Planned U.S. Ammonia Project Kickoffs Top $7 Billion in 2020

Researched by Industrial Info Resources (Sugar Land, Texas)--In 2017, observers of the U.S. Chemical Processing Industry said construction of world-scale ammonia plants had likely peaked, and that chances of new big plants being built were much slimmer going forward due to market conditions. To some extent, the situation may have changed, as evidenced by Wednesday's news that construction of a 1.3 million-ton-per-year anhydrous ammonia plant on the Texas Gulf Coast had received the financial green light.

Industrial Info is tracking more than $7 billion in ammonia production-related project activity that is planned to kick off construction this year in the U.S.

Click here for a graph showing planned U.S. ammonia-related project kickoff activity for 2020.

Not all of this activity may go forward as planned due to a variety of factors. Still, Industrial Info has assessed that $4.5 billion worth of ammonia-related projects that are planned for kickoff this year have a medium (70-80%) or high (81-99%) probability of staying on track.

Ammonia is a key building block of many fertilizers. In the U.S., there was a buildout in world-scale ammonia capacity from about 2013 through 2015. Industry experts said they didn't expect new world-scale ammonia capacity to be built in the U.S. again anytime soon, despite low natural gas-derived feedstock prices. For more information, see May 16, 2017, article - New U.S. Grassroot Fertilizer Plant May Mark End to Big Buildouts.

But on Wednesday, Gulf Coast Ammonia LLC (GCA) (Texas City, Texas), a joint venture of international trading chemical and energy company Mabanaft GmbH & Co. KG (Hamburg, Germany) and private equity investment firm Starwood Energy (Greenwich, Connecticut), said it made a positive final investment decision (FID) on a world-scale anhydrous ammonia plant to be built on a brownfield site in Texas City, Texas. Construction would begin in early 2020, with commissioning expected in the first half of 2023, GCA said.

"This new world-class facility will meet domestic and global demands for nitrogen-based fertilizers to improve crop production and yields to feed the world's growing population, as well as specialty chemical production on the Texas Gulf Coast," said GCA Chief Executive Officer Ken Koye in a press release.

Mabanaft said in a press release that GCA has long-term offtake agreements for the plant's entire nameplate production capacity, of which about 500,000 metric tons of ammonia per year would be marketed by Mabanaft.

"The project offers advantageous logistics with 70,000 metric tons of onsite storage and a dedicated, deepwater jetty capable of loading domestic barges as well as the largest seagoing ammonia carriers to reach global ammonia markets," Mabanaft said. The marine facilities will be owned and operated by Oiltanking, a sister company of Mabanaft. For more information, see Industrial Info's project report.

Air Products (NYSE:APD) (Lehigh Valley, Pennsylvania) will supply the hydrogen and nitrogen feedstock for the ammonia plant under a 20-year contract. Air Products said it will build, own and operate its largest-ever steam methane reformer (SMR) in Texas City to produce hydrogen, along with an air separation unit to supply nitrogen, to the GCA plant. Air Products also will extend its Gulf Coast hydrogen pipeline network to about 700 miles.

In a conference call with industry analysts, Air Products Chief Executive Officer Seifi Ghasemi said, "This project is a perfect fit for our long-term strategy."

The new SMR, air separation unit and pipeline extension represent the largest investment the company has made in the U.S., Ghasemi said.

"In the last few years, there has been this talk that Air Products is investing in China and the Middle East because (it) cannot compete in the U.S., and especially in the U.S. Gulf Coast. This project is a great demonstration that we definitely can compete," Ghasemi added. For more information, see Industrial Info's project report.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.