Concerning production and use of biofuels, mismatch between the locations of feedstock and the biofuel consumer may lead to high transportation costs and negative environmental impact. In order to minimize these consequences, it is important to locate the production plant at an appropriate location. In this paper, a case study of the county of Norrbotten in northern Sweden is presented with the purpose to illustrate how an optimization model could be used to assess a proper location for a biomass based methanol production plant. The production of lignocellulosic based methanol via gasification has been chosen, as methanol seems to be one promising alternative to replace fossil gasoline as an automotive fuel and Norrbotten has abundant resources of woody biomass. If methanol would be produced in a stand-alone production plant in the county, the cost for transportation of the feedstock as well as the produced methanol would have great impact on the final cost depending on where the methanol plant is located. Three different production plant sizes have been considered in the study, 100, 200 and 400 MW (biomass fuel input), respectively. When assessing a proper location for this kind of plant, it is important to also consider the future motor fuel demand as well as to identify a heat sink for the residual heat. In this study, four different automotive fuel- and district heating demand scenarios have been created until the year 2025. The results show that methanol can be produced at a maximum cost of 0.48 €/l without heat sales. By selling the residual heat as district heating, the methanol production cost per liter fuel may decrease by up to 10% when the plant is located close to an area with high annual heat demand.