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In August 2018, Reuters reported that cheap natural gas was driving industry expansions across Alberta, and disclosed that CF Industries was increasing ammonia production at its Medicine Hat plant.
Tag: CF Industries
Ammonia industry cycles and fundamentals: timing capex
THIS UPDATE IS ONLY AVAILABLE TO SITE MEMBERS
The simple economic argument for investing in a new ammonia plant in the US today is that ammonia prices, being cyclical, will recover from their present short-term low, but that natural gas prices, being fundamentally altered by the shale gas revolution, will stay low in the long-term.
Pipeline of new urea expansions (2017 update part 2)
2016 was a transformative year for the North American ammonia industry but, in 2017, the bigger impact will be on the urea industry.
Here's an update on four urea expansions expected on-stream this year and next, which will add almost two million tons of new urea capacity. In the process, they'll reduce the amount of ammonia that's available for sale by more than one million tons.
And, as a bonus, I have news on an embattled "clean coal" project that, in what might be a last gasp attempt at a viable business model, could potentially add another 1.5 million tons of urea in Texas.
Port Neal has started up: late, over budget, and down for repairs
CF Industries announced this morning that its new ammonia and urea plants at Port Neal, IA, "have been successfully commissioned and started-up."
Start-up at CF’s Donaldsonville
CF Industries today announced that its Donaldsonville ammonia plant is now operational.
This new ammonia plant is about six months late and perhaps 10% over budget, which is hundreds of millions of dollars, as I explain in my Research Note for Donaldsonville, LA.
CF-OCI merger cancelled
CF Industries terminated its proposed merger with OCI this morning.
"The Treasury announcement on April 4, 2016 materially reduced the structural synergies of the combination. Since that time, both companies have worked together collaboratively ... However, the companies were unable to identify an alternative acceptable to both parties and, therefore, agreed to terminate the combination."
OCI’s Wever greenfield: capex up, lawsuit, and intense monitoring
There's plenty of new news about OCI's Iowa Fertilizer Company and its world-scale greenfield nitrogen plant at Wever, IA.
In the last two weeks, we've had earnings reports both from OCI and from the project's EPC contractor, Orascom, which is OCI's sister company. Plus, we had a response and countersuit in the ongoing lawsuit between Orascom and one of the project's subcontractors.
2016 in preview: US ammonia capacity to increase by a third
This will be a transformative year for the ammonia industry. Four world-scale ammonia plants are scheduled to begin production, as well as three smaller plants, a couple of expansions, and a "clean coal" behemoth.
If all these projects start up successfully this year, they will add more than five million tons of ammonia capacity.
The new projects scheduled for 2016 will increase North American capacity by more than a quarter - and, because only one of these projects is in Canada, will increase US capacity by more than a third.
CHS cancels Spiritwood plant, buys some of CF instead
CHS announced today that it was canceling its plans to build a $3+ billion greenfield fertilizer plant in Spiritwood, ND - and separately announced that it was buying $2.8 billion worth of CF Industries and entering into a long-term supply agreement.
Market share in North America: with mergers, and without
Two major mergers have been announced in the last seven days - CVR Partners with Rentech, and CF Industries with OCI.
It's fair to say that the competitive landscape for ammonia will soon change, but you could look at both these transactions as companies running fast to stay still.
Any gain in market share caused by each merger is likely to be short-lived, because there are no less than 15 expansion projects already under construction, with more yet to get underway.
Any market share projections that fail to take these expansions into account will be short-sighted, so I've put together some charts ...
Merger season is now open
Last week, CF Industries announced that it was merging with OCI. This morning, CVR announced it was merging with Rentech.
I'll go into this in more detail soon, but the salient points are ...
CEO commentary, Q1 2015. Discuss: Will the US be a nitrogen exporter?
If you want to know whether - or when - the US will become a nitrogen exporter, read what the fertilizer company CEOs say during the latest round of quarterly earnings calls.
These guys should have formed pretty solid opinions by now about how the capacity expansions will affect long-term supply and demand, and how they're going to gain/keep market share and competitive advantage. But it can be a challenge to infer what those opinions might be.
I've summarized the pertinent parts of the debate here, with quotes from Agrium, CF Industries, KBR, LSB Industries, OCI, Potash Corp, and Yara.
David Asbridge, NPKFAS: 5 plants, 4.8 million tons ammonia
"We only expect five of those plants to actually get built ... The world does not need 20 new fertilizer plants."
Thus spake David Asbridge, president and senior economist, NPK Fertilizer Advisory Service
CF Industries presentation — Citigroup Basic Materials Symposium
Today, the CFO of CF Industries, Dennis Kelleher, presents some interesting tidbits about their Port Neal and Donaldsonville brownfield ammonia plants.
On page 13, Kelleher lays out the arguments that best explain why I judge some projects to be "unlikely": CF has first mover advantages, cheap debt, and (with the new Mosaic agreement) low risk on future cash flows ...
Beaumont, TX — OCI
UPDATED: 04/17/2017 — see Change Log
OWNER: OCI Partners LP (OCI NV)
PROJECT: Ammonia plant restart & expansion
SUMMARY STATUS: Operational
OCI Partners restarted the Beaumont methanol-ammonia plant at the end of 2011, and completed a debottlenecking project in 2015 with minor delays and cost over-runs. Since then, the ammonia plant has been producing at record levels, with output slightly more than 100% capacity in 2016. In December 2016, Dutch majority owner OCI NV launched an all-stock buyout offer to acquire the remaining ~20% of OCI Partners, but this was shelved in April 2017 and the offer terminated.
Courtright, ON — CF Industries
UPDATED: 09/02/2017 — see Change Log
OWNER: Terra International (Canada) Inc (CF Industries Holdings Inc)
PROJECT: Nitrogen production plant
SUMMARY STATUS:
The Courtright plant has been producing ammonia since 1966, with a second plant commissioned in 1985. Originally built by ICI, later acquired by Terra, it is now owned by CF Industries. An expansion of the urea plant is currently under construction.
Donaldsonville, LA — CF Industries
UPDATED: 09/27/2017 — see Change Log
OWNER: CF Industries Nitrogen LLC (CF Industries Holdings Inc)
PROJECT: Nitrogen fertilizer complex, Brownfield ammonia-urea-UAN plant
SUMMARY STATUS: Operational
Donaldsonville began producing ammonia in 1966. Today, the site is a collection of individual plants, variously owned across the decades by CF Industries as well as Terra, Triad, Mississippi Chemical, First Mississippi, and Ampro. The new ammonia plant was due to start-up in early 2016, but only became operational in October 2016; the new urea plant was commissioned in November 2015, and the new UAN plant in March 2016. Donaldsonville is now "the largest nitrogen facility in the world."
Faustina, LA — Mosaic Company
UPDATED: 02/21/2018 — see Change Log
OWNER: The Mosaic Company
PROJECT: Ammonia plant debottleneck and brownfield ammonia plant
SUMMARY STATUS: Operational
Faustina has been producing ammonia since 1968. Mosaic chose to implement an emissions reduction project in 2017 instead of a debottleneck at Faustina. In October 2013, Mosaic abandoned plans for a $1.1 billion ammonia brownfield plant, because it became "unnecessary" after Mosaic acquired CF Industries' phosphate operations. In early 2018, Mosaic derated the capacity at Faustina.
Medicine Hat, AB — CF Industries
UPDATED: 10/03/2018 — see Change Log
OWNER: CF Industries Holdings Inc (formerly Canadian Fertilizers Limited)
PROJECT: Ammonia-urea plant, Ammonia Expansion
SUMMARY STATUS:
In operation since 1976, CF Industries' Medicine Hat plant is the largest ammonia plant in Canada, and the second largest in North America. Although the plant's capacity was derated in recent years, a bigger expansion is expected as part of the maintenance turnaround scheduled for 2018.
Port Neal, IA — CF Industries
UPDATED: 04/17/2016 — see Change Log
OWNER: CF Industries Nitrogen LLC (CF Industries Holdings Inc)
PROJECT: Nitrogen fertilizer complex, brownfield ammonia-urea plant
SUMMARY STATUS: Operational
Port Neal's new ammonia-urea plant started up in December 2016. CF Industries announced the project in late 2012 and began construction in 2013; project costs increased considerably during construction, and start-up was about six-months behind schedule. The new plants are now running at or above capacity.
Spiritwood, ND — CHS
UPDATED: 08/24/2015
OWNER: CHS Inc
PROJECT: Greenfield nitrogen fertilizer plant
SUMMARY STATUS: Cancelled
CHS gave its $3.3 billion greenfield the green light in September 2014, and cancelled it in August 2015. The project faced intractable issues securing an adequate supply of water, and was beset by spiraling costs. CHS is purchasing a minority stake in CF Industries instead.
Verdigris, OK — CF Industries
UPDATED: 03/09/2017 — see Change Log
OWNER: Terra Nitrogen Company LP (CF Industries Holdings Inc)
PROJECT: Nitrogen fertilizer plant
SUMMARY STATUS:
The Verdigris plant has been producing ammonia and UAN since 1975. Minor expansion work was completed during scheduled plant turnarounds in each of the last four years. CF Industries has owned over 75% of Terra Nitrogen since 2010.
Wever, IA — OCI
UPDATED: 11/14/2017 — see Change Log.
OWNER: Iowa Fertilizer Company (OCI NV / Orascom)
PROJECT: Greenfield nitrogen fertilizer plant
SUMMARY STATUS: Operational
OCI announced the start-up of the ammonia plant in April 2017 but, while the site is mechanically complete and all the downstream plants are capable of production above nameplate capacity, the ammonia plant had trouble ramping up and OCI only acknowledged "Provisional Acceptance" of the project in mid-October. Despite OCI's first-mover advantage, the Wever plant is now two years delayed and more than a billion dollars over budget. OCI wanted to do mergers and acquisitions but didn't have much success: it failed to merge with CF Industries in 2016 and failed to buy out its subsidiary, OCI Partners, in 2017.
Woodward, OK — CF Industries
UPDATED: 11/09/2017 — see Change Log
OWNER: CF Industries
PROJECT: Ammonia-UAN plant
SUMMARY STATUS:
In operation since 1977, the Woodward plant is one of only two ammonia plants worldwide using process technology by Fluor. Most recently, a second UAN plant was commissioned in 2011.
Yazoo City, MS — CF Industries
UPDATED: 03/10/2017 — see Change Log
OWNER: CF Industries Nitrogen LLC (CF Industries Holdings Inc)
PROJECT: Nitrogen production plant
SUMMARY STATUS:
The Yazoo City nitrogen complex has been in operation since 1951. CF Industries recently adjusted the product mix and expanded the industrial grade ammonium nitrate production capacity at Yazoo City.