05–07

Methanex Environmental Excellence Report

Methanex Environmental Excellence Report 05–07     1

Methanex Corporation
Environmental Excellence Report 2005–2007

1. Executive Summary  4

2. Corporate Profile  5
2.1  Environmental Awards 6
2.2  Environmental Performance Data 7

3. Responsible Care® 8
3.1  Guiding Principles for Responsible Care 8
3.2  How Methanex Implements Responsible Care 8

4. Environmental Management Organizational Structure 10

4.1  Global Responsible Care Team  10
4.2  Global Environmental Excellence Team 11
4.3  Global Manufacturing Team 11
4.4  Global Marketing & Logistics Team 11
4.5  Global Marketing & Logistics Responsible Care Team 11

5. Methanol Uses and the Production Process  12

5.1  Methanol Uses 12
5.1.1  Methanol End Uses 12
5.2  Typical Methanol Process Description 16
5.2.1  Desulphurization of Natural Gas 16
5.2.2  Reforming 16
5.2.3  Compression and Synthesis 18
5.2.4  Distillation 18

6. Environmental Permission to Operate 21

6.1  General Conditions 21
6.2  Site Specific Permit Requirements 22
6.2.1  Medicine Hat, Canada 22
6.2.2  Kitimat, Canada 23
6.2.3  Punta Arenas, Chile  23
6.2.4  Taranaki, New Zealand 24
6.2.5  Point Lisas, Trinidad and Tobago 25
7. Changes / Process Improvements / Developments  26
7.1  Plant Operations 26
7.1.1  Kitimat, Canada 26
7.1.2  Punta Arenas, Chile 26
7.1.3  Point Lisas, Trinidad and Tobago 26
7.1.4  Taranaki, New Zealand 28
7.2  Marketing and Logistics 28
7.2.1  Responsible Care Seminars and Partnerships 28
7.2.2  CDI-T Audit 29
7.2.3  Regional Marketing and Logistics Developments 29
7.3  Waterfront Shipping 30
7.4  New Developments 31
7.4.1  New Plant Construction in Egypt 31

8. Issues / Incidents / Impacts  32
8.1  Kitimat, Canada  32
8.2  Punta Arenas, Chile 32

9. Environmental Issues and Opportunities for Improvement 33

9.1  Greenhouse Gases 33
9.2  Fugitive Emissions 34
9.3  Ozone-Depleting Substances (ODS) 34
9.4  Management of Non-Manufacturing Emissions 35
9.5  Contaminated Sites and Areas of Potential Concern 35
9.6  Environmental Management System 35
9.7  Environmental Improvement Opportunities 36
9.7.1  Sustainable Development 36
9.7.2  Office Recycling, Paper Use and Energy Conservation 36
9.7.3  Habitat Enhancement 36
9.7.4  Environmentally Friendly Purchasing  37

This report may contain forward-looking statements. By their nature, such forward-
looking statements involve risks and uncertainties that could cause actual results to differ
materially from those contemplated by the forward-looking statements. For a discussion
of these risks and uncertainties, please refer to the Risk Factors section of our most recent
annual Management's Discussion and Analysis, which can be found in our most recent
Annual Report on our website at www.methanex.com.
1. Executive Summary

Responsible Care® *was conceived more than two decades ago as a way for members of the
Canadian Chemical Producers’ Association to demonstrate the ethical, safe and environmentally
sound management of chemicals. As the world’s largest supplier of methanol to major international
markets, Methanex is committed to the principles of Responsible Care at all our global locations.
Responsible Care guides all of our actions throughout the development, manufacture, storage,
transportation, distribution and waste management of methanol and its end-products. It is also
the ethic that guides decision-making throughout the Company, starting with the governance
practices of the Board of Directors and senior management and extending to the business practices
observed every day by everyone in the Company. Methanex produces an annual Responsible Care
and Corporate Social Responsibility Report that describes our performance in areas related to
environment protection, health and safety, corporate social responsibility and other initiatives.

In addition, Methanex Corporation produces its Environmental Excellence Report every three years
to describe our environmental management practices in more detail. The current report covers the
period of 2005-2007 inclusive.

Methanex is constantly looking for better, more efficient ways to operate our plants to reduce our
environmental footprint. In the following pages we highlight plant changes and improvements
made during the past three years as well as efficiencies gained in the transport and delivery of our
product to customers. We also dedicate a lot of attention to reducing out wastes and emissions
including greenhouse gases. In this report we describe the monitoring systems that are in place and
the steps being taken to eliminate, reduce, reuse, recycle and manage our wastes and emissions.

This report details the environmental management processes within our business and the way
in which we intend to address existing and future environmental impacts from our operations.
Furthermore, the report discusses opportunities for performance improvements that Methanex is
focusing on in the near term, such as sustainable development, environmentally friendly purchasing
and pollution prevention. Methanex is the global leader in methanol, and with global leadership
comes global responsibilities. This report demonstrates that, in environmental issues, we will
continue to strive for the highest standards for environmental protection.

*Responsible Care® is a registered trademark of the Canadian Chemical Producers’ Association, used under license by
Methanex. Methanex is also a member of chemical industry associations that have adopted Responsible Care whenever one
exists in the countries where we do business.

Methanex Environmental Excellence Report 05–07   Executive Summary   4

2. Corporate Profile

Methanex Corporation is the world’s largest supplier of methanol to major international markets in
North America, Asia Pacific, Europe and Latin America. Methanol is an essential chemical building
block used in countless industrial and consumer products and increasingly in emerging energy
applications. This means that every day, all over the world, Methanex plays a vital role in people’s lives.

Headquartered in Vancouver, Canada, Methanex has production facilities in Chile, Trinidad and
Tobago and New Zealand with a total production capacity of 6.7 million metric tonnes annually.
Methanex also has a global network of methanol storage facilities and regional marketing offices.
Waterfront Shipping, a Methanex subsidiary, operates the largest methanol ocean tanker fleet in
the world and provides reliability and security of supply to our customers around the globe. Every
day, approximately 800 employees around the world work together in a team environment to
achieve the Company’s business objectives. We believe that our core values of integrity, trust, respect
and professionalism have made us a preferred methanol supplier for many of our customers.

Methanex common shares have been listed on the Toronto Stock Exchange (TSX) in Canada since
March 1992 and trade under the symbol "MX." In the United States, Methanex has been listed on
the NASDAQ Global Market since May 1992 and trades under the symbol "MEOH". In May 2007,
Methanex listed shares on the foreign securities market of the Santiago Stock Exchange in Chile
under the symbol "Methanex".

For more information about Methanex’s history, product and locations, please visit the Company
website at www.methanex.com

Methanex Environmental Excellence Report 05–07   Corporate Profile   5

2.1  Environmental Awards

Over the years, Methanex has received numerous awards that recognize the Company’s
commitment to environmental protection. These awards show how employees, working together,
make protecting the environment a regular part of their daily business. Some of the environment-
related awards from the last several years are shown below.

Table 1: Environmental Awards Received by Methanex from 2005 to 2007

2007

New Zealand Taranaki Regional Council Environmental Award

For environmental enhancement and community/industry partnership of the Herekawe
Walkway Project throughout the past three years.
Trinidad GE Ecomagination Leadership Award
In recognition of a project that provided an innovative and environmentally responsible
water treatment solution at Methanex Trinidad’s Point Lisas methanol facility.

2006

North America BNSF Product Stewardship Award

Burlington Northern Santa Fe Railway award for zero non-accidental releases on their
railroads and successfully implementing the ethics of Product Stewardship under
Responsible Care.

2005

North America BNSF and CSX Product Stewardship Award

Burlington Northern Santa Fe Railway and CSX Corporation award for zero non-
accidental releases on their railroads.
New Zealand Corporate Environmental and Social Responsiveness Award/Massey University
Winner of the above First Equal Award, out of 39 New Zealand companies, for
management systems, policies, objectives and communication.

Methanex Environmental Excellence Report 05–07   Corporate Profile   6

2.2  Environmental Performance Data

Methanex monitors environmental performance to measure our improvement over time and
to benchmark our performance against the broader chemical industry. Our environmental
performance indicators for the period 2005 - 2007 are shown below:

Table 2: Methanex Key Environmental Performance Indicators

Environmental Indicator Units 2005 2006 2007 *

Total energy use (excluding electricity) GJ 207,507,000 235,251,100 174,886,469

Total electricity use GJ 260,000 241,008 210,751

»» Electricity self-generated – thermal % 58 63 58
»» Electricity purchased – thermal % 30 32 37
»» Electricity purchased – hydro % 12 5 5
»» Electricity purchased – geothermal % 0 0 5

Total water treatment chemical use tonnes 3,313 3,891 2,729

Total fresh water use mD 7,585,000 5,511,010 4,448,292

Greenhouse gas emissions (COc) tonnes 3,220,366 3,511,905 2,420,121

Ozone-depleting substance emissions kg 0 0 0

Land owned, leased, managed or otherwise ha 707 674 739

impacted by Methanex

Impacts on protected areas — nil nil nil

Magnitude and nature of penalties — nil nil nil

* 2007 environmental performance figures were significantly impacted by the 1.6 million
tonne decrease in methanol production from our Chile facility as a result of natural gas supply
curtailments originating from Argentina.

Methanex Environmental Excellence Report 05–07   Corporate Profile   7

 3. Responsible Care®

Responsible Care is a risk minimization approach to operating a company that governs its actions
through the complete life cycle of its products. The concept of Responsible Care was developed by
the Canadian Chemical Producers’ Association (CCPA). Through the global International Council of
Chemical Associations, more than 50 countries around the world have adopted this initiative.

By choosing to implement Responsible Care, CEOs of chemical companies make a commitment to

adopt the ethic of Responsible Care in the way they do business. Established CCPA Codes of Practice
and Guiding Principles help companies understand Responsible Care; however, it is the responsibility
of each company to interpret and apply the codes and principles so that they are effective.

3.1  Guiding Principles for Responsible Care

Companies like Methanex that subscribe to Responsible Care are committed to the protection of
human health and the environment. In the execution of our responsibilities, we make the protection
of human health and the environment our first priority. We are committed to do the right thing
and be seen to do the right thing. We are guided towards environmental, societal and economic
sustainability by the following principles:

»» We are stewards of our products and services during their life cycles in order to protect people and
the environment.
»» We are accountable to the public, who have the right to understand the risks and benefits of what
we do and to have their input heard.
»» We respect all people.
»» We work together to improve continuously.
»» We work for effective laws and standards, and will meet or exceed them in letter and spirit.
»» We inspire others to commit themselves to the principles of Responsible Care.

3.2  How Methanex Implements Responsible Care

Responsible Care forms the umbrella under which Methanex manages its environment, health
and safety, emergency preparedness, security and community awareness programs. In addition,
we have adopted principles of Social Responsibility as a natural extension of our work under
Responsible Care. For us, Responsible Care means minimizing risk to people, the environment and
the community throughout the development, manufacture, storage, transportation, distribution
and disposal of our chemical products.

Methanex Environmental Excellence Report 05–07   Responsible Care®  8

 Methanex incorporates Responsible Care into all of its business activities, as is shown through the
following examples:

»» Establishing and maintaining a corporate structure where Responsible Care is a primary focus,
from the Board of Directors and management to the people working in our offices, terminals,
manufacturing facilities and warehouses;
»» Incorporating Responsible Care thinking into all phases of our business and making accountability
for Responsible Care a performance measure for all staff;
»» Continuously improving the way we do business through active participation in industrial
associations and by sharing knowledge and best practices between sites, with other companies and
with customers;
»» Encouraging all stakeholders to learn about and adopt the Responsible Care approach;
»» Encouraging others to apply the Responsible Care ethic by proactively selecting the best possible
contractors, suppliers, carriers and distributors, and working with them throughout their business
association;
»» Using site assessments, training and feedback;
»» Helping suppliers, contractors and distributors operate in a manner consistent with Responsible
Care requirements;
»» Working with communities and the public wherever we have or plan to have operations, knowing
that good communication is critical to the success of new projects and long-term operation of
facilities.

Methanex develops effective two-way dialogue so that social and environmental issues are
known, concerns are heard and issues are resolved in a timely manner to the mutual benefit of
Methanex and the community. To this end, Methanex has formed Community Advisory Panels at all
manufacturing sites.

Methanex Environmental Excellence Report 05–07   Responsible Care®  9

4. Environmental Management Organizational Structure

At Methanex, environmental issues and objectives are managed under the Responsible
Care Management System. At the Board level, the Responsible Care Committee oversees the
development and implementation of the Company’s Responsible Care policies.

To ensure consistency in the application of environmental standards, policy and procedures across
the Company Methanex has established a Global Environmental Excellence Team (GEET). The GEET
is comprised of environmental professionals from each Methanex region and operates as a sub-
team of the Global Responsible Care Team. The reporting relationships for other global committees
dealing with environmental issues are shown in Table 3.

4.1  Global Responsible Care Team

The Global Responsible Care Team (GRCT) provides a collective resource in Responsible Care whose
objective is to add value and knowledge to the Company beyond that which could be achieved by
the individual business units.

The team is a multidisciplinary group representing Manufacturing, Marketing & Logistics, Risk
Management, and Government and Public Affairs. All of the team members have a Responsible
Care management, coordination or advisory role within the organization. For example, the
manufacturing site representatives are the Responsible Care or Environment, Health and Safety
managers who report to a regional manager or to the Director of Manufacturing.

Table 3: Methanex Corporation global committees with environmental focus

Board Responsible Care Sub-Committee

Senior Management Responsible Care and Public Policy Stewardship Review

SVP Caribbean & Global SVP Global Marketing &

SVP Corporate Resources
Manufacturing Logistics

Global Manufacturing Global Responsible Care Global Marketing &

Team Team Logistics Team

Global Environmental Global Marketing &

Excellence Team Logistics Responsible
Care Team

Methanex Environmental Excellence Report 05–07   Environmental Management Organizational Structure  10

4.2  Global Environmental Excellence Team
The Global Environmental Excellence Team (GEET) operates as a collective resource on
environmental issues and promotes excellence in environmental performance. The GEET is
mandated to advise and counsel Methanex’s senior management on environmental issues and
events that impact the company as a whole.

Representatives on this team are Manufacturing or Marketing & Logistics Responsible Care or
environmental coordinators who manage local and regional environmental affairs. Environmental
coordinators typically report to the Responsible Care or Environment, Health and Safety manager
in their specific region. In several projects, the GEET works together with the Global Loss Prevention
Team (GLPT) to promote the protection of people, property and the environment from harm or loss
which may result from leaks, spills, or other incidents.

4.3  Global Manufacturing Team

The primary goal of the Global Manufacturing Team (GMT) is to promote the world-class operation
of the Methanex manufacturing plants. The GMT ensures strong adherence to Responsible Care
principles and practices, and provides leadership in managing environmental excellence in all
manufacturing operations and initiatives.

The GMT sponsors a number of sub-teams that work on continual improvement in various aspects
of the business on a global basis, including technology selection, maintenance management,
electrical, oxygen, operations, technical, water treatment, purchasing and project review. The goal of
these teams is to ensure environmental excellence in all aspects of the manufacturing business.

4.4  Global Marketing & Logistics Team

The primary purpose of the Global Marketing & Logistics Team (GMLT) is to coordinate marketing
and logistics activities to capture and optimize opportunities and create value for Methanex.
The GMLT ensures business units adhere to Responsible Care practice and principles, ensures
environmental excellence in Marketing & Logistics and encourages customers and distributors to
adopt Responsible Care principles including good environmental practices.

The GMLT also sponsors the Global Marketing & Logistics Responsible Care team.

4.5  Global Marketing & Logistics Responsible Care Team

The Global Marketing & Logistics Responsible Care Team (GMLRCT) manages environment, health
and safety issues globally within the day-to-day marketing and distribution activities of the Company.

The team includes a representative from each regional Marketing & Logistics office and from our
Waterfront Shipping subsidiary. The leader of the GMLRCT represents Marketing & Logistics on the
Global Responsible Care Team. Responsibility lies with the Senior Vice President, Global Marketing
& Logistics to ensure that environmental issues are addressed in all regions. Each Responsible Care
Coordinator reports to a line manager or directly to the Marketing Director who has the ultimate
responsibility on environmental issues relating to the region.

Methanex Environmental Excellence Report 05–07   Environmental Management Organizational Structure  11

5. Methanol Uses and the Production Process

5.1  Methanol Uses

Methanex makes one primary product: methanol (CHdOH). Methanol is a clear, colourless flammable
liquid that can be made from steam-reforming fossil fuels (primarily natural gas) or renewable
biomass that contains carbon and hydrogen. Methanol, also known as methyl alcohol, occurs
naturally in the atmosphere as a by-product of biomass and landfill decomposition, and in our
bodies as a by-product of metabolizing certain foods. It is water soluble, biodegradable and can be
safely transported by road, rail, barge, pipeline or ocean tanker.

Methanol is used as a petrochemical building block for other chemicals that are used to make
countless industrial and consumer products such as synthetic textiles, plywood, recyclable plastics,
household paints and adhesives, foam cushions and pillows, and even common medicines such as
ASA (acetylsalicylic acid). It is used to manufacture a fuel component that, when added to gasoline,
makes the gas burn more cleanly. It is also used to remove nitrates from municipal wastewater and
to produce biodiesel. There are also emerging uses for methanol in energy applications, including
dimethyl ether (DME), direct blending into gasoline, and biodiesel.

5.1.1  Methanol End Uses

Methanol is used to produce formaldehyde, acetic acid, methyl methacrylate (MMA) and a variety of
other chemical intermediates. Methanol is also used widely in the energy sector to produce methyl
tertiary butyl ether (MTBE), dimethyl ether and biodiesel, and it is blended directly with gasoline. It
is also considered to be a leading fuel candidate for many small fuel cell applications.

Figure 1: Global methanol uses (source: CMAI 2007 World Methanol Analysis)

6%
Fuel
Blending 23%
Other

39% 11%
Formaldehyde Acetic Acid

3%
DME

3% 15%
MMA MTBE / TAME

Methanex Environmental Excellence Report 05–07   Methanol Uses and the Production Process   12
Formaldehyde is the largest single end-use for methanol. It is a primary derivative of methanol
and is used to make many ordinary household items, such as the urethane foam in chair seats.
Engineered woods used in home construction and furniture are bonded with resins based on
formaldehyde. Even Spandex and polar fleece clothing are derived from formaldehyde.

Acetic acid is also used extensively in everyday life. It is used to produce terephthalic acid (TPA),
which, in turn, is used to manufacture polyethylene terephthalate plastic (PET). PET is used to
package beverages and household products. Aside from its clarity and impact resistance, PET has the
advantage of being 100% recyclable. TPA is also used to make polyester fibre, which is used to make
clothing and carpets. Acetic acid is also a major component of vinyl acetate monomer (VAM), which
is used to manufacture water-based paints and adhesives, a welcome replacement for solvent-based
products. Solvent esters are also acetic acid derivatives that can replace ketones and chlorinated
hydrocarbons, particularly in paint and coatings applications.

MTBE (methyl tertiary butyl ether) is a gasoline additive produced from isobutylene and methanol
that makes the daily commute less harmful to the environment by improving vehicle performance,
thus reducing harmful smog and toxic air emissions. Since the introduction of MTBE into the
gasoline fuel supply in 1973, its use continues to grow to provide higher octane in gasoline
worldwide and to help achieve cleaner air by replacing benzene, other aromatics and lead. In the US,
several states, including California, have banned the use of MTBE in gasoline as a result of concerns
over MTBE found in wells and surface water bodies. The source of the MTBE was primarily gasoline
leaks from underground storage tanks.

DME (dimethyl ether) is a gaseous, methanol-derived fuel used for cooking and heating throughout
the Asia Pacific region. DME is also beginning to be used as a transportation fuel.

Fuel blending is also an energy application of methanol. Methanol, mixed directly with gasoline,
is being used a vehicle fuel. In addition, methanol can be mixed with biological products such as
vegetable oil to produce biodiesel, a renewable diesel fuel alternative.

Other uses for methanol include the manufacture of silicones, refrigerants, adhesives, specialty
plastics and coatings. Winter driving is made safer through the use of methanol-based windshield
washer antifreeze, while paper products are being bleached using chlorine dioxide (which uses
methanol in its production process), a process that produces significantly fewer pollutants than
traditional bleaching methods. Acrylic polymers are made from methanol through one of its
derivatives, methyl methacrylate. Acrylics are used to produce acrylic plastic light-coverings and
water-based acrylic paint coatings where superior durability is required. Methylamines are used
as intermediates in a diverse range of specialty chemicals, with applications in water-treatment
chemicals, solvents, shampoos, liquid detergents and animal feed. Other uses of methanol include
the synthesis of jet fuel additives and fungicides.

Methanex Environmental Excellence Report 05–07   Methanol Uses and the Production Process   13
Methanol In Our Lives
Primary Derivatives
JJ  Formaldehyde
JJ  Acetic Acid
JJ  Clean Fuels
JJ  Other
JJ  Safety Glass Laminate
JJ  Clean Fuels
JJ  Acetyl Thermoplastics:
Gears, Pumps, Moulding
Compounds, Distributor
Caps, Fuses
Methanex Environmental Excellence Report 05–07
Derivatives Diverse Demand Drivers
Urea formaldehyde   Renovation, new building activity, automobile
Phenol formaldehyde production, panelboard substitution for solid
1,4 – butanediol  wood, changing wood panel mix, growth in
Acetal Resins high technology chemicals.
Vinyl acetate monomer   Building activity, durables output, automobile
Acetic anhydride   production, clean air legislation, packaging
Terephthalic acid   trends, growth in plastic recycling, paints
Solvent acetate   and coatings.
Solvent esters
Methanol/water blends Demand for better health/cleaner
– fuel cell “hydrogen – carrier” environment, clean air legislative goals,
Reformulated gasoline   displacement of gasoline components
 – MTBE (e.g. lead, aromatics), safety and engine
performance.
Methyl methacrylate Total chemical production, general economic
Methylamines activity, alternative fuel developments,
Chloromethanes   environmental pressures.
Direct use
JJ  Solvents, Paints JJ  Dashboard Foam
JJ  Windshield Washer Fluid
JJ  Light Lens
JJ  Body Panels
JJ  Bumpers J J  Tire Core Adhesive
  Methanol Uses and the Production Process   14
 Figure 2: Methanol In Our Lives

JJ  Particleboard

JJ  Decorative Laminates

JJ  Magnetic Film (Computer Disks) J J  Urethane Foam Cushioned

JJ  Polyester Carpets JJ  Magnetic Film (Video)

JJ  Moulding JJ  Solvents for Lacquers

Components
JJ  Nylon Carpet JJ  Fertilizer

JJ  Medication JJ  Mattress Foam

JJ  Silicone JJ  Laminated Lumber

Sealants
JJ  Medium Density
Fibreboard

JJ  Baseboard
Mouldings

JJ  Polyblend Fleece Jacket

JJ  Door
JJ  PET Plasic Bottle Insulation

JJ  Refrigerants
JJ  Exterior
Coating
Polyols

JJ  Textile
Treatments

JJ  Bleached Paper JJ  Acetyl

Thermoplastics
J J  Glass Wool
Insulation JJ  Aerosols 
Adhesive Disinfectants 
Fragrances 
JJ  Paint Solvents

Methanex Environmental Excellence Report 05–07   Methanol Uses and the Production Process   15
 5.2  Typical Methanol Process Description

When natural gas, which is primarily methane (CHe), is mixed with steam (HcO) and heated to
900°C over a nickel-based catalyst, it is transformed to “synthesis” gas, a mixture of hydrogen (Hc),
carbon monoxide (CO) and carbon dioxide (COc). This gas is pressurized and, using a copper-based
catalyst, is converted to a mixture of methanol (CHdOH) and water (HcO) and distilled to yield pure
methanol, a hydrocarbon rich in hydrogen.

This is the typical process used at all of Methanex’s methanol production facilities. Though there are
minor design differences between sites, each site uses similar technology.

The methanol production process consists of the following main stages, which are described in
more detail below:

»» Desulphurization of Natural Gas

»» Reforming
»» Compression and Synthesis
»» Distillation

5.2.1  Desulphurization of Natural Gas

Natural gas is preheated and a portion is diverted to be used for fuel. If organic sulphur is present
in the natural gas, a cobalt-molybdenum or nickel-molybdenum catalyst is used to convert the
sulphur to hydrogen sulphide. The gas stream is then passed through a zinc oxide bed to remove
the hydrogen sulphide, which, if left in the natural gas, would be poisonous to catalyst used further
downstream in the process.

5.2.2  Reforming
Steam is added to the natural gas stream before it enters the reforming stage of the process. This
steam/natural gas mixture is then preheated further before entering the reformer and passing
across a nickel catalyst. The catalyst, at high temperature, promotes a chemical reaction of the feed
stream to yield a mixture of carbon monoxide, carbon dioxide and hydrogen. This mixture, known
as synthesis gas, is cooled after leaving the reformer, from about 850°C to 30°C, before entering the
compressor section.

Methanex Environmental Excellence Report 05–07   Methanol Uses and the Production Process   16
Figure 3: Methanol Manufacturing Process – Desulphurization and Reforming

Autothermal
Desulphurization Reformer

Air Separator
Unit
Natural Gas Steam
Compressor Reformer

Natural Gas Waste Heat

Recovery

1. Desulphurization of natural gas 2. Reforming

Its purpose is to remove sulphurous   This stage involves combining natural gas, steam
components present in natural gas. and oxygen to produce synthesis gas. The following
processes take place in the Reformers:
Process 1: Hydrogenation Steam Reforming:
CHdHS + Hc    HcS + CHe CHe + HcO    CO + 3Hc
CO + HcO    COc + Hc
Process 2: Desulphurization Autothermal Reactions:
HcS + ZnO    ZnS + HcO CHe + Oc    CO + HcO + Hc
CHe + HcO    CO + 3Hc
CO + HcO    COc + Hc

Methanex Environmental Excellence Report 05–07   Methanol Uses and the Production Process   17
5.2.3  Compression and Synthesis
The pressure of the synthesis gas is then raised from 1500 to 8600 kilopascals. The compressor is
driven by a steam turbine, with steam generated primarily from heat recovery from the reformer.

Synthesis is the process of changing the synthesis gas through another chemical reaction to form
methanol of relatively low purity, called “crude methanol”, which is approximately 80% methanol,
18% water and 2% other impurities.

The converter outlet stream is cooled from about 270°C to 40°C and then passed through a
separator vessel where any unreacted synthesis gas is separated from the crude methanol. Some
of this unreacted gas stream is purged to remove unreactive compounds (primarily methane and
nitrogen) and excess hydrogen.

This gas may be used as fuel, but generally the majority is re-mixed with the synthesis gas and
circulated back to the converter to produce additional methanol.

The crude methanol is then brought to atmospheric pressure and either held in a tank or directly
fed to the purification process or distillation. The impurities in the crude are primarily water,
heavier alcohols (such as ethanol, propanol and butanol), ketones, aldehydes, amines and dissolved
unreacted gases (called light ends).

5.2.4  Distillation
Crude methanol must be distilled to increase its purity so that it meets commercial needs.

The crude methanol mixture passes through the distillation towers sequentially. In the first
distillation tower, the light ends are separated and sent to be used as fuel. Water is separated and
diverted to the process sewer system or, in some cases, back to the process. Heavier alcohols, ketones
and aldehydes are separated and sent to the fuel system for combustion; in some cases these are
also recycled back to the front end of the reformer. The purified methanol is temporarily stored in
tanks where it is analyzed to ensure it meets specifications for product quality. Once it is assured
that the methanol meets specification, it is approved and then transferred to product storage tanks.

From the final product storage tanks, methanol is pumped directly onto ships, railcars or trucks for
shipping to customers and distributors.

Methanex Environmental Excellence Report 05–07   Methanol Uses and the Production Process   18
Figure 4: Methanol Manufacturing Process – Synthesis and Distillation

Methanol Distillation
Reactors
Refined Methanol

Make-up
Gas Compressor
Purge

Transport

Water

Recycle
Gas Compressor

3. Methanol Synthesis 4. Distillation

Synthesis gas is compressed and sent to the
methanol reactor where, through chemical
reactions, raw methanol is made.
CO + 2Hc    CHdOH (methanol)
COc + 3Hc    CHdOH + HcO
This is the last stage in the methanol production
process. The liquid raw methanol mixture is heated to
separate the components and obtain pure methanol.
Methanol
Methanol AA = 99.85%

Methanex Environmental Excellence Report 05–07   Methanol Uses and the Production Process   19
Specific Plant Process Descriptions

Punta Arenas, Chile

The traditional steam reforming process is used
in three of our four plants in Chile, while an
Automated Thermal Reforming (ATR) process is
used in the newest, plant 4. In ATR, natural gas
reacts with oxygen from an air separator in an
incomplete combustion reaction that requires high
heat and generates steam.

Cooling water systems in plants 1, 2 and 3 are

based on once-through seawater flow: seawater
Methanex Chile is introduced into the process through an intake
pipe and returned after use to the ocean through
a seawater outfall. In plant 4, a recirculating
cooling tower system is used, operating mainly by
evaporative cooling.

Point Lisas, Trinidad and Tobago

Unlike a typical methanol production process with a one-stage steam reforming process, the
Methanex Trinidad plants incorporate secondary reforming prior to compression and synthesis. The
secondary reforming process uses oxygen and reduces the production of excess hydrogen, therefore
increasing process efficiency. In addition, the Trinidad compression and synthesis processes operate
at higher pressures than conventional plants.

Methanex Trinidad

Methanex Environmental Excellence Report 05–07   Methanol Uses and the Production Process   20
6. Environmental Permission to Operate

Production facilities are normally required to operate under the terms of an approval (resource
consents /permit) issued by the statutory authority with jurisdiction over the locale of each plant
site. The consents allow the facilities to use resources such as land and water, and to discharge
emissions to air and water.

The conditions in the permission documents vary from facility to facility and reflect both the
operating regime of each plant and the standards in place to protect the environment.

6.1  General Conditions

The general conditions that apply to all facilities cover air emissions and liquid discharges. Resource
consents set limits on methanol and hydrocarbon concentrations, pH, chemical oxygen demand,
and other parameters that reflect common by-products of methanol production. Also limited, either
specifically or by implication in consents, are water treatment chemicals and their breakdown
products.

The air emission limits common to all of our plants cover flow rates and concentrations of
combustion products, such as nitrogen oxides (NxOx) and discharges of volatile organic compounds
(VOCs). The limits are imposed either on the discharge itself or as an upper limit ambient
concentration in the surrounding area.

Solid non-hazardous wastes that are generated intermittently at the plants, such as spent resins
and construction residue, can be sent to the local municipal landfill and most are not covered by
resource consents.

The following chart indicates the permit limits for some of the common effluent discharge
parameters that are monitored at our sites.

Methanex Environmental Excellence Report 05–07   Environmental Permission to Operate  21

Table 4: Site-Specific Permit Limits

Kitimat, Punta Arenas, Motunui, Waitara Trinidad

BC* Chile NZ Valley, NZ

Ammonia (mg/L) 10 — — 200 —

COD (mg/L) 100 — 200 — 250

Flow Rate (m3/day) 3200 — 12096 5000 —

Methanol (mg/L) — — 15 15 —

Oil and Grease (mg/L) — 350 10 10 10

pH 6.5 – 8.5 5.5 – 9.0 6.0 – 9.0 6.0 – 11.0 6.0 – 9.0

Temperature ( ºC) 30 max — — — —

TSS (mg/L) — 700 — 1000 150

VNFR (mg/L) 40 — — — —
* Kitimat operating as a terminal only
Abbreviations used in the table above: COD – chemical oxygen demand, TSS – total suspended solids,
VNFR – volatile non-filterable residue

6.2  Site Specific Permit Requirements

This section contains a brief summary of the permit requirements at each of our current operating
plant sites as well as sites that are no longer operational.

6.2.1  Medicine Hat, Canada

The Medicine Hat site is no longer operational and is currently under active reclamation.
Environmental approvals must be obtained to carry out reclamation activities in the Province
of Alberta. An amendment to the former operating approval was granted on August 4, 2005
permitting reclamation activities at the site under the Province of Alberta’s Environmental
Protection and Enhancement Act S.A. 1992.

Site water supply is provided by the local authority (City of Medicine Hat) and is not limited by
volume. Occasionally, effluent arising from reclamation activities is discharged under the City of
Medicine Hat Bylaw 1541, which specifies which process effluent streams may be discharged to
the city’s wastewater treatment facility. The quality of the effluent from the Medicine Hat site is
measured and written permission is obtained before it is sent to the municipal treatment plant.

There are no longer any air permit requirements for the Medicine Hat site.

Methanex Environmental Excellence Report 05–07   Environmental Permission to Operate  22

6.2.2  Kitimat, Canada
The Kitimat site no longer produces methanol. Following the 2005 shutdown of the production
units, the site continued operation as a methanol terminal. In May 2007, the Kitimat terminal began
receiving sweet petroleum condensate from third parties by ship and trans-shipping it via railcar
to inland Canada. Condensate is used in the oil sands rich region in Alberta as a diluent to aid in
pipeline transport of bitumen containing material. These changes necessitated large modifications
to the site environmental permits issued under the Province of British Columbia’s Environmental
Management Act. There are strict limits on the quality of effluent and stormwater discharges, and
continuous monitoring of flow and pH is also required.

The Kitimat site discharges treated effluent (predominantly sanitary sewage) from the terminal
into the sea nearby. Samples of effluent are taken quarterly and tested for typical sanitary sewage
parameters, including the presence of methanol and petroleum hydrocarbons. Biannual toxicity
testing is also carried out on juvenile rainbow trout.

Under normal operations, stormwater is collected, tested and discharged into an adjacent river. The
permit requires that discharges of stormwater be sampled quarterly. The quality limits imposed on
the discharge of stormwater are the same as those that apply to wastewater effluent.

The permit also contains a provision for the Regional Manager of the British Columbia Ministry of
Environment to request Receiving Water Impact Studies. The Regional Manager has not made any
request following the study completed in 1997. In 2000 and 2005, Methanex voluntarily repeated
the study and determined that there were no significant impacts from manufacturing activities.

Air discharges from the sweet petroleum condensate terminal are strictly controlled by the use
of closed-loop transfers during ship offloading and railcar loading. Scrubbers are employed at all
storage tanks to remove methanol and condensate vapours due to expansion inside each tank
resulting from daytime heating. Ambient methanol and condensate concentrations are monitored
twice per year to verify that levels are lower than commonly applied occupational standards.

Reports on effluent test and ambient air monitoring results are submitted to the statutory authority
on a quarterly basis, and a summary report for all the effluent monitoring and air emissions
monitoring is prepared and sent to the statutory authority on an annual basis.

6.2.3  Punta Arenas, Chile

Environmental discharges from the four plants in Chile are approved under S.D. N° 90/2000
(Table 5, Art. 1) of the Ministry of General Secretary of the Presidentship for the control of
aquatic contamination. Additionally, the operation of plant 4 was approved in accordance with
Environmental Impact Study submissions to the Chilean Environmental Agency.

All process water for the plants comes from desalinated seawater, so the discharge of brine back to
the sea is one of the components of the effluents. The process cooling water effluent also goes back
to the sea. To protect the marine receiving environment, all the plant effluents are continuously
monitored online for total organic carbon (TOC) and are tested daily for flow, pH, conductivity,
chlorine and temperature. Other parameters (such as oil and grease, TSS, etc.) are tested weekly, and

Methanex Environmental Excellence Report 05–07   Environmental Permission to Operate  23

a complete analysis of the effluents is carried out once a year. Results of the monitoring are reported
to the authorities monthly.

The plant combustion flue gas stacks are tested on an annual basis for small particulate matter
(PM10), Oc, COc, CO, total hydrocarbons, SOc and NOx.

6.2.4  Taranaki, New Zealand

The Motunui and Waitara Valley plants in Taranaki operate with approvals granted under the
Resource Management Act 1991. The plants’ resource consents allow them to withdraw and
discharge water, and to discharge air emissions and solid waste.

Methanex Motunui (NZ) Ltd. owns and, in the past, has operated both the Motunui and Waitara
Valley plants, which hold a total of 19 resource consents for the operation of the plants. Of these,
twelve relate to water, four to air and three to land. These consents include a total of 160 conditions
setting out the requirements that Methanex must satisfy.

The local authority (the Taranaki Regional Council) monitors our performance through an annual
program that includes four site inspections, two inter-laboratory comparisons of split stormwater
and plant effluent samples, and ambient air quality analyses. Each month, Methanex provides
the Council with monitoring data associated with the Motunui and Waitara Valley effluent and
stormwater discharges. An annual report, summarizing the year’s results, is submitted to the
Council. A biennial report is also submitted that quantifies air emissions and process or plant
changes that have been carried out to reduce emissions.

Methanex New Zealand

Methanex Environmental Excellence Report 05–07   Environmental Permission to Operate  24

During 2005-2007, the Motunui plants were not operating because natural gas feedstock was not
available. The Waitara Valley plant was operating during this period, with a major maintenance
turnaround carried out in November 2007.

The Council officers have noted that, over the reporting period, the facilities have been well
managed, with a high standard of environmental performance and excellent compliance with the
resource consents. A project began in 2006 to renew the majority of resource consents due to expire
in 2008-09 that are needed to operate both plants. The new consents were granted early in 2008.

Methanex NZ must now also comply with the Hazardous Substances and New Organisms Act passed
in New Zealand. The purpose of this Act is to protect the environment and the health and safety of
people and communities by preventing or managing the adverse effects of hazardous substances
and new organisms. In relation to hazardous substances, the Act requires the identification of all
hazardous substances associated with production, where they are located, who handles them and
how to handle them. The Act also requires disposal controls to be established. These requirements
have been implemented at the Methanex Waitara Valley plant and at tank sites (The Motonui plant
does not need to meet these requirements while it is not in operation). In early 2008, we announced
our intention to restart one of our (previously idle) larger plants at Motunui in New Zealand. The
plant is estimated to begin production in late August 2008

6.2.5  Point Lisas, Trinidad and Tobago

The newer Atlas plant in Trinidad obtained certificates from the environmental authorities that
allow the operation of the 5,000 tonne per day methanol plant and an associated 2,810 tonne per
day air separation plant. The certificates also allow operation of an office, warehouse and workshop
repair facility.

The previously constructed plant, Titan, had no formal approval requirements but Methanex chose
to voluntarily apply environmental limits that met the requirements for the Atlas plant. Thus,
when water pollution rules were passed in 2007 requiring both Methanex Trinidad plants to hold
registration certificates, no new monitoring, recording and reporting restrictions were placed on the
two plants.

The Trinidad site received RC 14001 certification in 2007. The RC 14001 certification is based on the
environmental standard ISO 14001 and this achievement denotes that the certifying body was
satisfied that the Methanex Trinidad Environmental Management System met the standards of
the International Standards Organization as well as the American Chemistry Council’s Responsible
Care standards.

Methanex Environmental Excellence Report 05–07   Environmental Permission to Operate  25

 7. Changes / Process Improvements / Developments

This section provides an overview of the various changes, process improvements and new plant
developments occurring around Methanex’s global operations. The section is structured into four
major areas, including:

»» Plant Operations
»» Marketing and Logistics
»» Shipping
»» New Developments

7.1  Plant Operations

Methanex currently operates methanol plants strategically located in three countries in the
northern and southern hemispheres, including Chile, Trinidad and Tobago and New Zealand. The
Company also operated a plant in Canada until late 2005.

7.1.1  Kitimat, Canada

Site production capacity = 509,000 metric tonnes/year [until permanent closure]

The Kitimat plant had well-established controls in place for environmental management and
no significant plant changes were carried out during the 2005-2007 period. The Kitimat plant
was permanently shut down in late 2005 due to the high price of natural gas feedstock in North
America. It continues to operate as a terminal, receiving methanol and sweet petroleum condensate
from double-hulled ocean vessels. Both products are loaded onto dedicated railcars using closed
vapour return systems to minimize vapour releases due to loading.

7.1.2  Punta Arenas, Chile

Site production capacity (4 plants) = 3,840,000 metric tonnes/year

A new project was recently implemented to improve effluent handling and treatment. All liquid
effluent will now be checked in a verification basin before discharge to the seawater return. The
volume of effluent will be 53 mD/hour and the effluent originates from continuous saturator
blowdowns and from distillation. This project also results in water recovery and re-use, with only
25% of the original effluent returning to seawater; the rest will be returned to the process.

7.1.3  Point Lisas, Trinidad and Tobago

Site production capacity (2 plants) = 2,550,000

The Titan and Atlas plants have been operating since commissioning in 2000 and 2004 respectively.
We are currently carrying out an effluent review project with the goal of improving effluent
handling and discharge quality. Future system upgrades will be based on this review. In 2007, we
undertook a project to increase the capacity of the incoming Natural Gas Condensate

Methanex Environmental Excellence Report 05–07   Changes / Process Improvements / Developments   26

Knock-Out system in both the Titan and Atlas plants. This project is particularly significant when the
upstream natural gas processing plant is partially or fully offline or when there is a sudden surge of
condensate in the incoming natural gas, as was the case in 2005 that resulted in a trip of the Atlas
plant. The project involved installing additional condensate tanks (two at Atlas and one at Titan)
that now provide additional storage capacity for excessive build-up of condensate. The condensate
tanks also provide a manageable time frame for both Methanex and the natural gas supplier to deal
with the problem of condensate build-up without carry-over to the process or the environment.

Titan Natural Gas Condensate Tank Atlas Natural Gas Condensate Tanks

In September 2005, a new ion exchanger was commissioned at the

Atlas plant to address levels of trimethylamine (TMA), an impurity that
was being produced with the methanol product. The International
Methanol Producers and Consumers Association production
specification requires a maximum of 50 parts per billion (ppb) TMA,
which the plant design could not have facilitated. The ion exchange
material is a macroreticular polymeric resin called Amberlyst® 40WET
and it is recommended that this should be changed every three years.
Since the installation of this unit, there have been no product issues
Ion Exchanger with respect to TMA.

A recent cost-saving initiative was also undertaken. In the past, hypochlorite was supplied by water
treatment vendors at very high costs to Methanex Trinidad. In December 2006, a direct supply line
of hypochlorite was initiated, connecting an electro-chlorination unit located at the port directly
to the cooling towers of Atlas and Titan. This new system allows both cooling towers to be treated
with an oxidizing biocide, reducing the need for cooling tower chemicals and saving approximately
US$20,000 every month.

Methanex Environmental Excellence Report 05–07   Changes / Process Improvements / Developments   27

7.1.4  Taranaki, New Zealand
Site production capacity = 2,300,000 metric tonnes/year

The Waitara Valley and Motunui plants have well-established controls in place for environmental
management and no significant plant changes were carried out during this period.

7.2  Marketing and Logistics

7.2.1  Responsible Care Seminars and Partnerships

In 2005, Methanex began conducting Responsible Care seminars in the Asia Pacific region as part of
a key strategy to promote the Responsible Care ethic and approach of sound environmental, health
& safety management to our customers and contractors in the logistics chain. The Responsible
Care seminars focus on personnel safety, environmental protection and fire risk management when
working with methanol. In addition to introducing the Responsible Care ethic and goals, the seminars
educated customers and contractors on methanol safe-handling fundamentals and served as a
forum for knowledge exchange. In Asia Pacific, ten such seminars were held in the 2005-2007 period.

To further spread the Responsible Care culture in Asia, we have developed a systematic process that
we use with our suppliers, customers, terminal operators and other service providers. The process
commences with a site visit and the provision of information packages in the local languages. This
is often followed by a self-assessment by the involved company and a field evaluation and risk
assessment by Methanex staff, before follow-up visits are conducted to provide further assistance
and facilitate solutions. By the end of 2007, 25 companies, covering 100% of our business partners in
Asia Pacific, had gone through this process either fully or partially.

Following the success in Asia Pacific, Methanex began conducting Responsible Care seminars in
South America, North America and Europe. Methanex also reached out to users of methanol in
newer applications, such as biodiesel manufacturing and wastewater treatment. This is particularly
important as people in new industries may not have significant experience handling hazardous
chemicals. Much of the focus in North America is on preventing releases of methanol from
transportation and storage equipment. This focus on loss prevention has the beneficial consequence
of protecting the environment and reducing risk to personnel from a health and safety perspective.
In Europe, the seminars have grown from informational sessions to forums where lessons are
exchanged on how every member in the supply chain can play a crucial role in protecting people
and the environment. In all, Methanex has a significant program for working proactively with
logistics service providers and customers with the aim of preventing incidents, raising awareness
of methanol hazards and risk management, establishing best practices for handling methanol,
improving communications and learning from any incidents that may occur.

Methanex Environmental Excellence Report 05–07   Changes / Process Improvements / Developments   28

7.2.2  CDI-T Audit
In September 2005, Methanex voluntarily joined the Chemical Distribution Institute’s terminal
inspection division (CDI-T). This allowed the Marketing & Logistics group to use the services
of professional, independent and accredited CDI-T inspectors to conduct detailed Responsible
Care assessments of contracted storage terminals. The assessments cover significant aspects of
environmental protection practices and procedures at these facilities. Methanex Chile was the first
to use the CDI-T assessment process. Today, many more Methanex facilities, including those in South
America, North America, Europe and Asia Pacific, have adopted the CDI-T audit process.

In North America, every storage terminal contracted had undergone a complete CDI-T inspection by
the end of 2006. Working with Methanex, the terminals developed improvement plans to address
the findings of the inspections, with a focus on environment, health and safety issues. The CDI-T
process was also applied at the Methanex-owned terminal in Kitimat, BC, Canada.

In 2005, Methanex Europe used the CDI-T Program to inspect all the vessel discharge locations
and encouraged our logistics service providers to use the CDI-T inspection outcomes to improve
their performance. In addition, the European Chemical Industry Council (CEFIC) Safety and Quality
Assessment Systems (SQAS) was implemented for Methanex Europe carriers, and we plan to use
this independent inspection scheme to influence our distribution customers to improve their
environmental protection practices.

In 2005, Methanex Asia Pacific encouraged and facilitated Yeosu Tank Terminal Ltd. (Methanex Asia
Pacific’s largest storage tank facility) in going through its first CDI-T audit. Since the 2005 audit,
Yeosu Tank Terminal has completed over 40 technical and management improvements in areas
such as reinforced spill containment (installing new ditches and 30% containment dykes), vapour
monitoring and vapour recovery for truck loading, and a waste sorting program. Methanex Asia
Pacific also worked with two other Korean customers/distributors that operate terminals in Ulsan
and Pyeongtaek to undergo the CDI-T standard in 2007. CDI-T audits were also undertaken in
Taicang and Nansha (China) and in Singapore. Our ultimate target is to have all of the 18 terminals
that we deliver to in Asia Pacific audited and achieving improvements based on the CDI-T standard
by 2010. To date, six terminals have achieved this goal.

7.2.3  Regional Marketing and Logistics Developments

Other regional developments in Marketing & Logistics include hiring a full-time Responsible Care
resource (Methanex Europe); assessing our joint venture partners’ plant operational readiness
and environment, health and safety systems in line with the Responsible Care ethic (Methanex
Asia Pacific); and developing key performance indicators to measure our improvement over
time (Methanex North America). These key performance indicators enable us to benchmark our
environmental performance against both the broader chemical industry and the transportation
industry in North America relating to non-accidental releases of methanol during transportation.

In 2007, the new European Union’s chemicals legislation, REACH, entered into force. The new
legislation deals with the Registration, Evaluation, Authorisation and restriction of Chemical
substances. The objective of the legislation is to ensure that chemicals on the market in the EU do

Methanex Environmental Excellence Report 05–07   Changes / Process Improvements / Developments   29

 not pose a threat to human health or the environment by ensuring that appropriate controls are
always in place whenever hazardous chemicals are used. Methanex has the same objective as part
of our Responsible Care ethic and therefore it is unlikely that REACH will pose a large impact on our
business. In fact, Methanex is playing an active role in motivating the methanol industry to meet
the REACH standards.

7.3  Waterfront Shipping

One of the first non-manufacturing activities we examined from an environmental perspective

in 2005-2007 is our wholly owned subsidiary, Waterfront Shipping Company Limited. Methanol
is delivered around the globe by marine vessels that carry the product from our manufacturing
plants to storage terminals and customers. Waterfront Shipping manages a fleet of 19 various-sized
ocean-going vessels to accomplish this task. In addition, Waterfront Shipping also provides shipping
services to third parties for a variety of other products.

Like Methanex, Waterfront Shipping has adopted the Responsible Care principles. Guided by the
Responsible Care codes and ethic in combination with a quality management system approach,
Waterfront Shipping has developed a business model that strives to reduce shipping costs without
compromising people’s health and safety, environmental protection, quality of service or flexibility
of operations.

Many of the potential environmental impacts of our

shipping operations are partially regulated through marine
legislation such as Marine Pollution (MARPOLE) and other
requirements arising from such bodies as the International
Maritime Organization (IMO). Our performance related
to these regulations and our efforts to prevent pollution
arising from shipping activities are now being monitored
and measured.

Waterfront Shipping monitors the following specific parameters:

»» Total fuel consumption This parameter is of primary importance because of its associated impact
on greenhouse gas emissions. It is also an overall measure of engine efficiency and the efficient
deployment of ships (which impacts shipping cost). We can reduce total fuel consumption through
the most efficient possible use of fuel – including optimizing engine repair/running conditions and
reducing the miles traveled per shipment wherever possible. The total fuel consumptions (metric
tonnes) of the Waterfront Shipping fleet were 163,888 (2005), 172,535 (2006) and 166,607 (2007).

»» Fuel consumption by type of fuel Regulations on marine fuel composition are in place primarily to
manage and reduce over time the amount of sulphur contained within the fuel. There are two main
types of fuel used by ships: Intermediate Fuel Oil (IFO), which is normally 1.5% to 5% sulphur, and
Marine Diesel Oil (MDO), which averages 0.5% sulphur. A third fuel, which is a variety of IFO that has
only 1.5% sulphur, is available and is used in certain jurisdictions. The use of these fuels is governed
by local regulation, international regulation and ship activity. Burning high sulphur content fuel will

Methanex Environmental Excellence Report 05–07   Changes / Process Improvements / Developments   30

 produce greater levels of sulphur oxide emissions. The move to use lower sulphur fuels is complicated
by the availability of supply and the cost of the cleaner products. In 2007, of the total fuel consumed
by Waterfront Shipping, 97.2% was standard IFO, 1.2% was low sulphur IFO and 1.6% was MDO.

»» Control and discharge of ship’s slops When ships carry different cargoes on successive voyages,
the ship tanks must be properly cleaned and prepared for the next cargo. The cleaning operation
produces quantities of contaminated water and product known as “slops”. Many years ago, slops
were often discharged at sea. Ships today have specific slops tanks for holding these wastes until
the ships arrive in port where they may discharge them to a land-based management facility.
Waterfront Shipping ensures that appropriate facilities for slops handling are used, and that these
facilities are properly approved and are following environmentally acceptable disposal methods. In
2006 and 2007, the volumes of slops discharged were 1272 mD and 1308 mD, respectively.

»» Management of other wastes (preventing discharge at sea) A sea-going vessel produces wastes
other than fuel and wastes related to cargo. A ship is also home to the crew, hence, food, packaging,
grey water (such as water from dish washing), and sewage wastes are produced and must be
managed. Methanex ensures that ships have waste management plans to minimize generation,
encourage appropriate treatment and disposal, and prohibit disposal at sea. Plastics and metal
containers are also recycled.

7.4  New Developments

7.4.1  New Plant Construction in Egypt

In 2007, Methanex launched a new project to
construct a 3,600 metric tonne per day methanol
production and marine port facility in the region of
the Damietta Port on the Egyptian Mediterranean
coast (see inset map). The project is a joint venture
between Methanex, the Egyptian government and
private sector Egyptian investors. An Environmental
Impact Assessment (EIA) was completed by a third-
party consultant in the latter half of 2006 and legal
consents were secured in early 2007. The construction
phase began in May 2007 and commissioning and
start-up is expected in early 2010.

The Damietta Port site is a designated industrial zone and free port that already has significant
industrial development in place. Nevertheless, the EIA scope covered all areas of environmental
impact, including antiquities issues and local inhabitants of Damietta City a few kilometres away.

The production facility has been designed and is being built to world-class standards with a
particular focus on the management of water consumption from the Nile, effluent discharge into
the Mediterranean, air discharges, noise, dust, traffic and other considerations during construction  
and operations.

Methanex Environmental Excellence Report 05–07   Changes / Process Improvements / Developments   31

8. Issues / Incidents / Impacts

8.1  Kitimat, Canada

Effluent retention pond failed bioassay test

Shortly after plant decommissioning, the site effluent exceeded its fish mortality limit during a
routine bioassay test in March 2006. The high mortality was caused by high levels of flocculant
– an agent that was normally used to treat fresh water when the plant was operating. When the
plant was decommissioned, the flocculant injection was not shut down timely and flocculant
accumulated to higher levels than normal. Although there was no environmental impact during the
incident, this incident highlighted the importance of a comprehensive shut-down operation.

Non-filterable-residues exceedance at West Terminal

In March 2006, levels of non-filterable residues that exceeded the permit levels were found in
storm water discharge to a nearby creek. A valve was left in the open position during machine work
inside one storage dyke, and turbid rainwater from the activity drained directly to the creek. The
flow was relatively low and the valve was shut off soon after discovery, so there were no discernable
environmental impacts. The incident prompted a procedural clarification with workers to ensure
that valves are closed after water has been drained.

High chemical oxygen demand (COD) in raw water pond

In December 2006, a limit-exceeding COD (above 100 ppm) was found in the storm water discharge.
The COD was due to the presence of methanol in one of the storage tank dykes draining to the
outfall. To prevent similar incidents from happening, the operating procedure was amended to
ensure that the valves are correctly set at all times.

8.2  Punta Arenas, Chile

Acid and caustic discharge to seawater return

In early 2006, two incidents involving acid and caustic discharge occurred during the plant
regeneration process. Procedural deviation and lack of communication between personnel during
shift change, as well as personnel oversight, were the main causes of the discharge. These incidents
prompted the reinforcement of appropriate operational practice and highlighted the need to clearly
manage and communicate any deviation from standard operating procedures.

High total organic carbon (TOC) in seawater return

In February 2006, a short period of high TOC was found in the seawater return when the flow of the
saturator blowdown (which was discharged directly into the seawater) had to be increased to keep
up with an unexpected rise in the process cycle. The experience from this incident strengthened
the case for having some form of holding/treatment instead of direct discharge to seawater. This
culminated in the Liquid Effluent Project, which included an effluent system improvement that is
due to be completed by late 2008.

Methanex Environmental Excellence Report 05–07   Issues / Incidents / Impacts   32

 9. Environmental Issues and Opportunities for Improvement

9.1  Greenhouse Gases

Climate change continues to be a challenge for many industries because of continued demand for
energy and consumer goods. Evidence showing the direct effects of climate change is growing and
minimizing emissions is seen as a necessary step to reduce the effects of climate change.

Because carbon dioxide is one of Methanex’s largest waste streams, we are committed to managing
and minimizing this discharge. Methanex will continue to work towards reducing carbon dioxide
emissions using the following strategies:

»» Building new plants with increased energy efficiency and shutting down less efficient capacity;
»» Undertaking energy efficiency improvement projects at plants that will result in the most benefit;
»» Ensuring operating excellence and plant reliability; and
»» Developing an internal emissions trading process.
Table 5: COc Emissions Intensity
(metric tonne COc emitted /metric tonne methanol produced)

2005 2006 2007

New Zealand 0.66 0.69 0.67

Trinidad 0.53 0.51 0.45

Chile 0.62 0.61 0.57

Kitimat* 0.98 — —

Global Methanex Total 0.62 0.58 0.54

* Kitimat production ceased in late 2005.

Methanex Environmental Excellence Report 05–07   Environmental Issues and Opportunities for Improvement  33
Methanex believes that minimizing emissions from our Company activities is good business
practice. From a manufacturing standpoint, existing facilities have nearly reached the limits of
improvement that can be made with the strategies listed above. Additional significant reductions
in emissions can only result from large capital expenditures to upgrade the basic technology of
the process. These large projects are not likely to be done at the existing plants in Canada and New
Zealand because of the difficulty in refitting older plants to new technology. Our plants in Chile and
Trinidad are the most efficient in our asset base and only newer technology will improve on them.
The Egypt facility is also being constructed to have an efficient process with lower carbon dioxide
emissions.

In addition, Methanex voluntarily participates in greenhouse gas emission reduction plans in

countries in which we do not have emission reduction obligations. We continue to explore future
opportunities for participation in anticipated emissions trading systems.

9.2  Fugitive Emissions

‘Fugitive emissions’ is the term used to describe losses from a company’s operations that occur
due to leaks from piping and equipment connections and seals, such as pipe flanges and pumps.
Typically, any individual leak is small, but accumulations of multiple leaks from large amounts of
piping and equipment can contribute significantly to a company’s overall emissions.

To be effective, fugitive emissions monitoring should be a component of a leak detection and repair
(LDAR) program. At Methanex, the standard LDAR program involves routine monitoring of plant
process areas by either ultrasonic detection or by gas detectors as part of an overall preventative
maintenance program at a site. Although legislation focuses on reporting emissions quantities, we
are committed to reducing emissions by repairing leaks that are detected as soon as practicable so
that fugitive emissions are reduced. Sometimes this requires a complete shutdown of a plant.

Methanex standards require that any new product storage tanks have vapour suppression or
recovery systems, while vented volatile organic compounds that cannot be recovered are routed to
combustion systems.

The Global Environmental Excellence Team and the Global Loss Prevention Team are currently
looking at new infrared technology to measure and monitor leaks at the plants.

9.3  Ozone-Depleting Substances (ODS)

Methanex is in full support of the Montreal Protocol, and has taken a strong position that will see
all ozone-depleting substances (ODS) with a potential greater than 0.1 removed from facilities at the
earliest opportunity.

In this regard, purchase of ozone-depleting substances has been phased out and replaced by
materials with a rating not exceeding 0.1 (also known as ‘Best Available ODS’) at all manufacturing
locations.

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9.4  Management of Non-Manufacturing Emissions

Methanex has developed environmental management systems for its methanol production
operations and it has a good understanding of its emissions from these activities. However,
the environmental impact of non-manufacturing activities, specifically the transportation and
distribution of methanol to global markets, has not been thoroughly studied.

Methanex continues to evaluate non-manufacturing emissions. Though the opportunities to reduce

such emissions may be few, significant reductions may be realized once the sources of emissions
are fully understood. For example, opportunities may include selecting low-sulphur fuels or using
contracted storage tanks designed to minimize emissions.

9.5  Contaminated Sites and Areas of Potential Concern

Methanex continues to monitor all its sites to ensure that spills are actively managed and
mitigated. Where it is determined that losses of material to ground could occur from storage tanks,
drums, overflow devices, etc., preventative measures are taken wherever practicable.

At each facility, we have mapped areas of potential environmental concern and documented the
degree of contamination. Experiences at each site contribute to improvements in spill prevention
technologies, mitigation, recovery and remediation methods.

9.6  Environmental Management System

Trinidad
In pursuit and achievement of the RC 14001 certification, the Trinidad site also achieved ISO 14001.

New Zealand
Methanex New Zealand no longer holds ISO 14001 accreditation; however, its environmental
management system is maintained to the same standard as it was under this standard. This was
recognized when Methanex New Zealand was named the 2006 joint winner of The New Zealand
Survey of Corporate Environmental Responsiveness. This survey assesses a company’s systematic
approach to environmental management and provides companies with a measurement of their
strategic environmental business planning over the years. The survey is run by Massey University
and awarded by central government.

Chile
Similar to Methanex New Zealand, Chile does not hold ISO 14001 accreditation. However, its
environmental system is maintained to the same standard within the Responsible Care culture.

Methanex Environmental Excellence Report 05–07   Environmental Issues and Opportunities for Improvement  35
9.7  Environmental Improvement Opportunities

We are committed to going beyond compliance with our environmental performance. The following
are areas where we have undertaken initiatives and made improvements beyond what was required
by our consents.

9.7.1  Sustainable Development

Methanex Chile
In 2007, one of Methanex Chile’s primary objectives was to improve environmental performance
at the Punta Arenas site by building a new wastewater treatment system. Over the years, as new
plants were added to the Chile site, the wastewater treatment system had considerably higher
use. Manual operation of the equipment and cleaning chemicals increased the possible risk
of environmental incident due to human error. At the same time, new Chilean environmental
legislation demanded better effluent monitoring and management.

A strategy was developed to implement a significantly re-engineered wastewater treatment

system in three phases. In phase one, new processes were put in place to ensure that operational
procedures were designed to prevent incidents. The water treatment system’s original design was
also modified to provide new water ponds to increase the system’s capacity. This new system also
includes a cleaning process that reduces the need for staff intervention.

Phases two and three of this project, which will be incorporated in 2008, include introducing new
technologies that control the management of liquid effluent. The process recovers effluents and
recycles them into the production process, optimizing the use of natural and energy resources. The
new effluent management system will be fully operational by the end of 2008, guaranteeing that
the water meets the highest industry standards with little environmental impact.

Methanex Trinidad
Methanex Trinidad has also initiated engineering towards an effluent improvement project to
allow greater capacity to better handle non-routine off-specification effluent and improve its
effluent quality.

9.7.2  Office Recycling, Paper Use and Energy Conservation

Methanex Trinidad
In a region where office recycling is not commonly practiced, Methanex Trinidad demonstrated
leadership and initiated a paper recycling and reduction program. Copiers and printers were
programmed to copy and print double-sided to reduce the amount of paper used in the facility. The
recycling program will be enhanced to include batteries and lighting tubes in 2008.

Methanex Environmental Excellence Report 05–07   Environmental Issues and Opportunities for Improvement  36
9.7.3  Habitat Enhancement

Methanex New Zealand: Riparian Plantings Program

During 2005-2007, Methanex New Zealand (NZ) participated in a three-year native planting
program of the Herekawe stream, adjacent to the Omata tankfarm, including development of a
public walkway. As part of the Dairying and Clean Streams Accord, Methanex NZ is carrying out
voluntary riparian plantings along the streams bordering the western side of the Waitara Valley
plant and the eastern side of the Motunui plant. This began in 2006 and is anticipated to be
finished in 2008.

9.7.4  Environmentally Friendly Purchasing

Methanex Chile
Methanex Chile incorporated environmentally friendly purchasing in parts of its business. New
chemicals used in the plant are purchased with best quality certification for minor heavy metals
concentrations to protect the catalysts.

Purchasing procedures for Halons (which are ozone-depleting substances) have been changed in
accordance with the Montreal Protocol.

A new plan for dangerous industrial solid wastes was presented to the environmental authority for
approval and a new plan for gaseous emissions was presented to the sanitary authority for approval.

In addition, new national legal regulations are incorporated in our environmental policy. The Chilean
Environmental Law (Law N° 19.300) defines sustainable development as: “the process of sustained
and reasonable improvement of people life quality, supported in proper measures of environmental
conservation and protection, so as not to compromise future generations expectations”. The
Methanex Global Environmental Excellence Team will continue to enhance environmental
performance of the company by supporting ongoing business and new ventures and by developing
new environmental standards as needed.

Methanex Environmental Excellence Report 05–07   Environmental Issues and Opportunities for Improvement  37
Methanex Corporation General Inquiries 
1800 Waterfront Centre  1 800 661 8851 (Toll-Free in North America) 
200 Burrard Street + 1 604 661 2600 
Vancouver, BC  + 1 604 661 2676 (Fax)
Canada V6C 3M1
www.methanex.com