Eastman Chemical Co., Kingsport, Tenn., and Terra Industries Inc., Sioux City, Iowa, said Sept. 28 that Eastman has exercised its option to purchase Terra’s Beaumont, Texas, assets, including ammonia and methanol production facilities (GM July 23, p. 8). The closing is expected on or before Jan. 1, 2009. Terra has an ongoing commitment with Methanex with respect to the Beaumont plant through 2008. Terms of the sale agreement were not disclosed.
Eastman will incorporate the assets into a previously announced $1.6 billion industrial gasification project it is developing at Beaumont. Mark Costa, Eastman senior vice president of corporate strategy, said Eastman will be a developer, operator, co-investor, and customer for that project. “Exercising this option brings Eastman one step closer to construction of a new gasification facility,” Costa said. “We continue to meet our targets and remain on schedule.”
Eastman says front-end engineering and design for the facility, which will utilize petroleum coke as its feedstock, will begin immediately, with construction expected to be underway by early 2009. Eastman expects the plant to be online in 2011. Since 1983, Eastman has successfully operated a gasification facility at its Kingsport headquarters, supplying the company with methanol and acetyl streams used in the production of acetate resins, of which it is the world’s largest producer.
The gasification facility will produce hydrogen, methanol, and ammonia, chemical industry feedstocks that are usually derived from oil or natural gas. These feedstocks frequently serve as the base material for everyday products ranging from plastics, paints, and photographic film to pharmaceuticals.
Eastman told Green Markets that it has no plans to build additional ammonia capacity at Beaumont at this time. The Beaumont facility currently includes 255,000 st/y of idled ammonia capacity. It also has the capacity to produce 225 million gallons per year of methanol, and includes storage capacity for both methanol and ammonia.
Eastman anticipates a 50 percent equity position in the project and expects to announce a financial equity investor soon.
The Beaumont project involves multiple companies, with more pending. Air Products & Chemicals Inc. has signed a letter of intent to purchase hydrogen produced by the project on a long-term basis. It will construct and operate new world-class air separation units to produce over 7,000 tons per day (TPD) of oxygen, essential to the gasifier operation. Fluor will support the front-end engineering design effort. GE has licensed its gasification technology for the project.
The new facility is expected to generate 1300-1500 construction jobs and more than 250 permanent jobs, accounting for more than $686 million in direct and indirect employee compensation over a ten-year period. Eastman says the new facility will generate an additional $124 million in local tax revenue and a $210 million increase in local sales revenue over a ten-year period. Local officials have approved incentives valued at about $100 million for the project.
Terra President and CEO Michael Bennett said Terra is pleased with this opportunity to divest these assets in a move that is consistent with its desire to focus on its core nitrogen business.
In addition to the Beaumont development, Eastman will also be an operator, co-investor, and customer of another $1.6 billion petroleum coke-based project at Faustina Hydrogen Products LLC (FHP) in St. James Parish, La. Eastman has provided development funding for this project, with the intent to take a 25 percent equity position. Eastman will also provide operations and maintenance services and purchase methanol under a long-term contract. This facility is expected to be online in 2010.
The FHP facility will also produce 1.3 million tons of anhydrous ammonia. Agrium Inc. and The Mosaic Co. will both have offtake agreements at 40 percent and 60 percent, respectively (GM June 18, p. 1). Agrium also has the option to obtain a sufficient supply of carbon dioxide for the potential development of a large-scale facility for upgrading ammonia to UAN/urea. Neither Agrium nor Mosaic is expected to have an equity stake in FHP.