All Posts from September 27, 2012

New nitrogen plant planned for Indiana

Ohio Valley Resources LLC (OVR), Fairfield, Ill., filed an air permit application with the Indiana Department of Environmental Management (IDEM) on Sept. 17, 2012, to construct a new $1 billion nitrogen fertilizer facility in Spencer County, Ind.

On the same day, OVR entered into technology licensing agreements with KBR of Houston, Texas, to provide the essential ammonia process production units necessary for the proposed facility. The agreement with KBR also includes a front-end engineering design (FEED) package to develop a lump-sum turnkey engineer, procure, and construct (EPC) price for the project. Weatherly Inc., Atlanta, Ga., will supply the design of its proprietary urea ammonium nitrate (UAN) plant on a subcontract to KBR as part of the overall project. OVR has retained Morley and Associates of Newburgh, Ind., to assist with off-site utilities and related infrastructure.

OVR says the new ammonia plant will be the first entirely new facility of its type to be constructed in America by a U.S.-based firm in more than a quarter-century. It will use the latest version of KBR’s Purifier Process and therefore will consume less energy than ammonia plants currently operating in the United States. The project is made economically viable by a recent decrease in natural gas prices due to domestic shale gas development. It will feature state-of-the-art emission-control technologies that comply with current federal and state environmental regulations.

As global demand for nitrogen fertilizer has increased, the U.S. has become one of the world’s largest importers of this important commodity. This has resulted in America’s farmers and food supply becoming more dependent on foreign sources of essential fertilizer products. According to data from the Economic Research Service of the United States Department of Agriculture (USDA), 54 percent of the U.S. nitrogen supply – or approximately 10.79 million tons – was imported in 2011.

According to Doug Wilson, President/CEO of Ohio Valley Resources, this project represents a major step forward in reviving domestic production of critical nitrogen fertilizer products to serve the Eastern Corn Belt. “Our goal is to restore jobs to the United States that have been lost for years by displacing imported sources of fertilizer products,” Wilson said. “We are excited that our new plant will help to stabilize the supply and price of nitrogen fertilizers to support the regional agricultural economy.”

Tentative plans call for the nitrogen fertilizer plant to be located on approximately 150 acres in Spencer County north of Rockport. Its location will allow convenient rail and highway access, as well as the potential for river access. Other competing sites in Kentucky are still being evaluated.

The facility will produce approximately 2,420 tons per day of ammonia and 3,000 tons per day of urea ammonium nitrate (UAN) solution for fertilizer. Some of the ammonia production will serve the local utility markets for NOx control (known as selective catalytic reduction units or SCRs), which reduces emissions in coal-fired power plants and industrial facilities. In addition, the plant will produce 300 tons per day of diesel exhaust fluid (DEF), a urea solution used to reduce emissions in diesel engines.

“Not only will our new plant play a key role in boosting domestic agricultural production, but it will also provide a reliable source of emissions-control products to support a cleaner environment,” Wilson said. “This will all be done by American workers using domestic sources of low-cost natural gas.”

Approximately 1,200 workers will be needed to construct the plant over a three-year period. Upon its projected completion in 2016, the facility will provide approximately 80 full-time jobs.

FNA proposes Canadian N plant

Farmers of North America, a farmer business alliance is proposing a new nitrogen plant for Canada. FNA says it has moved from the conceptual stage to full project development, where farmers are getting involved.

FNA announced that a new business in the form of a limited partnership, the FNA Fertilizer Limited Partnership, has been created specifically to provide farmers a mechanism for ownership of a new fertilizer manufacturing facility.

In turn, FNA Fertilizer Limited Partnership has launched a formal project named "ProjectN" (as in Project Nitrogen fertilizer) which will begin raising seed capital immediately.
It had been previously reported that FNA was "pondering" the idea of building a fertilizer plant, but no direct actions to that end have been publicly disclosed until now.

"It needs to be clear that FNA is not talking about getting into the manufacturing business itself," said spokesman Bob Friesen. "Rather, as we have done in the past, we are organizing and providing the catalyst to see a fertilizer plant built. Participation in fertilizer manufacturing will allow farmers to capture more of the value chain."

The ProjectN working group has conducted a review of the sector, analyzed natural gas pricing, plant scale, market demand, competitive supply and other indicators framing the business case for a new development. The results of these preliminary investigations have been positive.

"The business case is compelling," said Friesen. "The real question is if and to what extent farmers want to gain a return on investment to offset the high cost of fertilizer rather than merely paying for it. Whether or not farmers participate, they will pay for new fertilizer plants indirectly as part of the base fertilizer cost." He added that since North America imports nearly seven million mt of fertilizer a year, it is obvious that farmers are paying for all the plants that now exist and the profits they make.

The intention of FNA Fertilizer Limited Partnership (FNA FLP) to connect committed purchase contracts for the products of the fertilizer plant to farmers that will own an equity stake in the plant provides a unique form of stability and risk mitigation to underpin the success of the project, while providing farmers a certainty of supply of a key farm input.

FNA says it has already gauged a high level of interest in its membership. To further solidify and document farmer commitment, today FNA FLP is launching a seed capital raise.

A new website, www.ProjectN.ca, has been created where members and non-members can indicate their interest and sign on to commit to the project. The website will provide core information about the fertilizer industry, the nature of the tasks involved in building a plant and the benefits and commitments members may expect once the plant is built. The earlier farmers commit to the project, the greater the benefits that are expected to accrue from their participation.

Friesen said that if ProjectN receives a strong response through the website and the seed capital raise, FNA & FNA FLP will be in a position to make additional "concrete announcements in a relatively short time frame."