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.
In total, we’re looking at 5,094,195 metric tons of new capacity coming online in one year, on top of a current capacity of 19,203,632 metric tons in North America (a 26.5% expansion) or 13,598,904 metric tons in the US alone (a 37% expansion).
There’s little doubt that most of this capacity will come on-stream this year, though some projects may be pushed into 2017 (and one small one has yet to start construction, so … we’ll see about that). Much of the timing, I suspect, will depend on the weather.
| NEW AMMONIA CAPACITY | DELAYED FROM 2015 | SCHEDULED FOR 2016 | TIMING |
|---|---|---|---|
| DONALDSONVILLE, LA | 1,324,490 mtpy | Q1 | |
| GREENEVILLE, TN | 66,224 mtpy | Q1 or Q2 | |
| BRANDON, MB | 90,000 mtpy | Spring | |
| BEATRICE, NE | 52,980 mtpy | April | |
| WEVER, IA | 876,000 mtpy | Q2 | |
| EL DORADO, AR | 513,240 mtpy | Q2 | |
| KEMPER COUNTY, MS | 19,958 mtpy | June | |
| PORT NEAL, IA | 883,104 mtpy | Q3 | |
| WAGGAMAN, LA | 920,520 mtpy | Q3 | |
| PASADENA, TX | 215,230 mtpy | Q3 | |
| ENID, OK | 132,449 mtpy | Q4 | |
| TOTAL = 5,094,195 mtpy | 1,105,162 mtpy | 3,989,033 mtpy | |
| Adjusted Capacity data in metric tons per year; assumes operations for 365 days per year. Note that there may be discrepancies between the Adjusted Capacity presented here and numbers announced by the companies; see individual project pages for exact data sources (eg, air permits). See Methodology. Data source: https://ammoniaindustry.com, as of 01/12/2016 |
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It’s going to be a big year for CF Industries, with new world-scale plants starting up at Donaldsonville, LA, Port Neal, IA, and – assuming the OCI merger goes through – Wever, IA. According to CF’s recent investor presentations, delays at the Wever plant mean that it won’t be the first new ammonia plant since anything – because the Donaldsonville plant will begin operations first. Wever was supposed to start up in 2015, but is now scheduled for Q2 2016. At the moment, it seems that CF will be commissioning a new world-scale ammonia plant in each of the first three quarters of 2016.
It’s also a big year for Dyno Nobel, and parent Incitec Pivot, whose Waggaman, LA, plant should begin operations in the second half of the year. This will make Dyno Nobel self-sufficient in ammonia, supplying all its upgrade plants around the US.
Another explosives maker, Austin Powder, will be relieved when their small US Nitrogen plant at Greeneville, TN, finally starts up. This was supposed to begin in 2015 (well, 2014 actually), but has been so beset by problems it’s been hard to follow too closely. I’ll be interested to see if operations run more smoothly than planning and construction did.
Another company that will be heaving a corporate sigh of relief upon start-up will be Southern Company, whose Mississippi Power “clean coal” power plant in Kemper County, MS, is years behind schedule and billions over budget. And, while this project won’t produce much ammonia, it may finally pay dividends to technology licensor KBR, should the technology be picked up in other nations.
Other ammonia projects delayed from 2015 include two expansions for Koch Industries, at Brandon, MB, and Beatrice, NE. Koch may also complete its ammonia expansion at Enid, OK, which is due by the end of the year, though this may be delayed into 2017.
LSB Industries is another company that will be deeply relieved when its new (used) plant starts up at El Dorado, AR. 2015 was not a good year for LSB: capex doubled during construction, share price fell more than 80%, executives were replaced. Shareholders must be hoping that this new plant will perform better than LSB’s other plants, which have been going in and out of service with too much regularity – but, given its age (it was built in 1969), only time will tell.
The least certain project in the 2016 schedule is Pallas Nitrogen, which proposes to reconstruct an old ammonia loop in Pasadena, TX. It’s not yet clear to what extent this project is moving forward – there’s no website, let alone construction activity – and, in any case, I suspect the construction schedule is overly optimistic (just ask LSB how hard it is to rebuild an old plant). I see this one being pushed back – if it gets off the ground at all.
You are off on your gross ammonia added annual capacity numbers are too high (I note you are stating metric tonnes).
The biggest errors are as follows. You also neglect to mention Agrium Borger has been downsized and delayed.
CF D-Ville is billed at 1,155,000 not 1,324K
IFC Wever is billed at 770,000 not 883K
LSB El Dorado is billed at 340,000 (if they don’t go bankrupt first) not 512K
CF Port Neal is billed at 770,000 not 883K
Hi Chris,
Thanks for chiming in.
My numbers are bigger, but they’re not necessarily “off.” I use a different methodology, so my numbers may not compare to other data sources. That doesn’t make them “errors.”
The most important point is that “annual capacity” is not “annual production” – actual production will be less than capacity – in some cases, far less.
The numbers I’ve presented in this post are my “adjusted” capacities (which I’ll make more clear above). Members of this site can see these data discrepancies clearly on my project pages, where I cite up to four sources for capacity: USGS, the company, the air permits, and my adjusted capacity. Sometimes they’re wildly different, depending on the data source.
As you note, I’m converting everything to metric tons, however, the methodology I use is different from most in two other significant respects (see: https://ammoniaindustry.com/about/methodology/).
First, I adjust capacity to reflect operations for 365 days per year. Some companies disclose data in this format already (OCI). Most however, adjust their capacity down to count only 340 days per year. LSB adjusts down to 330 days per year. I feel this obstructs apple-to-apple comparisons between companies and assets.
(For example, if both LSB and OCI were to say their plants performed at 100% capacity utilization, you might think their performance was comparable but it’s not: one asset would have been operating successfully for 35 days more than the other. You might argue that 340 days is reasonable average given the necessary downtime plants require over the years. However, I’ll be interested to see how these new state-of-the-art ammonia plants perform compared to the current fleet, which is, at best, decades old. I suspect many of these new plants will perform above rated capacity (based on a 340 day year), which might be an argument for revising the old 340 day methodology.)
Second, I rely on data from air permitting documents over the numbers published by the companies themselves. I believe it gives a closer estimate of an asset’s maximum potential production than numbers that the companies choose to announce.
In the case of LSB, you’re right that there is a major discrepancy between their air permit (1,550 stpd) and their announcements (375,000 stpy). All the other projects you cite have similar, if smaller, discrepancies between what’s in their air permits and what they’ve announced in press releases.
As an analyst yourself, you’ll understand my desire to present data based on the most accurate numbers, even if it raises some questions (like, why is LSB permitting a 1,550 stpd plant, but only announcing 375k stpy?)
The Agrium Borger ammonia expansion was supposed to happen in 2015 – so I didn’t include it in this post (I wrote that up here: https://ammoniaindustry.com/2015-in-review-start-ups-and-cancellations-but-mainly-delays/). The new urea plant at Borger is scheduled for 2017.
Did I miss anything?
I’m new to the web site and trying to learn more about the industry.
I appreciate the information about your methodology. Can I assume the 340 days is allowing 25 days of maintenance? or do they have some other type of operating pattern
When operating do the plants typically run at 100% capacity factor? Do the plants typically have operating derates?
Hi Scott – welcome!
Short answer: yes, assume 25 days of maintenance.
You’ll find some good information on what actually happens with specific assets in the public companies’ 10-Ks and 10-Qs, available via the SEC (www.sec.gov/edgar/searchedgar/companysearch.html).
Simply shutting down and starting up an ammonia plant is an operation that can take a week+, so every unplanned outage or repair takes a while. Then there are the major plant turnarounds, which happen every few years (but not every year) and can take a month+. So the 340 days per year is not even an annual estimate, it’s more like a four-year average, across the full turnaround schedule. For three years the plant may exceed capacity but then go out of service for months in the fourth year – averaging ~340 days per year.
I haven’t noticed any recent derates, though I’m sure there must have been plenty during other periods, perhaps when spending maintenance capital was less worthwhile. Since natural gas got so cheap, most plants have done what they can to increase capacity. The Koch’s Enid plant would be an example: their “expansion” project taking place now on the existing urea line will simply return that plant to its original rated capacity.
Dear Mr. Brown,
I am a newcomer to your web-site. Thank you very much for all this information!
From my experience I can say that first 12 months will be most difficult for the new factories to run smoothly due to many technical issues unpredictable during construction and being vital during comissionning and start-up period. It may easily happen that a newly built ammonia factory has to stop every month for a few days maintenance to ajust some sensors. I would dare say that if ammonia unit runs smoothly from one yearly maintenance shutdown to another for 340 days it is a very very good result. Usually due to inevitable production stops ammonia producers become the major buyers of ammonia.
I would appreciate if you can share how American ammonia producers secure the gas supply? is it a price formula based on ammonia sales price or fixed price for some long period? and another question what will be the captive use of ammonia at these new factories and how much ammonia will be left for sale ?
Hi Dmitry,
Thanks for your comment – very interesting. In response to the other comments on this page, I posted a more in-depth article about how people define capacity, including discussion of operating days, over here: https://ammoniaindustry.com/what-does-capacity-mean/
Regarding natural gas supply pricing: it depends and, in any case, very few companies disclose exact terms of their supply agreement. As I understand it, most long-term contracts are based on a price formula linked to the US market price of natural gas.
Regarding the captive use of ammonia, most of it will be upgraded to other products, although hardly any plants plan to have zero marketable ammonia left over; on the other hand, some plants are planning to sell only ammonia. I provide capacity data for both gross (maximum production capability) and net (marketable) amounts of ammonia, as well as for intermediate and end products – this information is in the page for every plant (existing and proposed). That data is reserved for the members of this site, but you can see an example here: https://ammoniaindustry.com/greeneville-tn-us-nitrogen/
Best wishes,
T.