UPDATED: 04/02/2018 — see Change Log

OWNER: IFFCO Canada (IFFCO joint venture)
PROJECT: Brownfield methanol-urea plant[memberful does_not_have_subscription=”1314-ammonia-industry-annual-subscription,1311-ammonia-industry-monthly-subscription,3338-ammonia-industry-30-day-subscription”]

COST (reported): More than $2 billion
JOB CREATION (reported): 200 permanent, 1,000 to 1,500 construction
START-UP DATE (reported): On hold

CAPACITY	USGS[1]	COMPANY[2]	PERMIT[3]	ADJUSTED[4]
Ammonia		None given	[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] No ammonia capacity given in company press releases or media reports. [3] [Membership required]. Sources: linked below. [4] [Membership required]. See Methodology.

[/memberful]

[memberful does_not_have_subscription=”1314-ammonia-industry-annual-subscription,1311-ammonia-industry-monthly-subscription,3338-ammonia-industry-30-day-subscription”]

[/memberful]

[memberful has_subscription=”1314-ammonia-industry-annual-subscription,1311-ammonia-industry-monthly-subscription,3338-ammonia-industry-30-day-subscription”]

SUMMARY STATUS: Planning
In December 2017, this proposed ammonia-urea plant was relaunched as Projet Bécancour: a methanol-urea production facility. IFFCO Canada is still the primary project sponsor, making good on its promise, when it put the plant on hold in October 2016, that “Le projet n’est pas mort.” The brownfield plant was originally announced in 2012 for a 2017 start-up, but was put on hold repeatedly when construction costs ballooned from $1.2 to more than $2.0 billion, natural gas feedstock supply could not be secured, and the urea market tanked.

COST: No recent estimate, was more than $2.0 billion, up from $1.2 billion
JOB CREATION: 200 permanent, 1,000 to 1,500 construction
START-UP DATE: On hold – 2023 earliest, originally 2017
LIKELIHOOD: Unlikely — see Methodology

CAPACITY	USGS[1]	COMPANY[2]	PERMIT[3]	ADJUSTED[4]
Methanol		No data
Ammonia			2,200 mtpd	803,000 mtpy
Urea granular		1,300,000 to 1,600,000 mtpy	3,850 mtpd	1,405,250 mtpy GROSS
DEF		760,000 mtpy		676,000 mtpy
Ammonium sulfate		3,000 to 4,000 mtpy		3,500 mtpy
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 website. [3] BAPE documents. Sources: linked below. [4] Adjusted Capacity is in metric tons per year assuming operations for 365 days per year; based on daily capacity where given or mid-point of annual range. See Methodology.

FEEDSTOCK: Natural gas
END PRODUCTS: Methanol, Urea, and previously also Ammonium sulfate, DEF (or, as they say, FED)

RESEARCH NOTES:
In December 2017, this project was relaunched with new development partners, new production design, and a new name: ProjetBécancour.ag Limited Partnership. The project, first announced in 2012, was originally a $1.2 billion urea plant, but is now being reconfigured as a methanol-urea plant.

It is not yet clear to what extent the previously announced urea capacity might be reduced, or how much methanol capacity would be added in the revised design. According to the new company’s announcement, details about the project “will be provided once the environmental impact study has been completed,” which could be months away.

The project sponsor is still IFFCO Canada, a joint venture led by the Indian Farmers Fertilizer Cooperative (IFFCO, through its international development subsidiary Kisan International Trading FZE), and local Canadian cooperative La Coop fédérée. Joining these agricultural cooperatives in late 2017 is Développement Nauticol Québec Ltée, a subsidiary of Nauticol Energy Ltd, which replaces former development partner Pacific Gateway Energy.

Nauticol has developed a low-cost approach to convert abundant natural gas into high value products in a way that significantly reduces carbon dioxide output …

We are excited to be releasing specific project information very soon. “Final Investment Decision” for our first project will happen in 2018.
Nauticol Energy website, accessed April 2018

Plans for the Becancour plant had been on hold since October 2016, when IFFCO Canada reduced itself to a skeleton staff and announced its intention to keep the project on ice (“sur la glace”) until the urea market recovered. The previous year, in December 2015, IFFCO Canada had also put the urea plant on hold “until favourable economic conditions prevail.” And that decision came shortly after the project had been “reactivated” in June 2015, having previously been put on “strategic pause” in December 2014.

The project has barely been in active development, therefore, since 2014, when its backers were coping with snowballing construction costs and difficulty securing a supply of natural gas. Since 2015, however, it was the market price of urea that dropped too low for the financiers’ comfort. Now that the urea market is showing signs of durable recovery, it makes sense that the developers would revisit the project.

2016: “sur la glace”
In June 2016, the IFFCO Canada board had met to decide the project’s future. Their options were: delay further, abandon, go ahead as originally planned, or go ahead with a reduced-scale project. Their decision was pushed to October 2016, when it was announced that IFFCO Canada was reducing to a skeleton staff, while it awaits the recovery of the urea market. “Le projet n’est pas mort. Mais on réduit nos dépenses au minimum.”

The project sponsors were in this for the long-term, and could afford to postpone the project indefinitely, until it made financial sense to proceed.

2015: “market conditions are unfavourable”
The IFFCO Canada urea brownfield was put “on hold” in December 2015, “until favourable economic conditions prevail.”

The reason given then was that “market conditions are unfavourable for completing the financing,” primarily the low cost of urea, which made future cashflow and profitability projections unappealing. However, the project backers were keen to emphasize that this is “not the end of the project.”

“Urea prices are at their lowest level in five years and as a consequence, investors are being prudent. The promoters and investors believe that the world class project remains fundamentally viable, and that the support of the government of Québec and major institutional partners remains solid …

The promoters believe that the future Bécancour plant will still fill a major need in Québec and Canadian agricultural markets, indeed more than ever in today’s turbulent geopolitical environment. La Coop fédérée and IFFCO remain convinced that the project is soundly based … ‘We are waiting for the cyclical low point in the price of urea to end, which we expect will allow resumption of the project. In the interim, we continue to work on developing the project and preparing for its relaunch.'”

In June 2015, IFFCO Canada had disclosed to local newspapers that they had “reactivated” the project, as a result of progress on securing a long-term supply of natural gas, and rethinking the engineering contract. However, neither contract was ever finalized, as far as I’m aware.

Project details had evolved, however: IFFCO Canada was now working with Spanish engineering firm DF (Duro Felguera). The cost was reported to be pushed down to $1.7 from $2 billion. And the start-up date was pushed back to 2020, with the possibility of construction starting in Spring 2016. The confidence in securing a gas supply may have had something to do with the Stolt LNG plant planned for the same industrial park in Becancour, which received its government approval in August 2015 (the environmental permits for that project have also expired). “We have a construction agreement in principle, an agreement in principle in the gas.” At the time, this was a significant step forward, since the project had previously been put on hold for lack of both.

2014: “requires a new approach to ensure … viability”
In December 2014, IFFCO Canada had announced that it was suspending work on planning, project costing, and the EPC contract – temporarily – because the capital cost had risen “in excess of $2B,” well above the original $1.2 billion.

“This suspension will allow the shareholders to review the global strategy of financing, construction and execution … The project now requires a new approach to ensure its realisation and viability. In no way does this announcement deem the project abandoned, but rather declares a strategic pause common in such large projects. In coming months, the focus will therefore be put on the search for new partners.”

In September 2014, IFFCO Canada had announced that the start date had been pushed back to 2018; representatives had previously maintained that it was on schedule for commissioning in 2017. The company said that the delay by “several months” was due to “various issues related to natural gas supply and the review of our project execution strategy.”

One major issue was natural gas supply, hinging on whether TransCanada’s new Energy East pipeline, a 4,600 mile, $12 billion project, would be approved. Energy East would essentially repurpose an existing pipeline, which delivered natural gas to the East Coast, to transport 1.1 million barrels per day of crude oil from Western Canada to Eastern refineries, leaving uncertainty about gas supply and prices for the IFFCO Canada project. TransCanada asked for approval for a tariff increase, which would have paid for an expansion of the natural gas distribution system, making up for the reduced capacity caused by Energy East.

In October 2014, IFFCO Canada VP David Tournier was outspoken on the subject in various public hearings and in the press, saying “Without gas, there can be no plant,” and, more to the point, explaining that “As long as you don’t have your gas supply confirmed, then investors aren’t going to lend you any money … So that’s the danger to our project.”

This had to be resolved before IFFCO Canada could proceed. The plant would consume about 80 MMbtu per day, or “roughly one-fifth of Quebec’s total annual natural gas consumption,” so this was not a small problem.

At that time, construction could have begun in 2015, assuming financing was in place, which depended not only on whether the natural gas supply can be secured, but also on whether new EPC bids came in with “acceptable project execution costs.” The previous cost estimate had come in at $1.6 billion.

In March 2014, IFFCO Canada had announced that Ganotec (part of Kiewit) was working on a final cost estimate, required for financing and awarding the EPC contract; IFFCO Canada considered Ganotec to be the “principal contractor of choice” for the EPC contract (Ganotec was replaced in 2015). The plant would use ammonia technology from KBR and urea technology from Tecnimont / Stamicarbon.

In April 2014, IFFCO Canada announced that the government has formally given the project the green light – in January 2014, the BAPE commission in Quebec had cleared the way forward by concluding that the project was “acceptable from an environmental, social and economic point of view.”

IFFCO Canada was explicit that the plant would “not produce and market surplus ammonia [making it] possible to recover 100% of all CO2 generated, thereby avoiding the transport of ammonia and reducing related risk levels.” The ammonium sulfate will be a byproduct, produced “from the transformation of residual production waste.”

The project’s business plan targeted three regional markets: Canada (Quebec and Ontario), Eastern US (WI, IL, MI, IN, OH, NY, PA, and MN), and Western Europe (mainly France, Spain, Italy, and the UK). It projected distribution to each region as a percentage of total production, depending on market conditions in various scenarios: 20%-25% to Quebec, 10%-15% to Ontario, 40%-50% to the Eastern US, and 10%-30% to Western Europe.

The plant location is the site of the old Norsk Hydro magnesium plant that closed in 2007; IFFCO Canada purchased the land in January 2013.

IFFCO Canada is a joint venture between IFFCO (India Farmers Fertiliser Co-operative, through its Dubai-based subsidiary, Kisan International Trading aka KIT) and local partners including La Coop Fédérée (who have an offtake agreement to buy and distribute 500,000 tons of urea per year), Investissement Québec, and Développement Nauticol Québec Ltée (which replaced former development partner Pacific Gateway Energy). [/memberful]

View larger map with all ammonia plants.

ADDRESS: Becancour Industrial Park, Champlain, Quebec, G0X 1C0, Canada

WEBSITE: http://projetbecancour.ag/

REGULATORY SOURCES:

• USGS: Minerals Yearbook, Nitrogen [RECENT / ARCHIVE]
• Environmental permitting: BAPE (Bureau d’audiences publiques sur l’environnement) documents [LINK]

NEWS SOURCES:

• 12/13/2017: Projet Bécancour press release: Développement Nauticol Québec ltée et Entreprise IFFCO Canada ltée souhaitent construire une usine d’urée et de méthanol à Bécancour [LINK]
• 12/13/2017: Le Courier Sud: IFFCO relance son projet à Bécancour [LINK]
• 10/20/2016: La Presse: IFFCO sur la glace … mais maintenu en vie [LINK]
• 05/24/2016: La Presse: Bécancour: Québec remet 6 millions dans IFFCO Canada [LINK]
• 12/14/2015: IFFCO Canada press release: La Coop Fédérée and IFFCO put on hold their urea production plant project at Bécancour until market conditions improve [LINK]
• 08/25/2015: Le Nouvelliste: Place IFFCO? [LINK]
• 06/11/2015: Le Nouvelliste: Le projet d’IFFCO remis sur les rails [LINK]
• 12/16/2014: IFFCO Canada press release: La COOP fédérée and IFFCO are repositioning in order to seek new partners [LINK]
• ONGOING: The Globe and Mail, archive: Energy East [LINK]
• 10/15/2014: Winnipeg Free Press: TransCanada pipeline conversion faces building pushback in Quebec [LINK]
• 09/17/2014: IFFCO Canada press release: Project Update [LINK]
• 04/16/2014: IFFCO Canada press release: Government of Québec formally endorses project [LINK]
• 03/19/2014: IFFCO Canada press release: New development in proposed IFFCO Canada fertilizer plant: Ganotec Inc. selected as strategic project collaborator [LINK]
• 09/04/2013: IFFCO Canada documents: Ernst & Young, Carbon footprint report [PDF]
• 03/18/2013: Canadian Environmental Assessment Agency – Construction of a fertilizer plant in Bécancour Project [LINK]
• 10/09/2012: IFFCO Canada press release: A $1.2 Billion Investment in Bécancour [PDF in French]