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Yara and Enbridge plan $2.9 bln ammonia plant in Texas
By Victoria Klesty and Rod Nickel
March 31, 2023
The Yara International company logo is seen on Yara
Birkeland, the world's first fully electric and autonomous container
vessel, in Oslo, Norway November 19, 2021. REUTERS/Victora Klesty
- Plant to supply 1.2-1.4 mln tonnes
of ammonia per year
- Yara attracted by low US gas
prices, carbon capture cost
- Production start up set for
2027-28
OSLO, March 31 (Reuters)
- Norwegian fertiliser maker Yara (YAR.OL) and
Canadian pipeline company Enbridge (ENB.TO) plan
to invest up to $2.9 billion to build a low-carbon blue ammonia
production plant in Texas, they said on Friday.
Blue ammonia, rather than green ammonia derived from renewable energy,
refers to ammonia produced from natural gas, with the carbon dioxide
(CO2) byproduct captured and stored.
The plant, which would be Yara's biggest, would be built at an
Enbridge oil storage and export facility near Corpus Christi, with
production to start around 2027-28.
The companies have not yet made final investment decisions.
Yara is the latest European company to announce a major investment in
the United States. More than 200 low-carbon ammonia facilities are
being planned globally and the U.S. Gulf Coast is becoming a major hub
due to existing infrastructure, cheap natural gas and high government
subsidies, said Alexander Derricott, senior analyst at consultancy
CRU.
The number of projects that actually proceed depends largely on how
much of a premium buyers of low-emission ammonia are willing to pay
for the costlier production, Derricott said.
While the project was planned long before last year's U.S. Inflation
Reduction Act (IRA), the increase in carbon storage tax credits in
that law made it more attractive, Yara said.
"We've focused on the United States for two reasons and the first is
low energy prices, naturally, and the other is that carbon capture is
accessible at an attractive cost," Magnus Krogh Ankarstrand, president
of the Yara Clean Ammonia subsidiary, told Reuters.
Yara intends to buy all of the plant's output for feedstock in its
global production system, including Europe, as well as for new clean
ammonia markets such as shipping fuel.
The plant will supply 1.2 million to 1.4 million tonnes of low-carbon
ammonia per year.
About 95% of the CO2 generated from production would be captured and
transported for nearby permanent storage.
The Oslo-listed firm last year cut much of its European production,
citing high energy costs, and currently imports about 1 million tonnes
of ammonia to Europe per year.
High gas prices in Europe have made the case to build in the U.S.
stronger, Ankarstrand said.
"But prices in the U.S. have been attractive for a long time, and in
addition there is already a tax credit in place for carbon capture in
the U.S.," he said.
The IRA offers
companies a tax credit of as
much as $85 per tonne of captured carbon stored underground.
Many similar facilities are in development and demand for low-carbon
ammonia looks strong, said Vince Paradis, Enbridge's vice president of
business development.
He said the project has the advantage of using Enbridge's existing
export terminal and gas pipelines.
Green Play Ammonia™, Yielder® NFuel Energy.
Spokane, Washington. 99212
www.exactrix.com
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