Yara Clean Ammonia (YCA) and German Chemicals giant BASF announced on June 29 that they are collaborating on a joint study to develop and construct a world-scale, low-carbon blue ammonia production facility with carbon capture in the US Gulf Coast region.
The companies are looking into the feasibility of a plant with a total capacity of 1.2-1.4 million mt/y, with Yara expecting to contract full offtake from the proposed facility. Yara and BASF are long-standing collaboration partners, operating a joint ammonia plant at BASF’s site in Freeport, Texas.
“Yara and BASF have successfully collaborated in the past and we are pleased to explore a new clean ammonia project together,” said YCA President Magnus Krogh Ankarstrand. “In line with Yara Clean Ammonia’s strategy, we are working systematically to develop asset-backed supply to decarbonize agriculture as well as serving new clean ammonia segments such as shipping fuel, power production, and ammonia as a hydrogen carrier.”
Approximately 95% of the carbon dioxide (CO2) generated from the production process is aimed to be captured and permanently stored in the ground, the companies said. For BASF, the new plant would act as backward integration to serve the company’s demand for low-carbon ammonia and would lower the carbon footprint of its ammonia-based products.
“This project underlines BASF’s commitment to drive the sustainable transformation of the chemical industry,” said Dr. Ramkumar Dhruva, President Monomers Division, BASF. “Our existing Verbund sites in the region with integrated material flows and advanced infrastructure would be ideally suited for the integration of a new world-scale ammonia facility that has the potential to significantly improve the carbon footprint of both our own operations and the various industries we serve.”
YCA and BASF plan to complete the feasibility study by the end of this year. If confirmed through the Front-end Engineering Design (FEED) phase and an approved Final Investment Decision (FID), production start-up is expected in 2027-2028.
The project is Yara’s second blue ammonia development in the US. This past March, YCA and Calgary-based Enbridge Inc. signed a letter of intent to jointly develop and construct a world scale, low-carbon blue ammonia production facility as equal partners at the Enbridge Ingleside Energy Center (EIEC) near Corpus Christi, Texas (GM March 31, p. 1).
Yara International ASA President and CEO Svein Tore Holsether told participants at the company’s Capital Markets Day presentation that Yara hopes to pass the final investment decision on the two US blue ammonia projects in the coming year or so.
Responding to an analyst’s question whether there is potential to convert the existing Freeport ammonia plant to blue ammonia, Holsether said various options to decarbonize the facility are being investigated.
Yara in its Capital Markets Day presentation also said it plans to optimize its assets with an increased focus on divestment opportunities for non-core assets, especially where it sees opportunities to redirect financial and organizational resources in prioritized growth segments.
Holsether said Yara will assess its European footprint, “prioritizing assets that are higher return and fit for future.” Yara Executive Vice President and Chief Financial Officer Thor Giæver did not elaborate on what those assets might be, but said the company is looking for “operational flexibility” in terms of the sourcing of raw materials and the scale of operation.
“Some of Yara’s existing assets require significant capital and provide limited contribution to the overall company financial performance,” Giæver said. “At the same time, they demand considerable investments and resources.”
Holsether said that in the markets Yara operates in, the most fundamental shift is happening in ammonia, which he said is ideally suited to decarbonize hard-to-abate sectors beyond fertilizer. The other driver, he said, is regulatory, where the US has taken the lead in creating incentive to channel investments toward climate-friendly solutions.
“US investment in blue ammonia is a standalone profitable opportunity with attractive economics under different market scenarios,” Holsether said. “These investments will secure ammonia both for Yara’s potential increased ammonia needs in Europe and for Yara Clean Ammonia to capture opportunities in new market segments in line with our strategy.”
Yara said its US ammonia investments are “very complementary” to the company’s European footprint. The company currently imports approximately 1.5 million mt/y of grey ammonia to its European system. By switching grey ammonia to clean ammonia imports, Yara said emissions can be significantly reduced.
Yara believes imports from the US are the most economic route today to close the remaining gap, and can be supplemented with “select conversions” to blue or green ammonia in Europe if government support and economics improve.
“This is a significant outlet for our new ammonia, but also importantly, this is a significant opportunity to decarbonize Yara’s existing plant footprint,” Holsether said.
In terms of its green ammonia portfolio, which comprises smaller projects “more tailored to the development of technology and availability of renewable energy, Yara said the first 8,000 mt of green fertilizers will be produced and delivered this year from the company’s Porsgrunn production site in Norway, where its first green hydrogen and green ammonia production facility is under construction (GM Feb. 10, p. 33; Jan. 28, 2022).