UPDATED: 05/14/2018 — see Change Log

OWNER: Northern Plains Nitrogen (NPN)
PROJECT: Greenfield nitrogen fertilizer plant[memberful does_not_have_subscription=”1314-ammonia-industry-annual-subscription,1311-ammonia-industry-monthly-subscription,3338-ammonia-industry-30-day-subscription”]

COST (reported): $2.5 billion
JOB CREATION (reported): 170 permanent, 2,000 construction
START-UP DATE (reported): 2020

CAPACITY	USGS[1]	COMPANY[2]	PERMIT[3]	ADJUSTED[4]
Ammonia		2,400 stpd	[Membership required]	[Membership required]
Units: stpd, stpy, mtpd, mtpy = short/metric tons per day/year. [1] United States Geological Survey (USGS) Mineral Yearbook, Nitrogen gives capacity in metric tons per year, calculated as “engineering design capacity adjusted for 340 days per year of effective production capability,” rounded to three significant digits. Source: most recent year, Table 4: Domestic Producers of Ammonia, http://minerals.usgs.gov/minerals/pubs/commodity/nitrogen/. [2] Company reports. Sources: linked below. [3] Air permit documents. Sources: linked below. [4] [Membership required]. See Methodology.

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SUMMARY STATUS: Planning phase
World-scale greenfield project led by farmers’ co-ops. Seed capital raise exceeded expectations, January 2014. Water permits approved, December 2014; air permit approved, August 2015. Thereafter, project severely delayed: fund-raising was complicated by the commodity price drop. Awaiting FEED study, EPC contract, and financial close. In April 2018, the project was reportedly still “alive and well … [although] we’re definitely not where we thought we’d be.”

COST: $2.5 billion, originally $1.5 billion
JOB CREATION: 170 permanent, 2,000 construction
START-UP DATE: 2022 earliest estimate, originally 2017
LIKELIHOOD: Possible — see Methodology

CAPACITY	USGS[1]	COMPANY[2]	PERMIT[3]	ADJUSTED[4]
Ammonia		2,420 stpd 75,000 stpy NET	2,425 stpd 885,125 stpy	802,972 mtpy GROSS 68,039 mtpy NET
Urea			3,000 stpd	993,367 mtpy GROSS
Urea granulated		3,000 stpd 785,000 stpy NET	3,000 stpd 1,095,000 stpy	993,367 mtpy MAX 712,140 mtpy NET
DEF		150,000 stpy	300 stpd 109,500 stpy	99,337 mtpy
Nitric Acid			2,000 stpd	662,245 mtpy GROSS
ANSOL		100,000 stpy	2,540 stpd 927,100 stpy	841,051 mtpy GROSS 90,718 mtpy NET
UAN		1,500 stpd 533,000 stpy	5,620 stpd 2,051,300 stpy	1,860,908 mtpy MAX 496,684 mtpy NET
Ammonium Thiosulfate		100,000 stpy	441 stpd 160,965 stpy	146,025 mtpy MAX 90,718 mtpy NET
Ammonium Polyphosphate (10-34-0)		40,000 stpy	1,080 stpd 394,200 stpy	357,612 mtpy MAX 36,287 mtpy NET
Units: stpd, stpy, mtpd, mtpy = short/metric tons per day/year. [1] United States Geological Survey (USGS) Mineral Yearbook, Nitrogen gives capacity in metric tons per year, calculated as “engineering design capacity adjusted for 340 days per year of effective production capability,” rounded to three significant digits. Source: most recent year, Table 4: Domestic Producers of Ammonia, http://minerals.usgs.gov/minerals/pubs/commodity/nitrogen/. [2] Company reports. Sources: linked below. [3] Air permit documents. Sources: linked below. [4] Adjusted Capacity is in metric tons per year assuming operations for 365 days per year; based on permitted capacity for GROSS/MAX capacities, and announced end products for NET capacities. See Methodology.

FEEDSTOCK: Natural gas
END PRODUCTS: Ammonia, Urea granulated, DEF, UAN, Ammonium Nitrate solution, Ammonium Thiosulfate, Ammonium Polyphosphate

RESEARCH NOTES:
Northern Plains Nitrogen LLP (NPN) still plans to build a world-scale nitrogen fertilizer greenfield in North Dakota, to supply locally-produced fertilizer to farmers. The project is led by a group of farmer’s co-ops and is thus “created by the customers it will serve.”

Despite initial hopes to begin operations in 2017, construction has not yet started: the earliest I estimate this plant could begin operating would be 2022.

In April 2018, a local news report interviewed the CEO, Don Pottinger:

Pottinger said a dedicated team is still working hard to make the plant happen. He insists that the vision for the plant is “alive and well.” The project is up to date with certifications and licenses, and the search for investors continues — and yet.

“It’s been five years — it’s going on six since the effort began — so we’re definitely not where we thought we’d be, because we thought we’d have a plant by now.”
Bismarck Tribune, Five years later, Grand Forks fertilizer project still searching for investment, 05/14/2018

According to the COO, quoted by local media in April 2017, “there’s one year’s worth of engineering to do … and three years of construction.” That clock will not begin ticking, however, until the project raises more investment: the first item on NPN’s to-do list is the FEED study, which could cost “$20 million to $30 million.”

While significant progress has been made, there remain several obstacles, including the need to attract additional investors. NPN cannot complete the project without significant new financial partners. Several avenues are being pursued to identify and attract additional partners.
http://northernplainsnitrogen.com, accessed 12/05/2016

NPN needs to complete the FEED study, and award the EPC contract. According to city council documents from October 2016, NPN was not expecting an imminent financial close, but needed 9-12 months to complete the FEED study, after which the 36-month construction phase could begin.

Back in November 2015, the project manager admitted that “We’re not where we intended to be in terms of funding the project … it’s just taking a little bit longer than we expected.” In June 2015, company reps had been quoted claiming that “three industry-experienced investors are completing project reviews and other due diligence processes.”

By September 2016, local news reported that, due to the downturn in global commodity prices, “we need a more sophisticated investor who is familiar with the nitrogen industry and its cyclical nature.” According to another report:

“We went from double-digit returns to single-digit returns, hence the hurdle with the finance community to sell the project,” he said, adding they’ve spoken to more than 100 investors. “Many want to participate; they just don’t like the market conditions.”

Now, however, project developers believe that they’ve passed the bottom of the industry cycle, and rising prices for nitrogen fertilizers will make it possible to find sophisticated investors. Local news reports from January 2017 described how they see the “market poised for resurgence as the catalyst for the investments project leaders have long pursued.” The article quoted NPN CEO, Don Pottinger saying: “The project is so good, and it is so necessary in the area, in the market that we plan to serve, that we are just bound and determined to pursue the financing until it’s successful.”

In the meantime, the project developers extended their various agreements, most important of which are the water rights, extended in May 2017 and again in December 2018, and the air permit, which has been extended through 2018.

Serious financing and EPC contract announcements were not feasible until the permits were in place. In December 2014, company reps described permits as “de-risking activities for investors,” and claimed that they “had secured most other required permits.” The draft air permit was published in July 2015 and the final permit to construct was approved in mid-August 2015.

Also, before the EPC could be confirmed, NPN needed to complete the FEED study. According to NPN’s newsletter, in February 2016, the team was embarking on a “value engineering process,” which would “include modularization workshops, FEED execution planning and construction labor assessment.”

In the meantime, important work has been achieved: local incentives kept falling into place, primarily the North Dakota state “sales and use tax exemption for materials used to construct a fertilizer or chemical processing facility,” signed into law in April 2015.

The project cost rose, regularly: originally announced as $1.5 billion, then $1.7 billion, then $1.85 billion in July 2014, then “more than $2 billion” in September 2014. It seems to have settled, since December 2015, at $2.5 billion. These cost escalations are still less than those faced by other proposed greenfield plants, like CHS’s cancelled project in Spiritwood, ND, or Ohio Valley Resources possibly-abandoned plant in Rockport, IN, and less even than completed greenfields, like OCI’s new plant at Wever, IA.

Although many aspects of NPN’s project were similar to the CHS greenfield at Spiritwood, which was cancelled because of spiraling costs and insufficient water, Darin Anderson, NPN’s president, clarified that the Grand Forks greenfield was still economically viable. “We’ve looked at what would happen if our costs increase … and we’re still very satisfied with the potential returns.” More importantly, NPN started out with a plentiful supply of water, the lack of which proved an insurmountable obstacle for CHS.

In December 2014, the North Dakota State Water Commission approved the company’s water permits, authorizing NPN to use “7,287 gallons per minute from its wastewater lagoons, or 11,755 acre-feet of water annually” and, additionally, “4,165 gallons per minute from the Red River, or 6,717 acre-feet annually.”

In June 2014, it was reported that NPN would buy the final parcel of land required for the project “within a month,” giving the existing 320-acre site access to the BNSF railway. The site sits between a wastewater treatment plant and solid waste landfill.

The market for the plant’s fertilizer output will be primarily local, focusing on “north central United States and the southern portions of Manitoba and Saskatchewan,” to reduce freight costs and thus consumer prices.

The plant will consume “approximately 80,000 MMBTUs/day” of natural gas. This could be supplied from the 500-mile pipeline that passes East of Grand Forks, operated by Viking Gas Transmission Company (a ONEOK company), by building a “dedicated lateral from the existing mainline.” Alternatively (an “intriguing option”), it could come from WBI Energy‘s $650 million, “375-mile pipeline to deliver natural gas from the Bakken,” newly proposed in January 2014.

In January 2014, NPN announced that it had raised enough seed capital, “exceeding its $3 million goal,” to commission the pre-FEED study. The seed capital, totalling “more than $4.7 million,” came from “nearly 200 individuals,” who each committed a minimum of $15,000; “more than 90%” of these investors are local farmers.

In November 2013, NPN announced that it had signed an MOU with Chinese firm Chengda Engineering Co. Ltd., for a construction and financing partnership. Chengda completed the pre-FEED study in late 2014. This study was used as the basis for the air permit application, and gave NPN a “+/- 20% cost estimate” to support the company’s efforts to raise further equity. The full FEED study was estimated to cost “$20 million to $30 million.” I am not aware of any ongoing involvement for Chengda.

NPN is a client of Taylor DeJongh, “an independent investment banking firm providing strategic, project finance and M&A advisory services.”

Northern Plains Nitrogen was “was conceived by growers in the northern plains based on research conducted by North Dakota State University.” The farming co-operatives behind the project include North Dakota Corn Growers Association, Minnesota Corn Growers Association, North Dakota Soybean Council, Manitoba Canola Growers Association, and South Dakota Corn Growers Association. [/memberful]

View larger map with all ammonia plants.

ADDRESS: Grand Forks, North Dakota, United States

WEBSITE: http://northernplainsnitrogen.com/

REGULATORY SOURCES:

• USGS: Minerals Yearbook, Nitrogen [RECENT / ARCHIVE]
• Air Permit documents: ND Health, Air Quality Permits – Construction: Northern Plains Nitrogen, LLP [LINK / PDF]

NEWS SOURCES:

• 05/14/2018: Bismarck Tribune: Five years later, Grand Forks fertilizer project still searching for investment [LINK]
• 12/13/2017: Knox Radio: GF – FERTILIZER PLANT [LINK]
• 05/01/2017: Grand Forks Herald: Fertilizer plant agreement extended [LINK]
• 04/24/2017: Grand Forks Herald: A ‘state nitrogen plant’? Grand Forks council member sees opportunity [LINK]
• 01/27/2017: Grand Forks Herald: Grand Forks fertilizer plant works to woo investors amid economic headwinds [LINK]
• 10/03/2016: City of Grand Forks, City Council Staff Report: Northern Plains Nitrogen, LLP – Letter of Intent Agreement Extension [PDF]
• 10/03/2016: Grand Forks Herald: Arbor Park sees final GF Council vote to begin building negotiations [LINK]
• 09/28/2016: KFGO: Investors in Grand Forks nitrogen plant having second thoughts [LINK]
• 09/27/2016: Grand Forks Herald: Planners of Grand Forks fertilizer plant acknowledge financial hurdles [LINK]
• 05/16/2016: Industrial Info: Despite Decrease in Oil Work, North Dakota Likely to See Labor Force Tighten in 2016 [LINK]
• 02/2016: NPN Newsletter, February 2016: How research keeps NPN on track [PDF]
• 01/28/2016: Grand Forks Herald: Grand Forks maxes out fertilizer plant consultant spending at $237,000 [LINK]
• 12/24/2015: Prairie Business: ENERGY ENGINEERING: The Intersection of Energy, Water and Economic Development [LINK]
• 11/25/2015: Grand Forks Herald: Northern Plains Nitrogen wins water extension with city pending funding [LINK]
• 11/15/2015: Grand Forks Herald: Fertilizer plant planned for Grand Forks will minimize plumes [LINK]
• 10/09/2015: Grand Forks Herald: Nitrogen plant developers making progress [LINK]
• 09/16/2015: Grand Forks Herald: Fertilizer plant faces one more hurdle: Money [LINK]
• 08/13/2015: Grand Forks Herald: CHS decision doesn’t faze Grand Forks project developers [LINK]
• 08/11/2015: Grand Forks Herald: Air quality permit issued for Grand Forks fertilizer plant [LINK]
• 06/28/2015: Grand Forks Herald: Costs for city services to Grand Forks fertilizer plant projected at $45 million [LINK]
• 04/30/2015: TaxRates.com: New Sales Tax Exemption in North Dakota [LINK]
• 05/02/2015: Grand Forks Herald: Fertilizer plant planned for northwest of Grand Forks reveals product list [LINK]
• 04/22/2015: Grand Forks Herald: Fertilizer plant incentive bill sent to governor [LINK]
• 04/12/2015: The Dickinson Press: Will a man camp come to Grand Forks? Fertilizer project may require small man camp, but details uncertain [LINK]
• 03/01/2015: Grand Forks Herald: Proposed fertilizer plant plumes examined [LINK]
• 02/25/2015: Grand Forks Herald: Fertilizer plant incentive bill passes North Dakota Senate [LINK]
• 12/05/2014: Grand Forks Herald: Water permits approved to supply proposed fertilizer plant on north end of Grand Forks [LINK]
• 11/2014: NPN newsletter: November 2014 [PDF]
• 09/2014: NPN newsletter: September 2014 [PDF]
• 07/22/2014: Grand Forks Growth Fund staff report: Agenda Item, Northern Plains Nitrogen LLP project oversight consultant [PDF]
• 06/02/2014: AgWeek: Northern Plains Nitrogen to buy final rail access acres [LINK]
• 01/28/2014: Pioneer Press: Proposed $1.7 billion Grand Forks fertilizer plant takes key step [LINK]
• 11/19/2013: Bismarck Tribune: Agreement on fertilizer plant signed [LINK]
• 09/25/2013: NPN press release: Northern Plains Nitrogen is now open to investors [PDF]
• 05/09/2013: NPN Press Kit [PDF]
• 05/09/2013: NPN press release: Northern Plains Nitrogen to Invest Over $1B in Agri‐Business in Grand Forks, ND [PDF]
• 09/2012: North Dakota State University: Economics of Using Flared vs. Conventional Natural Gas to Produce Nitrogen Fertilizer: A Feasibility Analysis [PDF]