Adelaide-based Leigh Creek Energy (LCK), which plans a 1 million mt/y urea facility in South Australia, north of Adelaide, has awarded two engineering, procurement, construction, and management (EPCM) contracts for the Stage 1 commercial development of the US$2.6 billion project.
The Leigh Creek Energy project (LCEP), which is located 550 kilometers north of Adelaide and overlays the Leigh Creek coalfield, aims to initially produce 1 million mt/y of urea, utilizing in-situ gasification (ISG) technologies.
LCK said on Jan. 18 the Upstream contract has gone to InGauge Energy Pty., Brisbane, which has been hired to manage drilling services for development of initial gasification wells to provide feedstock syngas for a 5 MW power plant. The Downstream contract has been awarded to Brisbane-based Prudentia Process Consulting Pty Ltd. to manage selection, engineering, construction, and commissioning of the 5 MW gas-fired power plant.
These two commercial stages of the project will be developed in parallel. LCK said it will separately contract for long lead items that will then be managed by respective EPCM contractors.
The positive project economics for the development of the urea production facility supported by syngas feedstock were confirmed in LCK’s recently-released pre-feasibility study (PFS), the company said.
“The PFS outlined an average nominal production cost of US$109/mt, which places the LCEP project in the lowest cost quartile of the global urea cost curve,” said LCK. “Pre-tax leveraged Net Present Value (NPV) is A$3.4 billion, with an internal Rate of Return (IRR) of 30 percent.”
LCK expects first urea production in late 2023.
“With the award of these contracts, LCK moves closer to becoming a significant supplier of domestically-produced urea providing additional security to a critical product to the Australian agricultural sector,” said LCK’s Managing Director Phil Staveley.
Two other major urea projects are under development in the country. Strike Energy Ltd., also headquartered in a suburb of Adelaide at Thebarton, earlier this month announced the launch of Project Haber, an ammonia and 1.4 million mt/y urea complex for Western Australia’s Narngulu Industrial Estate. The site lies adjacent to Geraldton Port (GM Jan. 15, p. 1).
Like the LCK project, Strike Energy said its Haber Project will be primarily focused on meeting the needs of Australian farmers, with surplus product to be made available to international markets.
Perth-based Perdaman Industries’ (Chemicals and Fertilisers) is also working to establish a 2.14 million mt/y urea project near Karratha on Western Australia’s Burrup Peninsula. A long-time-in-development project, Perdaman only signed an engineering, supply of equipment and materials, construction, pre-commissioning, and commissioning contract for the execution of the urea plant in December (GM Dec. 31, 2020). This followed the inking of a 20-year natural gas supply agreement with Woodside Energy for the project in November 2018 (GM Nov. 21, 2018),
This week also saw news of the announcement of the signings of memorandum of understandings – albeit non-binding – for a giant fertilizer complex in Western Australia’s sparsely populated northern region, which would include ammonia and urea production, by a little known Australian consortium. The consortium is reported to have the in principle backing of a large Dubai water and energy company, ARJ Holding Group (see separate news story).