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.
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.
While we wait for the current slate of new ammonia plants to start up this year, here's a reminder of the projects that are still in development across North America.
More than a dozen major ammonia plants are in various stages of planning or financing. None of these have started construction yet. Some have been stuck in limbo for years, while others keep making progress. The project pipeline represents a potential investment of over $20 billion and additional ammonia capacity of more than 9 million tons per year.
Obviously, not every project will move ahead - in fact, conventional wisdom says none will - but new trends are emerging that may influence their success or failure.
A list of the biggest projects follows below, summarizing their evolving costs, pushed-back schedules, and changing EPC contractors.
SUMMARY STATUS: Planning phase
World-scale greenfield project led by farmers' co-ops. Seed capital raise exceeded expectations, January 2014. Water permits approved, December 2014; air permit approved, August 2015. Schedule since then severely delayed: fund-raising was complicated by the commodity price drop. "NPN cannot complete the project without significant new financial partners." Awaiting FEED study, EPC contract, and financial close.