Tag: CF Industries

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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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."

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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.

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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.

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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 ...

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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.

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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 ...

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Beaumont, TX — OCI

Ammonia plant: Beaumont, TX - Orascom

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.

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Courtright, ON — CF Industries

Ammonia plant: Courtright, Ontario - 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.

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Donaldsonville, LA — CF Industries

Ammonia plant: 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."

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Faustina, LA — Mosaic Company

UPDATED: 03/14/2017 — see Change Log

OWNER: The Mosaic Company
PROJECT: Ammonia plant debottleneck and brownfield ammonia plant

SUMMARY STATUS: Planning phase
Mosaic is choosing between a debottlenecking project or an emissions reduction project 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.

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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.

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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.

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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.

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Wever, IA — OCI

UPDATED: 09/20/2017 — 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 is having trouble ramping up and the EPC firm has yet to finish testing and project hand-over. 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.

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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.

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CF Industries investor day

Douglas Hoadley (Director of Agribusiness Analysis) at the CF Industries Investor Day:

I know there's been a lot of projects announced, whether North America or around the world. I think you have to take those all with a grain of salt. We've done some analysis and IFA has done some analysis. When you look about it, it's only 50% to 60% of the plants that are announced actually get built ...

And when you look at that, you'll find that North America, or the US, will still remain importers of nitrogen fertilizers ...

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