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).
