With low North American natural gas prices, domestic and offshore companies are looking to revive the North American nitrogen production business, which waned when natural gas prices skyrocketed and devastated production over a decade ago.
While skeptics can easily argue that demand is not growing to meet the need for this new capacity, the new tons can instead go to compete with and replace imports. U.S. imports currently make up approximately one-half of U.S. nitrogen consumption. When the U.S. industry was pummeled years ago, producers went offshore to Trinidad and Venezuela to build new plants, and buyers also sourced product from the Arab Gulf and Former Soviet Union. Now the U.S. has the low gas price, thanks to oil shale gas, and can more readily compete with these offshore tons.
To date, some seven companies have publicly reported that they are eyeing the construction of major new nitrogen projects in North America – North Dakota Corn Growers Association (NDCGA), Yara International ASA, Agrium Inc., Orascom Construction Industries (OCI), Incitec Pivot Ltd. (IPL), The Mosaic Co., and Indian Farmers Fertiliser Co-operative Ltd. (IFFCO) – with others privately researching the possibility. In addition, three major companies – CF Industries Holdings Inc., Koch Nitrogen Co., and Agrium – are seriously eyeing the upgrade of existing plants, and others, including Potash Corp. of Saskatchewan Inc., are weighing those options. Rentech Nitrogen Partners and LSB Industries Inc. continue to upgrade their East Dubuque, Ill., and Pryor, Okla., facilities, respectively.
The latest to be publicly mentioned is the one backed by NDCGA (see page 1), which is estimated to cost $1 billion.
Of the projects, Yara says its proposed 1.3 million mt/y urea plant adjoining its existing nitrogen complex in Belle Plaine, Sask., is fast-tracked for an expected start-up in second-half 2016 (GM June 18, p. 1). However, the final decision to implement the project still awaits an engineering, procurement, and construction (EPC) contract, and agreements with Saskatchewan authorities relating to utilities and other key terms of the project.
The new plant will have two urea granulation units and its own ammonia production. It will produce 1.3 million mt of urea and urea plus sulfur per year, bringing total Belle Plaine production capacity to 2.4 million mt/y. Current Belle Plaine production stands at 1 million mt/y urea, 700,000 mt/y ammonia, and 200,000 mt/y UAN, with most of the ammonia used to make urea and UAN.
In the meantime, Agrium is searching the U.S. Cornbelt for a site for a new nitrogen plant that would produce 2 million mt/y, primarily urea and UAN, with a little excess ammonia left over to sell (GM June 18, p. 1). Pending board approval, which it hopes to have within a year, Agrium said the plant would be fast-tracked for start-up in early 2017.
Agrium says it needs a plant in the U.S. heartland, particularly since it has so many dealerships in that area. In addition, it noted tight nitrogen supplies in the area. It is not worried about oversupply, saying that 12-14 new North American nitrogen plants would be required to displace current U.S. imports.
Also within a year, Agrium hopes to have board approval for a $150 million urea debottleneck of the Redwater, Alberta, facility that would add 170,000 mt/y of urea, with a startup slated for 2015. Current Redwater urea production is 700,000 mt/y. Agrium is also eyeing a $500 million ammonia debottleneck and urea brownfield at its Borger, Texas, facility. This project would add another 120,000 mt/y of ammonia production and 640,000 mt/y of urea production, with a startup slated for 2016. Agrium said actual net ammonia production would go down about 250,000 mt to accommodate the increase in urea production, but would allow the company to better flex between urea and ammonia.
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