Pipeline of new urea expansions (2017 update part 2)

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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.

But first, we already have three major projects that were completed (or nearly) in 2016 and are now in various stages of ramping up. The new urea plant at Donaldsonville, LA, is running at “between about 10% and 15% above the nameplate.” At Port Neal, IA, they’re producing at nameplate capacity now, and pushing higher. And who knows exactly when OCI’s new plants at Wever, IA, will finally be fully operational? There’s been precious little news since the “initial start-up last fall,” but news reports from the last few weeks suggest the plant is “very close to coming on line.”

Between these three projects, domestic urea supply in early 2017 is already about three million tons per year greater than it was at the end of 2015, when the Donaldsonville urea plant first started production.

Courtright, Ontario – CF Industries
CF Industries has been so busy with its major capacity expansions that it hasn’t even mentioned its previously announced $85 million expansion at Courtright, ON. I’ve no reason to believe the timeline for this has changed from the scheduled Q4 2017 turnaround. The debottlenecking project should bring gross urea capacity up to 1,100 mtpd, adding roughly 120,000 mtpy to the site’s existing urea output, much of which will be turned into DEF. With more ammonia consumed in urea production, Courtright’s output of marketable ammonia will drop by about 70,000 mtpy.

Beulah, North Dakota – Dakota Gas
The urea brownfield plant being built at Beulah, ND, has generated much more news coverage, especially after its buildings were flattened by storms in 2016 forcing Dakota Gas to rip out the foundations and start again. The project will be about a year delayed and 80% over budget, with project capex rising from $402 million in 2014 to $740 million in 2016 – it isn’t clear how much of this can be recouped from insurance claims. The brownfield urea plant will have a capacity of 1,100 stpd, or about 360,000 mtpy. They’ve been working on the ammonia plant as well, including a turnaround just completed in February, to bring it back up to nameplate capacity. Nonetheless, this new urea production will reduce Dakota Gas’s marketable ammonia by about 200,000 mtpy.

Borger, Texas – Agrium
Agrium’s $720 million expansion of its ammonia-urea plant at Borger, TX, has been under construction for the last three years. The ammonia expansion was cancelled in 2015, when Agrium realized that it would be like “doing open-heart surgery on a 40-year old ammonia plant.” At the same time, they also delayed the schedule for the urea brownfield to “help us contain the costs.” The new plant was mechanically complete at the end of 2016 and is now at the end of the commissioning phase. In its Q4 2016 earnings call, last month, Agrium said “We’re going through commissioning at the moment. I can tell you commissioning is going really, really well … We expect that we’ll get the first meaningful products out of the plants by the end of the quarter [by the end of March 2017], and we expect it to ramp up pretty quickly in the second quarter.”

The new urea plant will add 610,000 mtpy of urea to the existing site capacity, which will take roughly another 350,000 mtpy ammonia off the market.

Enid, Oklahoma – Koch Industries
The biggest expansion expected in 2017 is Koch Industries’ $1.3 billion, 900,000 stpy urea brownfield at Enid, OK, which should be commissioned this Summer. Alongside the brownfield, this project is expanding the existing urea line back to its nameplate capacity, and adding 400 stpd ammonia by debottlenecking its two ammonia lines. Even after expending the ammonia lines, once all the expansions are online, Enid’s net marketable ammonia will drop by roughly 400,000 mtpy.

Penwell, Texas – TCEP / Summit Power
Finally, the developers behind a long-promised “clean coal” power plant, the Texas Clean Energy Project (TCEP), have decided that power isn’t a viable business model for coal gasification (I bet, with hindsight, the team behind the again-downgraded Mississippi Power’s Kemper County, MS, plant would agree). As a last-ditch effort at keeping the project alive, they’re trying one last time to raise funding – this time abandoning power for twice as much urea output.

They think that “repurposing the project to produce more fertilizer will make raising money for the project easier.” Time will tell but, after the DOE pulled project funding last year, TCEP’s prospects haven’t looked good. If they succeed, the plant could produce up to 1,500,000 stpy urea – but that’s an awfully big if.

For more on the future capacity expansions across North America, see my previous article on the project pipeline, with updates on potential projects that could add four million tons of ammonia capacity by 2022.

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