Category: Capacity Expansion Updates

Fortigen in pre-commissioning phase; ammonia tank setback

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Construction is almost complete on Fortigen's new ammonia plant in Nebraska, and "the pre-commissioning stage is now underway,” according to local press. Unfortunately, there was a significant setback on the site at the end of May, when the ammonia storage tank was damaged, which will probably delay full operations by at least a month.

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Sold! Cornerstone Chemical: new private equity owner for urea plant

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It's a busy time for mergers and acquisitions in the global ag industry: Dow and DuPont, Syngenta and ChemChina, Bayer and Monsanto. Three deals, worth about a quarter trillion dollars.

It seemed as if there weren't any North American nitrogen assets worth buying or available for sale - except, now, Cornerstone Chemical.

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Yara / BASF Freeport plant: on schedule for 2017 start-up

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Yara released its earnings report for the second quarter yesterday, featuring a long tale of woe for nitrogen margins based around the argument that nitrogen commodity prices are depressed due to oversupply.

Still, this won't stop Yara from opening its new world-scale ammonia plant later this year, which remains on schedule at Freeport in Texas.

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Phibro’s ammonia plant in Indiana – progress in stealth mode

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In May 2016, Phibro announced that it was going to invest $450 million to open a half million ton per year ammonia plant in Indiana. There's been precious little news about the project since then, but a lack of news doesn't mean that nothing is happening.

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Ammonia prices are low (so start building your ammonia plant now)

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In 2012, when US Nitrogen broke ground on its new plant in Tennessee, the resurgence of the North American nitrogen industry was just beginning. Ammonia sold at high prices but, thanks to the shale gas revolution, the natural gas feedstock was cheap. As a result, profit margins were high and forecasts were rosy.

Now, it's different. Ammonia and its derivatives don't command high prices, which makes it a poor time to begin operating an expensive new plant - but those same low prices might make this a good time to begin construction.

Recent news regarding both completed and future projects illustrate the sometimes painful relationship between product pricing in a cyclical industry and the timing of investment decisions.

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OCI ribbon-cutting at Wever: partial start-up, IRS bond status, LP buyout terminated

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"IFC was ready to make it official. The company was at 100 percent operation. It was time for the ribbon cutting."

Well, yes and no.

Yes, Iowa Fertilizer Company held a ribbon-cutting ceremony to celebrate its greenfield at Wever. No, Wever is hardly 100% complete: the ammonia plant is operational, but the downstream plants may be months away.

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Waggaman, LA: owner ramps up, EPC books loss

Dyno Nobel's new plant at Waggaman, LA, is producing ammonia above its daily rated capacity. Conversely, total production in 2017 is expected to be closer to 80% of annual capacity, because it is likely to be taken offstream regularly this year while it ramps up.
This article discusses the early performance of the Waggaman ammonia plant, and the cost overruns it saw during construction.

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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.

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Pipeline of new ammonia plants (2017 update, part 1)

I've published recent updates on four greenfield nitrogen plants that hope to break ground in 2017, potentially adding 1.8 million tons of ammonia capacity in the US.

The project pipeline is long, however, and others are making progress too. This article provides updates on another four projects that, together, could add more than 4 million tons to North American ammonia capacity through 2022.

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Midwest Fertilizer update: EPC, air permits, sukuk, and bonds

Midwest Fertilizer Company continues to juggle progress and setbacks on its $3 billion greenfield nitrogen plant in Indiana, following the December 2016 termination of its EPC contract with ThyssenKrupp. In the last few weeks, we've seen updates on the EPC contract, air permits, debt financing in Pakistan, and the $1.259 billion tax-exempt bond issue in the US.

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US Nitrogen finally at full capacity

Five years after breaking ground, and almost three years behind schedule, US Nitrogen's ammonium nitrate plant in Tennessee has finally reached "full production capacity."

This project has been so fraught with problems - permitting, compliance, engineering design, construction, community acceptance, health and safety - that it wasn't always obvious whether the plant would ever be fully operational. Even now, a raft of legal challenges remain unresolved.

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OCI announces merger with OCI

I wrote last week about Iowa Fertilizer Company's greenfield plant at Wever, IA, and mentioned that OCI NV had begun hinting about mergers and acquisitions activity in recent disclosures.

This "phase of consolidation" has now begun for the Dutch owner of both the world-scale plant under construction at Wever, IA, and the ammonia-methanol plant operating at Beaumont, TX.

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Grannus awards EPC contract

Grannus awarded two contracts for design and technology licensing in November, and it has started December with a third announcement, naming its new EPC partner.

Yesterday's announcement, which sees the previous engineering partner entirely replaced, focuses on the company's business model, which is not to be an ammonia producer, but to be a global licensor of regional-scale ammonia plant technology.

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AM Agrigen: new strategy for Louisiana ammonia plant

AM Agrigen has had its air permit extended for another year (unlike one other proposed greenfield) but, in its application, disclosed a completely different plan for the project.

For over a year, I've been commenting on the creativity that ammonia project developers have been forced to display, in order to demonstrate a viable business model.

The remaining pipeline of potential new ammonia plants has shifted away from brand-new, multi-billion dollar, world-scale plants producing multiple end products; these demonstrated good efficiencies of scale but became - evidently - almost unfundable.

Now the focus is on developing smaller ammonia plants, using diverse feedstocks, and avoiding as much new machinery as possible.

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OCI Wever update: rising costs, mergers and acquisitions, bond refinancing, no start-up yet

Over the last few weeks, Iowa Fertilizer Company and its parent, OCI NV, have been busy with the commissioning phase of their major greenfield at Wever, IA. However, they've also been restructuring bond payments, which was necessary "to ensure the successful completion of construction and first year of operations."

In the process, we've seen the bond rating downgraded, the IRS launch an examination, disclosures of project costs rising further, and hints at future mergers & acquisitions.

OCI has successfully refinanced the project. They hope to start producing ammonia soon but, if history is any guide, defining "soon" may be difficult.

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