At an investor conference in Chicago June 13, Agrium Inc. revealed plans for a world class greenfield nitrogen plant to be located in the U.S. Cornbelt. Agrium said the plant’s product mix is under evaluation, but planned capacity would be approximately 2 million mt/y net production of primarily urea and UAN, with a little bit of excess ammonia available for sale.
Ron Wilkinson, Agrium senior vice president and president of Wholesale, told analysts the company is looking for a location in the U.S. Cornbelt. The project does not yet have board approval, but Wilkinson said “it does look pretty promising.
“It fills in a fairly big market gap for us. We’re in the west, we’re in the east, but we’ve got a little bit of a gap in the middle, especially when it comes to urea and UAN,” Wilkinson said. “This would really fit that market very well for us. And obviously, our retail is very, very big there.”
Pending board approval and permitting, Agrium’s Midwest plant would be on a fast track execution strategy, with a planned startup in early 2017. In an effort to “parallel path” the engineering and permitting for the facility, Wilkinson said the accelerated strategy includes using contractor standard designs and making quick decisions on ordering critical path and long-term delivery equipment for the facility. Wilkinson estimated the permitting process would take 18-24 months.
Wilkinson said “there is lots of room for nitrogen expansion in North America,” adding that nitrogen supplies were strained this year due to an early spring and acreage increases for corn in the U.S. and canola in Canada. More than 50 percent of U.S. nitrogen consumption is imported, he said, and North America is likely to remain a nitrogen importer for the next decade. “Twelve to 14 new North American nitrogen facilities would be required to displace all those imports,” he said.
Wilkinson noted that other projects have been announced to add North American fertilizer capacity in response to low domestic natural gas costs, but none have full board approval. “There are lots of people in North America certainly giving it consideration, and it’s going to be a race with all of us,” he said. “We believe we have a proven track record on project development. We know how to do it, and we’ll be right in there.”
Wilkinson provided no cost estimates for the facility, but said the final figure will depend on the product mix. He estimated the EBITDA contribution from the project at $400 million, and said the goal is to have full board approval of the project by this time next year.
Wilkinson also detailed proposed brownfield and debottleneck projects planned for two of Agrium’s existing North American nitrogen facilities. Pending board approval, a projected $150 million urea debottleneck at Agrium’s Redwater facility in Alberta would add an addition 170,000 mt/y of urea production, with startup slated for 2015. Current urea capacity at Redwater is 700,000 mt/y. The facility also produces ammonia, MAP, and ammonium sulfate, with total annual capacity of 2.2 million mt of finished fertilizer products.
Agrium is also planning a $500 million ammonia debottleneck and urea brownfield project for its Borger facility in Texas. The project would add another 120,000 mt/y of ammonia production and 640,000 mt/y of urea production, with startup slated for 2016. Net ammonia production at Borger would actually go down about 250,000 mt to accommodate the increase in urea production, Wilkinson said, but the project would increase Agrium’s ability to flex between urea and ammonia at Borger.
As with the Midwest greenfield facility, Wilkinson said Agrium’s goal is to have full board approval of the Redwater and Borger projects by this time next year.
Agr