during the low end of the cycle. But I think it's also worth highlighting, particularly in the current gas environment, that we find ourselves in that we are hedged for 85% of our needs next year across our North American assets. So which if you look at the current forward, Henry Hub cost curve, we are -- it provides us with a really strong cost advantage heading into 2023. So for those of you that are here in person today, you all had the great opportunity to do the tour this morning and see the significant progress we've made on our G3 project. First and foremost, and to echo Kevin's point, we're really pleased with the excellent safety record on this project. We've completed over 2.8 million work hours without a lost time injury. And as everybody knows, a safe project is ultimately a successful project. For the engineering and procurement predominantly complete and with all the key equipment and materials already on site, we've eliminated most of the supply chain and materials cost risk exposure. So we now focus on the construction phase of this project. And to date, we're about 55% complete on the project, overall. We have a very experienced, excellent onus team in place. And we're really benefiting from the decisions and the work that was taken during the deferral period. And our timing on restart has really placed us ahead of any other construction project in the area as we consider competition for labor. So it's a cost advantaged capital project given the brownfield advantages that exist from the existing infrastructure from the G1 and G2 site as well as we've talked about the capital cost advantage given G3 users excess hydrogen from the G1 and G2 site. So it eliminates the need for a primary reformer. So we can take -- continue to make excellent progress, and we're confident in our ability to deliver this project within the capital and schedule parameters we set out at restart. When complete, as well as adding to our market leadership position, G3 will also significantly increase our future cash flow generation capability. As highlighted on the chart, if you look at a $400 methanol price and consider a range of gas prices between $3 and $5 in MMBtu, the uplift to our EBITDA earnings is in the potential of $250 million to $325 million. And another point is the economics for G3 were based on delivering all of this product to Asian markets. So as we see the opportunity to grow our sales position further in the Atlantic, it will only further add to the value of this project to make it even more attractive. So it's a great project. We're really excited to see it advancing well, and we know it's going to add to our global market leadership position. So consistent with this global market leadership strategy that we've been pursuing, we've invested in growth through capacity additions over recent years. We executed the relocation of 2 of our assets from Chile to Geismar to now G1 and G2. And it enabled us to capitalize on the availability and the cost advantage of shale gas here in the U.S. We've successfully debottlenecked both those plants at low capital cost to add a further 200,000 tonnes of low-cost capital -- low-cost capacity additions. And we know our current G3 project will strengthen our asset portfolio. As mentioned, we remain focused on securing economic gas to restart our idled assets, that being our 800,000 tonne plant in Trinidad as well as our 0.5 million tonne Waitara Valley plant in New Zealand. I think the ability to restart these plants represents the lowest capital cost investment to add back capacity and we're actively pursuing these restarts in both locations. So also -- and given the demand growth outlook for methanol and recognizing the multiyear time frame it takes to develop and ultimately build the plant, we continue to evaluate options for future growth, which include options for brownfield expansion on a site like Medicine Hat or Geismar as well as we are always monitoring and evaluating greenfield opportunities in other locations around the world. But I would say in that as we evaluate future growth options, it's clear that low carbon technology pathways are going to be a really important part of their future project evaluation. So methanol is an important part of the transition to a low carbon economy. We know it's an essential chemical that goes into every day -- multiple everyday products, and it is a low carbon fuel but we are aware that this is an emissions intensive industry. And so we're focused on our opportunities to decrease carbon intensity at our existing sites and as we consider new projects. While methanol can be made from different feedstocks, different energy sources, we all know the resulting methanol is chemically the same and it can be used same end applications. So there are different production methods including from renewable sources to produce green methanols, but these are all at different stages of commercial and economic feasibility. Really, in terms of green methanol today, it's really a nascent industry, making up a small amount of global production. If we consider the industry is roughly a 90 million tonne industry, coal production in China makes up about 1/3 of that global production. And it's mainly based from coal and has a CO2 carbon emissions intensity of about 5x greater than that of a conventional methanol natural gas-based plant. So if you consider the concept of an industry carbon curve, we believe our assets are really well positioned on that theoretical carbon curve. And we have shared that G3 on that carbon curve would be one of the lowest carbon emission intensity methanol plants in the world. So we're active in all the pathways to produce low carbon methanol. As mentioned, our feasibility project in North America to evaluate carbon capture and storage would enable us to produce flue methanol. Today, we can produce biomethanol, certified biomethanol here at our facilities in Geismar using renewable natural gas. And we'll continue to evaluate projects and technology options for e-methanol and bioethanol. But I think if you take anything from the slide, I think we've -- what we're trying to outline is, we have a great platform and options for transition to low-carbon methanol production. It's also useful to have some context when we talk about the pathways to low carbon and green methanol. While all are technically feasible, the options for green methanol at considerably higher cost to produce today and tend to be smaller in scale off in the 50,000 to 100,000-tonne plant. And the recent IRENA studies highlight that as compared to the cost of conventional methanol, which they've indicated is in a range of $350 million to $450 million. In terms of cost to produce for conventional methanol, the cost of the different green methanol production technologies is going to be 2 to 5x higher or more costly to produce. So we look at the existing conventional assets, and we see their ability to lead the transition to low carbon. That is the ability to convert to blue methanol from carbon capture and storage and even through to green methanol with renewable natural gas today. So while technology improvements and scale benefits, you'd expect them to emerge over the longer term. What's highlighted, though, is that there needs to be a premium, a willingness to pay or response that is to incentivize green methanol happen. So as we continue to our sustainability path and as we've released in our sustainability report this year, I think our intent and direction is really clear through our commitments to transition to a low-carbon economy. And our assets are important in this transition as they show a path to low carbon methane. And as Kevin highlighted, we're undertaking work throughout all our sites and teams to reduce our emissions. And we believe in the value of methanol as a future carbon source, particularly low carbon fuel source, particularly in the marine fuel space. So I think it's clear the energy transition will take a long time, and it's going to require a lot of input from multiple stakeholders. And so we continue to work with our customers, the governments that we're -- in the regions we operate and in around the world, technology providers as we evaluate opportunities in green methanol. So maybe in summary, we are the industry leader in methanol, the clear industry leader. And we've got to focus on low-cost operational excellence and market leadership. For our global team, team members around the world, they're the ones that execute on our strategy everyday. And we have a depth of industry experience and knowledge, which allows us not only to develop, to build projects like G3, but also operate those plants efficiently, operate or integrated global supply chain and service our customers around the world globally and seamlessly. So I think it's worth highlighting our team members are really key to our competitive advantage as well. So we're excited about G3 and what it led to our business. It's clear from the capital advantages that will be also one of the lowest CO2 emission intensity plants in the world and we look forward to bringing on G3 on stream sometime next year.

Good afternoon. It's my job to tie some together by talking about the finances and how this impacts the financial performance of the company. So maybe talking a little bit about the financial strategy, how we approach our balance sheet, things like that, capital allocation, our cash generation capability and then our approach to shareholder distribution. So that's the way that's going to be the focus of my discussion. So first of all, I'd say our financial strategy is informed by the industry structure, by our company strategy and things like that. So the industry is growing. We're the leader in this industry. We like to grow. So you want to add good, profitable capital projects to our portfolio over time. I think we've done a really good job of that. Another thing that informs our strategy is cycles. We are commodity and commodity cycles. And the best thing about cycles is that it can always predict when they're going to happen. And so you always have to be prepared to manage through business stress, not recognizing that you cannot always foresee it. The third characteristics of the former strategy is that we generate a lot of cash. And we generate more cash than we can reinvest in the business. So we want to make sure that we have a good vehicle for returning cash to shareholders. So let me just sort of talk a little bit about the practical ways that we think about that in terms of our balance sheet management. First of all, we think the methanol price, the natural range for methanol price is $300 to $400 a tonne. So we structure our balance sheet around that price range. And we target investment-grade metrics. And our primary metric that we target is based on debt to EBITDA and the low end of the investment grade rating is 3x, and we want to target in meeting that 3x in that price range. We have foreshadowed for about a year now that we would like to lower that range. We would like to be able to meet the investment-grade targets at $275 a tonne, and over time, our intention is to delever. Our next opportunity to delever is a bond that's coming due in 2024. It's a $300 million bond. So over the next little while, our intention would be to repay that bond in some way through cash. We'll focus on liquidity. Liquidity is a huge defensive mechanism and an offensive mechanism for us. So we target a minimum $300 million of cash, and we also have backup bank capacity. So today, we have $300 million of normal bank operating capacity, and then we also have a $300 million loan that's supported by the G3 project. So we have $600 million of backup liquidity. You can see from the graph that we have ample liquidity. So today, at the end of the first quarter, we had $1.1 billion of cash. We have $600 million, as I say, backup liquidity. And if you look at that against our major capital project, of Geismar 3, which you saw today, there's $675 million to go. So we're in really good shape to complete this project with very little risk. So we really feel our balance sheet is in really good shape. The third aspect of our strategy is just thinking about shareholder distributions. And the thing about for us for shareholder issues we have to take into account is that we want to grow. And when we do grow, it takes capital, capital comes in big lumps. We also recognize that cycles come as well. And so the focus really is flexibility, flexibility, flexibility. And that is the same for our -- the way we like to distribute cash. So first of all, we'd like to have a base dividend that grows over time, but we want to ensure that we can pay that dividend at all points of the cycle. And you'll see that we reset our dividend about a year ago, and we took the opportunity last April to increase it, and we will continue to grow the dividend over time. The second vehicle that we use is a normal course issuer bid, and we've had a long history of repurchasing a lot of shares. And we think that the normal course issuer bid is a tremendous vehicle for distributing cash to shareholders for our type of business where you have cycles and you have big lumps of capital from time to time. So we think that normal course issuer provides a lot of flexibility. So we're going to have a base dividend that we can say in all points of the cycle and the rest of the cash will come back in the form of share buybacks and the preferred vehicle for that is a normal course issuer bid. So -- and I would say that we are very -- we have a lot of discipline around capital and structure our strategy. So when we have excess cash after meeting these parameters. We have a strong commitment to giving that money back to shareholders. So we -- this is an illustration of our -- how we've utilized our cash over the 10 year -- the last 10 years, and we call it a balanced approach. But what it shows is that we generate, first of all, generate a lot of cash, and that's even take into account a couple of down cycles. So we generate a lot of cash, and we've had a lot of history of returning excess cash. We've invested what we think is a balanced way, $3 billion back into the business. That's including maintenance capital to sustain the business and primarily in this graph, anyway, the 2 big projects, G1 and 2, which you saw today, which have been excellent investments and really added to the cash generation capability of the company. So we're really pleased to have you here today and showcase our Geismar assets. We really think this is a really foundational part of our asset portfolio. G1 and G2, as I've already mentioned, have been outstanding investments for the company, and we're really excited about G3. And I think you heard a lot about risk, and we've really had -- taken the opportunity to really derisk G3 in the projects going really, really well, and we're really looking forward for this project to come on stream. We already structurally generate a lot of cash. But as you can see, and Vanessa pointed out in her presentation, G3 represents a big step up in cash generation. So how do we think about some of our capital allocation priorities? Our first priority is always going to be to maintain the business, and that's making sure that our plants are reliable and safe as Kevin and Vanessa have already mentioned. That takes about $120 million of maintenance capital a year on average. We want to meet our liquidity targets for sure. So that's $300 million of cash on our balance sheet in excess of the cash required to complete G3. And we -- as I've mentioned already, we very comfortably meet those liquidity targets today. We have said that we would like to delever a little bit. And we think that taking out the $300 million bond that's coming due in 2024 with cash is smart and provide us lots of financial flexibility going forward. Not a lot of new capacity and new capital required ex G3 for the next few years. So that means that all excess cash after thinking about including the funding of G3 and our debt repayment will come over the next couple of years, there's going to be a lot of cash to distribute to shareholders. And I just thought I'd maybe give you just a little bit of a look of that and how that might look over the next little while. So this is a pro forma cash forecast over the period from March 31 to the end of '24. And that's presented under 2 price scenarios. It's presented under a $400 price scenario and $350 price scenario. And it takes into account the capital cost to complete 3 maintenance capital, debt service, all those good things. And also, you'll notice that it takes into account also our intention to repay the bond is due 2024. And you can see under a wide range of price assumptions, there's still a lot of cash that's available for distribution to shareholders. We feel really, really good in terms of where we are on our balance sheet and our ability to provide really good returns to shareholders over the next few years. So maybe just to summarize, it's all about flexibility. We want to be able to manage cycles. We want to be able to grow, and we want to be able to provide a good vehicles returning cash to shareholders. We have really -- we have -- our cash generation capability is excellent, really good cash generation capability and very disciplined around capital. And we are committed and have a long history of returning all excess cash to shareholders. So I'm going to stop there, and we're now going to continue on and have a Q&A session. Sorry. So just to wrap up before we get into the Q&A. So obviously, hopefully demonstrated our leadership position and the value of that leadership position positive medium-term to long-term growth outlook and not a lot of new supply coming on, growing cash flow capability with a track record of disciplined capital allocation, returning asked to shareholders and then really well positioned as we transition to a low carbon economy. So with that, I'll stop and open to take your questions. Joel?

Joel George Jackson of BMO. I had 2 questions. First, you gave a bit of color on the 14 million tonnes of demand growth over the next 5 years. I'm guessing the numbers you didn't mention was just the kind of growth in GDP and from all the [indiscernible] gas. Can you clearly go through exactly how the 14 million tonnes of demand growth are coming from the different buckets? And then the second question is on G3, it did seem like the team is quite excited about what's going on here. It's -- they're all the parts and steel and pipes that are stockpiled everywhere here. Can you give us an idea of what is the best case scenario? There's no hurricanes and people can somehow withstand the ridiculous heat here. What is the best case scenario that we could be past the precommissioning into the commissioning phase now? Is that October? Is that September? That would be helpful.

Yes. So on the demand growth, if we take half the market, let's say it's 44 million tonnes around today is related to GDP IP. We've got that growing at around 3%. Those numbers are IHS numbers, not our numbers. Our numbers would be similar, slightly different in the categories. That's a 3%. So if you had a view of no growth in that half of the market, it's about 1.2 million tonnes that wouldn't grow. I think Rich illustrated that we need new supply to come on into the market or higher operating rates. And today, the cost curve is in the $360 to $390 with a lot of production there based on a high energy environment. So if we did see less demand growth in the -- because of a recession or a prolonged recession, it's about 1.2 million tonnes, yes, a year. And then if we look at the MTO space, we have one new plant coming on this year, 1.8 million tonnes of demand. And we expect the industry operating rates, as Rich mentioned, to be in the 85%, 90%, which is historically what they've been. So I would add 1.8 million tonnes into the MTO space. And then the rest of the balance would be in the fuel space, and that's really the shipping that's coming on as well as the boilers and kilns in China and some in 100 in China as well. So it's a combination of the demand. We're pretty conservative on the energy space. And then when these demand forecasts were done, I think we were in a different energy environment and a high energy environment is certainly good for energy demand as well. As far as the project itself, we have a detailed project review coming up in mid-July. And I'll be able to update the entire investment community on the July call with the capital cost estimate as well as the schedule. So for natural gas availability in Trinidad, maybe I'll ask Ian to -- he was just there and just had the complete review with the government. So maybe just give us the color there, Ian, please?

Sure. Just for background, the way the ELT works is that we all have functional responsibilities, but we also have sponsorship responsibilities for our operations around the world. So my sponsorship of the Trinidad operation and very proud of the organization that the Atlas plant has been running for last year, and it's running on incredibly good rates, 100% reliability and safety records for excellence. So the challenge in Trinidad is gas. So I was down in Trinidad, I don't know, 10 and 12 days ago, there was a big energy conference there in Trinidad and it was all about the future. And just sort of as a background, Trinidad is a country that's heavily reliant on oil and gas and chemicals and LNG. So it's a big part of their economy. And as a big picture concept, the government is very incentivized to make or that all these operations are sustainable over the next number of years. And you can really feel that energy that that's happening. So -- and I -- so when I was in Trinidad last week, I met with the most senior people in government, in GC and also with some of the CEOs of the upstream. And I would say all of them are very committed to future investment and continue to ensure that the assets -- and all the assets in Trinidad are sustainable. So that's the goal. The challenge is timing. There's a lot of contractual relationships that are converging at about the same time. So the upstream contracts are expiring in the next year or 2 and the contract with the LNG producers are expiring the next year or 2 years and the same with most of the chemical operations as well. So there's a lot of the things that need to happen in order for the gas contractual regime to work quickly. So that's the challenge. But as I say, the government's very incentive and the upstream is very incentive to ensure that somehow we figure out a way that we share the economic rent that's available. We think is available between the upstream, NGC, the government and downstream, the chemical. So we're cautiously optimistic that we're going to be successful and that includes the Titan plant. But it's a bit of a journey. And my suspicion is that we will keep the operations going. But it's -- the time frames and the issues around timing are going to be a challenge.

Yes. And I want to emphasize the economics of the gas will be different than the economics we've traditionally enjoyed with Titan. So we'd pay a little bit more for the gas. But we want to remain -- to sign a contract, take-or-pay contract, and to invest the tens of millions of dollars we have to do to get the plant restarted. We'd want to be cash positive through the cycle. So that's our goal. And we won't sign a contract that assures losses during the bottom end of the cycle, and that's part of the challenge that we're having with the government. And as the government renegotiates with the upstream, they certainly know the downstream's position not only ours, but our competitors, the ammonia guys and LNG. This is another part of the question here. Maybe Vanessa, I'll ask you to just give us an update what's going on in New Zealand with the gas there and what's going on with the high energy complex there as well.

So in New Zealand, we idled our Waitara Valley plant back at the end of 2019. And that was as a result of some poor performing fields at the time from the gas suppliers. So not a reserves issue in New Zealand. They always have a reserve to production ratio that we would consider just keep moving out as they continue to explore. So what we've seen over the last few months is more drilling activity in New Zealand. It's a scheduled program. And so they're starting to see those results. And as we come through the second half of the year, we're expecting to see more gas flow into the 2 plants. And we're continuing to have those conversations with gas suppliers around the restart of the Waitara Valley, which is going to take time from the capital to be deployed to return the facilities as well as return some stuff. But we're still confident in the reserves outlook in New Zealand. We've gone through these challenges before on New Zealand. It is a country that has a small amount -- a small number of large fields, and we're confident at some point, we'll get back to operation in New Zealand.

Yes. Just some context about New Zealand, we're half the gas market. And the gas there is very rich in liquids. So when you get $120 oil, they're very incentivized to monetize liquids in a high methanol price like we're experiencing today, we're paying a really good price for gas. So the private market, it's not government, it's private owners, and they're very interested in drilling and developing those reserves. Like Vanessa says, that's not a reserve issue, is developing the reserves and it's tended to develop the reserves as we and the country needed it. So the economics today are so -- in such a good place that we're going to see gas be developed, and they need us as much as we need them because they want to get the liquids and monetize the gas. What I would remind everybody, though, that, that plant was end of life when we did shut it down. We had planned a fairly significant investment in turnaround, and that would have to be done. So we'd have to, again, sign a contract that allowed us to, in a 5-year period, just to take an example, to recoup the capital that we'd be putting in into that plant. So I think we're going to hear -- see a lot more about what the drilling programs produce over the next 1 to 2 quarters and certainly continue to engage with gas suppliers about getting a 5-plus year contract.

Great. Just back to Trinidad. The Atlas contract, I believe it expires in 2024. Is that going to be the same negotiation with the government as Titan? Or are those really 2 separate discussions?

No. I think it's a similar discussion because the timing is such that a lot is going to happen in the next 2 years. So we'd like to finalize gas for Atlas post '24 at the same time we're negotiating gas for Titan.

And then just one more -- back to a Rich. You talked about another MTO plant coming online in the second half of the year. What's coming on in '23 and '24? And if not much, why not?

Do you want to -- yes. So maybe I'll start and then Rich, you can add. There was a second wave plan then of MTO plants So first wave is coming to a conclusion here with the Bohai plant. Obviously, when we had the oil collapse in 2016, most of the second wave was canceled in favor of naphtha crackers, because naphtha obviously trades at a price of ratio to oil. Obviously, that's changed now and naphthas back to $800, $900. So depending on what your outlook is for oil and naphtha even in today's olefins markets that naphtha crackers are marginal and some of them have reduced rates. So there is an opportunity now to think about more MTO or the second wave probably have to see a high oil environment for another couple of quarters before we see that. But I'll remind you, there are 2 plants in China that are idle, [indiscernible] and -- what was the other one, Rich? [indiscernible], those are idle. And in this environment, restarting those plants is certainly a lot more attractive and, let's say, in a $60 oil environment in relative or $500 naphtha. Anything you want to add, Rich?

No.

Jacob?

Yes, just a question on the capital cost for the restart of the 2 plants. And then maybe walk through -- there's a couple of debottlenecking opportunities you talked about. One was the Geismar, I forget what the other one was, what the cost for that would be as well?

Yes. So the Titan plant to restart its people and maybe $10 million in that order of magnitude. Waitara Valley, I mean, it's more $50 million or $100 million because it's come to end of life and that's order of magnitude. As far as debottlenecking opportunities, I don't see us having any, around the world at this point. Certainly, getting the high CO2 gas in New Zealand would allow us to operate at higher rates. And some of the gas that has been recently found in New Zealand or in the drilling programs is high CO2. And we're really the only offtaker for that kind of gas. So I think getting the other area we didn't talk about is Chile. And the developments there in the gas side have been really, really good in the Dorado Riquelme field, where we have a 50% ownership. Those wells are 2, 3x more productive than the [indiscernible] field where we're getting most of our gas. We're running the one plant during their winter at 70-plus rates, which is all in Chile gas. So I think that's really important to understand. And then Argentina continues to develop the Neuquén field. And again, in a high energy environments like today, we would expect that to continue to investing in pipe, et cetera. And there's going to be more drilling in the southern cone on the Argentinian side. which will also be helpful. So I think the guidance we're giving is still the same, 2-plant operation during their summer time and a onetime operation during the winter time with upside over the coming years based on both Chile and Argentina guess.

The other question I had was just on the European market. Obviously, lots of moving parts with the work going on over there, say it was roughly about 20% for your end market. What are your thoughts there? Are there any opportunities that present up there given the high natural gas environment? Or is it kind of status quo?

Yes. So the Dutch plants are down, and you would have seen natural gas prices spike up here in the last few days in Europe as well. So we don't see them coming back in this environment. Russia is an exporter of about 1.6 million tonnes of methanol to Western Europe. Today, most Western European companies, consumers have said pretty emphatically they don't want to deal with Russian methanol anymore. And -- but until they have an alternative, they're going to try and run their plants. I think it does create a significant opportunity for us. We modeled all of the Geismar 3 molecules going to Asia. And in today's high fuel environment, that's about $100 a tonne in freight. So if we were able to move a bunch of that volume to Europe, that's about $50 a tonne in freight in today's energy market. So it makes the economics which are already terrific going to Asia, even that much better. And certainly, our preference would be to grow our market share in Europe if the Russians aren't able to supply because we'd be the natural supplier to Europe. The other complication or opportunity Equinor is a producer of methanol in Norway. They have the opportunity to move that gas into the European market if they choose, but they have contracts for methanol. So directionally, as we come into the contracting season, which will start here now through the end of the year, it will be interesting to what we learn about the Russian supply as well as intentions of somebody like Equinor going forward. So I think this is a very good opportunity for us to increase our market share in Europe and even further help with the balances on the Atlantic and the Pacific basins.

You mentioned the 2 idled MTO plants in China. I was just wondering what that represents in terms of metric tonnes?

Rich?

It would be about 2 million to 3 million tonnes operating per year.

How long -- how fast could they -- I mean I don't know if you know the answer, how fast could they bring that back online? I mean is this something that could affect 2023?

It'd be difficult to say because they've been shut down for -- I would say, over the last 2 or 3 years. So it would -- it's difficult to say how long that would take and what kind of capital that would be needed to restart, but we wouldn't think it would take too long. So...

A couple of quarters. I mean, they built them in 2 years. So I mean to restart them probably max a couple of quarters, when they decide to do something, it goes pretty fast.

It's Nelson Ng from RBC Capital Markets. I might be getting ahead of myself, but you guys talked about the Medicine Hat brownfield opportunity. Can you just remind us about that opportunity? Like is there enough domestic demand? Like what are some of the other considerations you need to think about there?

Yes. So we've been looking at that site for a while, and it was a choice between that site and Geismar 3 when we made that decision. So I think the conditions why we chose here versus Medicine Hat haven't changed and maybe got a little more difficult is what I would say. So what are the challenges? You're right. It's not enough market, so it would have to be all exported through the West Coast to Asia. Obviously, if Europe develops, there might be an opportunity to move some the other way, but it would have to be all exported. Challenge on the carbon tax. The Canadian government has been pretty clear on its wants to move the carbon tax up to $150 a tonne range. And if we are producing 0.4 carbon per tonne of methanol, you can -- the economics get quite squeezed. The other issue is the rail transportation. I don't know if you followed the rail markets in Western Canada, but they've been quite horrible as far as service and getting product out of Western Canada to U.S. markets and overseas markets. So there's some monopoly situation and how could you ever assure yourself that you're going to move million-plus tonnes to Asia on the current rail system. So that's something that we'd have to solve. And then getting a terminal built on the West Coast and in the United States is in that hard-to-do basket, where nobody seems to want any of these kinds of things in their backyard. Having said that, there might be an opportunity up in the Prince Rupert area, Kitimat, where there is activity today to do that. So those are some of the issues that we've been dealing with. On the positive side, it's a great gas market. We expect that gas market to continue to be advantaged over even Henry Hub as well as we've got the land there. We've got a great operation. We've got a great team. So we've been able to staff it with a really good group of people. We know that -- we're well known in the marketplace. We have lots of good connections in the community. So from an operations point of view, it would be a great place to operate, but there's some hair that we have to deal with. And so those are some of the things that we think about, Nelson.

We have a question from the webcast. Historically, Methanex has had a 60-40 split of organic investments and capital returns to shareholders. Do you see that mix changing after G3 starts up?

Yes, it will change because we won't be having any other capital projects in the short term, even if we decide to do a green project. These are small in nature, like Vanessa said 50,000 to 100,000 tonnes in -- of capital cost in a -- or anywhere close to 1.3 billion tonnes. I think also what we've learned through G3, it's quite a significant capital outlay. Every time we want to build a project of scale. So I think our next one we -- certainly be more difficult to do without a partner, I never say never, but certainly having a partner to help you risk some of the capital risk that you take over a 3-, 4-year period when you build is a consideration. So Yes. I think the slides that I showed and Ian showed once G3 is complete here in less than 18 months at any range of methanol prices, we're going to have a lot of cash to share with our shareholder base and give back. We're not going to hoard the cash. We're not going to diversify into other industries. If we don't have projects that we can execute along with the market growth. And who knows if we're going to go into recession for how long and how deep. And if the market is not growing, we're not going to look to grow. And we'll be focused on getting our idle assets restarted. That's going to be our 100% focus. And that will -- if we get Chile back to full rates in Waitara Valley and Titan up, that's another 2 million tonnes. So that's for just a fraction of the capital. So we're going to have a lot of cash to distribute and it will all be more in the 60-40 or probably 70-30 because it's just our maintenance capital, which I think Ian mentioned is around $120 million a year.

So -- sorry, it's Ed Brucker from Barclays. You mentioned that you wanted to keep IG like credit metrics through the cycle, it seems like through at lower methanol prices as well. So I just wanted to get your thoughts on maybe getting back to IG ratings if that's a goal for you or you just want to run the business with those IG ratings?

Yes, we want to target the metrics. So that's 3:1, as Ian mentioned, at $275 million instead of $300 million. We've seen below $300 million pricing 3x since 2008. So I think it's prudent to lower our debt and target that $275 million out of $300 million. That's about $300 million less debt, whether we ever get back to investment grade I think it will be difficult because of the volatility that we've seen in our industry and the fact that we're a single product company, when we talk to the rating agencies, it's difficult for them to see us as an investment grade. Whether we ever get there or not, I guess, it's less important than having our own internal targets of making sure we likes to say, bullet proof the balance sheet from a down cycle. Ian, anything you want to add there?

John, you captured it well. We can't control whether we're going to get an investment grade rating or not, but we want to do what's right for shareholders and their bondholders, and we think it -- market to run this place very conservatively. And [indiscernible] have lots and lots of flexibility, and we're going to run the business that way. I think that's the most important point when I think about it.

John, just thinking about the Maritime opportunity longer term, it's finally emerging, which is great to see. But from the shipowner standpoint, one of the concerns has been access to long-term supply or consistent supply already well available in other markets, of course. So I mean, what can you do to help facilitate that growth or get you more ship owners onboard, can you offer longer-term supply agreements, would you enter into those? Or would they even be willing to entertain them? I'm just trying to get a context for how you could help accelerate the market growth?

Yes. In the current environment, Waterfront Shipping is a really good customer of ours right now. We're running all of our ships that can run on methanol because it occurred methanol prices versus marine gas oil at total advantage today to run on methanol. We'd certainly entertain long-term contracts with shipowners to secure supply. That was a barrier for them to enter. That has not been a barrier. We haven't, in my knowledge, Rich, had any or shipping, call it, companies say they're -- they're not going to do this until they get a secure supply. And I think many of them are thinking the pathway to carbon-free fuel is through methanol as well. Maersk has been very public that there is a willingness to pay or green methanol. I think Vanessa illustrated the numbers today for green methanol, and we certainly haven't signed a contract with Maersk yet, those kinds of numbers, and I'm not aware of anybody else signing a contract either. So I think it will become a bigger issue if the supply-demand balance that we present continues to be quite tight. And you get more shipping companies like last week, another one for another 300,000 tonnes. I always said when we've converted the first engine on the Stena Ferry years ago when people thought I was crazy, maybe I am, but I thought it was a good opportunity to improve methanol demand that proved to be quite successful. And then when we took the plunge ourselves in mid-decade to build our own ships with this dual-fuel capability, I thought it would be a slow adoption. And the second half of the decade demand driver, and that seems to be what it's looking like -- the total potential here is if every ship was to convert to methanol, which is not going to happen, but it's a 500 million-tonne potential markets. So we don't need much penetration I'll just reemphasize, this is a new build market. This is not -- retrofitting is very expensive. I mean, that's what we did with Stena just to prove out that the Wartsila engine, which is the 4-stroke on the faster ferries worked. And then we work with man to prove it out on the 2-stroke engines. And we're -- our market development team has got many projects with cruise ships, with fishing vessels, with tugs and all different types of vessels around the world. So really exciting to see the other engine makers like Caterpillar et cetera getting into the production of the engines because that's a bit of a bottleneck. So I think this is going to be a key driver of demand growth for our product for the next 10 years.

And do you think there's any resistance on behalf of those ship owners to use, call it, green methanol or blue methanol in the [ instrument ]? And it sounds to me like most of them are sort of making the conversion step because they believe there's a path to green methanol over 10 years or whatever the time frame might be. But I think as you've described, the economics are pretty terrible still at this point. So is there any resistance, I guess, to use the traditional methanol?

Well, they have to make decisions today as they're replacing their ships, right? And they're making a decision for 15 years of minimum. I mean, if you're an oil major, you don't have a ship that's more than 15 years old, but many carry on beyond 15 years and can be 25 years. So they're making decisions today that not knowing where the landscape is going to be. I think what they like about methanol is there is a green pathway to it. They also like this dual-fuel capability, right? They like to be able to -- if the regulation is allowed to run MGO or methanol depending on the relative economics. But as the IMO specifications become tighter and tighter, things particulate matter, MGO goes away as an option. So I think they're not sure exactly where everything is going to end up on the regulation side. And if they can make a choice, methanol with a green pathway and flexibility, that's why we're seeing quite a bit of adoption now. And it's been proven out. I mean we proved it out in the engine. So the biggest interesting thing it's not -- the engine itself is exactly the same. It's the injector and the fuel delivery system that's different for the 2 products. So having solved all those issues, and I won't get into the long list, but certainly, more and more interest. There's other competing products as well. But I remember promoting this early on, LNG was going to be the -- of the fuels for ships and certainly with -- not just the economics of LNG, but the handling and the storing and the granular, willing to be a lot more complicated and difficult than maybe first off.

And just one last one, if I may, is just on the G3 gas. I think you described sort of in broad strokes what the gas position is going to be domestically hedged. But as we contemplate start-up for the first year or 2. '24 really '25. I mean how much of that gas has been secured so far in sort of those initial years and sort of what threshold -- the gas position and at what price?

I won't -- we don't reveal the price, but I think we gave you a hint our delivered cash cost target to Asia in that $200 range. And you can do the math backwards on the gas price. I said we have 65% hedged, and that's our goal, is to have 65% of our North American operations hedged. You can do that as a liquid market out about 5 years. Beyond that, it gets a little tougher. We've been layering in hedges all along and call it lucky or whatever. I mean next year, we're 85% hedged because that's some of the gas we hedged in years ago when we thought G3 was going to be starting up now before the care and maintenance period. So certainly, in this market, we're happy to have that extra gas. But 65% is what you should be thinking. And that allows us to have minimum operating rates at our production facilities. And if markets get to a situation where it doesn't make economic sense run at $10, $11 gas, whatever it might be. But we look at that all the time. But we understand our competitors really aren't that hedged either. So we kind of think there's a natural methanol price hedge too that if it gets really ugly, that it doesn't make economic sense to make methanol at high gas prices than those producers will be reducing production as well, which will further tighten the markets. And we have seen some of our competitors lower operating rates in this environment.

We have another question from the webcast. Could you elaborate more on brownfield expansion opportunities in Medicine Hat and Geismar, specifically around timing, capacity and anticipated cost?

Yes. So we have the opportunity to look at a Geismar 4. We have the land. I really worry about concentration risk. So I don't know if I'm ever going to get over that hurdle. I think what I'd rather do here, but I never say never to anything, it's great to attract a couple of large customers to the site and have pipeline customers here. But certainly, this is a great place to do business, a great place to build things and just the concentration risk of adding another 1.5 million tonnes here that I don't know how we could get comfortable with that. I went through the long list of issues at Medicine Hat and I think D3, we would not be able to replicate those capital costs with a new plant, whether it be a brownfield, certainly not greenfield. I think you're talking, and we've been speaking, it's at least probably in the order of magnitude of $1,000 a tonne, and that's before the inflationary environment that we're currently experiencing. So that means you'd have to have -- you get a double-digit return $3 to $4 gas and $400 methanol price for 25 years. And I think that seems to be in the hard-to-do basket as well right now. So I don't anticipating us having another significant capital project more towards the end of the decade at the earliest because I think what we'd like to do is really work hard to get our idle assets restarted at a fraction of the capital cost. We have to watch how the market develops and how it grows. And if we are headed to recession and zero or less growth, then we have to consider that as well.

Just back to the maritime market. Can you talk about what the clean fuel alternatives are to methanol? I mean I think ammonia is probably the biggest one. Are there others? And is there flexibility between ammonia and methanol? Or is it just is there room for both of those to be involved?

Sure. Yes. So you're right, ammonia is being looked at, hydrogen also. And initially, it was also LNG ships were also had a big uptake on LNG ships. With LNG, you can only get a certain amount of the way there on CO2 reduction before you have to introduce bio LNG. And there's other issues around LNG with methane slip and other things that the shipping industry is quite concerned about. Maersk has been very public about that issue. On dual capability between ammonia and methanol that, those will be completely different technologies. Ammonia is being developed, but it's not there yet today. So they're quite far away behind on the actual ammonia technology in comparison to methanol. And then ammonia has -- both ammonia and hydrogen have their own challenges. In relation to hydrogen has to be cryogenic, it's difficult to deliver the volumetric and energy -- energy intensity for hydrogen is a lot less than methanol. On the ammonia side, you've got obviously toxicity issues. And also there's still NOx issues when it comes to burning ammonia. So it's not a perfect solution developed on those applications yet, but those are the ones that are being looked at.

And I think methanol is readily available around the world. So bunkering is much easier. It looks like water, handles like water. And if you were to spill some, you might kill a few fish within 100 feet of the ship, but you're not going to have a major type spill. Even ammonia has properties, we all know that can -- that are different. And hydrogen is hydrogen. So -- but those are the competing ones as of today. Go ahead.

Can you just talk a little bit about the current market. We've got natural gas in the U.S. I don't know where it is today, $7, $8, $9. So the cost to produce methanol in the U.S. if you're using spot gas is -- I don't know, what $330, $350, depending on if you're at $9 gas. Is that the marginal cost of production right now given that there's no gas-based operations running in Europe?

That would be the case today. I mean China is at $390, right? I mentioned the cost curve in China is $360 to $390 based on RMB 1,200 coal. I don't know if you read this morning, Australia is short on energy because they can't get enough coal to run their coal plants. So it seems to be a global issue. So I think it's in the $360 to $400 area. But you've got to add freight, right? It's not just gas. So the marginal molecules from the United States go to Asia. I already mentioned it's $100 freight today with the price that you're paying for fuel. So it's really marginal because the price in China today is $350, $360-ish for imported products. So the economics are quite challenging today if you're going -- add any freight if you're not hedged on your gas.

And how does the gas price in the U.S. impact Trinidad and kind of just how they think about price there for industrial consumers?

Yes. Historically, the goal of the Trinidad government was to link their gas to Henry Hub. And that's when Henry Hub was trading at $10 plus. And we all saw what happened with the shale and they went to $250, that seemed for a long time. So they changed that strategy, no longer wanting to be linked. So I think the strategy today is to, like Ian said, have the upstream, the government, the downstream, all the ride and make some returns. And they're trying to work out a way how to do that. So I think I said earlier that the gas price will pay in the future, there is not going to be what it has been historically, but we are optimistic we can get a price that makes sense through the cycle, so that we don't have to have take or pay gas on the bottom end of the cycle is quite challenging. But they have gas. I mean there's a willingness to develop in Trinidad. The big majors are spending money and it's just now, how do we get the economics right. There, we have, I guess, a natural hedge as well because our largest -- one of our largest competitors is 4 -- have 4 plants there. They're going to face the same challenges that we do as the ammonia players are as the -- others are.

As we think about the possibility of a recession coming up, how are you thinking about preparing for that possible outcome? How do you think about methanol demand? And how do you think about pricing in that environment?

Yes. So there's -- it depends on how deep and if it's a mild recession, probably not going to be much impact unless we get an oil collapse, again, which would impact the cost curve. So if you believe in higher energy prices are here for a period. The cost curve will be in that $360 to $390 with a lot of production at that level. So I think you'd have to see 7 million or 8 million tonnes of demand go away before we move down on that cost curve. So that would be around 10%. And I think when we've seen prices go below $300 in the past. There were 1 in 100-year events, but we've had 3 of them in 15 years where we saw a 10% to 15% demand dip kind of overnight because of the energy collapse, which impacted DME and MTP as a financial crisis throws everything and most recently, COVID, when everything stopped. And I guess you'd have to have an event like that, I think, to move down significantly on the cost curve today, or oil go back to $50 -- $40, $50.

Given this very fragile economic environment we're in right now, what's your biggest concern?

Hurting somebody, it's always my biggest concern. We're seriously hurting somebody or having a fatality. That's the number one concern I always have. Getting this project done safely on time, on budget is 100% focused. So I think we have the cash, as you know, we have the cash on the balance sheet to complete it and we have other cash. And so really, the same concerns in this environment is all environments is safety and hurting somebody significantly. I think you've seen the project, this is the best project we've ever run. This is a best team and it's the largest team we've ever had on a project. They're doing an outstanding job from day 1. This doesn't happen because of work in last year, it started 5, 6 years ago when we built that team and the way we're going to build this plant. And I was around as a CEO for G1 and G2 and there were tremendously successful projects, but they pale in comparison to what we've done on this one. So I'm really not concerned about completing this on time and on budget at all. And I think you saw that today.

Another question from the webcast. How does management look at M&A opportunities and whether there are any viable or attractive opportunities out there?

Yes. So we look at the M&A space on a regular basis. When you look at the 100-plus methanol plants in the world, most of them are not for sale or would be salable because they're state-owned or they're in China or they have some other integration situation. But there is some plants. I think the Oman or the OCI plants would -- and OCI has been trying to sell their methanol business for quite some time. And when you do sit down and have a conversation about M&A or activity related to acquisitions, the price becomes in the $1,500 to $1,700 a tonne for installed capacity discussion, and we're trading at $600, $700, whatever it is. And I can't imagine that's well embraced by shareholders. So I think -- there could be opportunities now as we come in, if it is a severe recession, and a lot of -- some of our competitors are really leveraged and we have to renegotiate. So there may be opportunities, but I put it in the low probability basket for mergers and acquisitions. And I think as long as the industry is growing, taking mergers and maybe shutting capacity is not the strategy that we need to do like we did in 2000. We certainly need -- if we're going to incentivize shipping and have enough methanol to do some of these other new applications, we need more methanol, not less. So always consider things, but they have to make economic sense.

John, could you explain the confidence in the cost curve? Because I think you said today, it costs more to make methanol in the sales price in China. I think you said some European plants are out. So why isn't the price better for methanol today?

Sentiment, I would say. There's a lot of sentiment that -- and that's been there for some time now. Prices rolling over and that the energy complex will retreat. I think the more -- as it goes along, that's proven to be not accurate. The imported material into China is right around that cost curve. So we've seen operating rates not rebound. Like in China, during the winter time, we see lower operating rates. And as they come out of winter, we see higher operating rates. And we've seen a slight increase, but not to the extent we would have seen in previous years. We still see inventories being quite skinny through the chain as well. And we've just come out of a long term -- or another long-term COVID shutdown in parts of China. So that's now behind us, and that's spurring on some new demand. So there's been a few things like that. I think in the short term that have impacted some of the demand for methanol, but yes, the product or the market will always be balanced. It's just a matter of at what price. So if you said I could have the current price for the next 10 years, I'd be a very happy person. So it's really hard to predict where energy is going to go and certainly LNG prices and coal prices don't seem to be going to go down in the short term. But if you get a severe recession, that can change overnight as well. So I think that's why we tend to be quite cautious in this kind of environment. But I have to go by the numbers today. And I know that doesn't mean it's going to not be different in the future, but we're not seeing any impact on our demand from our customers. I know Rich and Vanessa were just down at the ACC meetings and their demand is still quite good. Although they are nervous too about what kind of recession, if there's a recession, how deep, et cetera. So taking a cautious approach here today is the right thing to do.

We have another question from the webcast. Could you give us some more details around the carbon capture initiatives and time line?

Kevin, can I ask you to?

Yes. Right now, we're just analyzing different technologies. We're doing a little bit of work on that. And probably, I would expect by end of the year, we have a little bit more color around cost and what kind of technology we would use.

About lead time. If we went forward and made an investment in carbon capture. How long do you think to get that up and running?

Relative -- relatively large project, and it's going to be integrated to existing. So I think you're looking at probably 3 years from the time you decide to the time it would be operating.

Other questions. Okay. Well, thanks very much. We really appreciate you've taken the time out of your busy schedules to come down to Geismar. I know it's not a great -- an easy place to get to, but it's a great place to see and I think seeing the project hopefully has alleviated some of the peers in the market about us being late or over budget. Certainly, I think Paul told me that on his bus, he was schooling the analysts about not writing things about supply chain issues impacting this project. So Paul is pretty passionate. And I didn't tell them to say that, but that's Paul, he says, I read that. I don't know where that's coming from. So hopefully, that fear has been alleviated. And we really appreciate. I know it's lot of uncertain times, markets are in a turmoil right now and for you to take the time to come down and spend last night with us and all most of the day today, certainly, I appreciate that commitment and the interest in our company and look forward to continuing our dialogue as market development as things change in ways that we probably can anticipate today. So safe travels home, and I'm certainly back on the road again. I'm in New York on Wednesday and Toronto on Tuesday, meeting within shareholders and potential shareholders. So look forward to catching up with everybody as we go forward here. So thanks very much.