A multi-billion-dollar project that has promised to help cut the increasing volumes of flared wellhead natural gas in North Dakota has been delayed indefinitely by ideveloper CHS Inc., based in St. Paul, MN, which is the nation's largest farmer-owned cooperative. There is no timeline for the project being restarted.
Low-cost, plentiful U.S. gas supplies have been touted as creating a resurgence in the fertilizer industry in North America, and the prospects have been bullish in North Dakota and elsewhere in recent years (see Shale Daily, Jan. 17, 2013).
After launching its plans in 2012 for a $1.2-1.4 billion nitrogen fertilizer plant on 200 acres in Spiritwood, ND, (see Shale Daily, Sept. 14, 2012), the multi-billion-dollar cooperative indicated Tuesday it has decided to rethink its proposed venture because of higher-than-expected costs that have driven the cost of the project close to $2 billion.
Annette Degnan, CHS marketing communications director, said the costs of the project are now estimated to be "significantly higher" and the company wants to reconsider and recalculate the project with its senior management and board of directors. Meanwhile, local officials in Spiritwood indicated they expect the plant eventually to be built.
The project originally was announced in September 2012 by Gov. Jack Dalrymple as the largest single private investment ever contemplated in North Dakota, employing 100-150 people.
With steadily increasing gas production in conjunction with the state's bonanza of light sweet crude oil production, North Dakota has been courting the development of multiple fertilizer plants as a mitigation against the increase percentage of wellhead gas that is flared (see Shale Daily, Nov. 26, 2012).
Late in 2012, New York-based NFlex was given a $1 million grant from the state to pursue the first of what eventually was envisioned as up to three anhydrous ammonia fertilizer plants.
Degnan said more recent examination and analysis by the company has indicated that "there are additional project infrastructure and labor costs. At the current cost estimate, the project will not generate the targeted returns on capital and would not be viable."
Separately, CHS informed Stutsman County, ND, officials that they should continue to work on purchasing road easement and bidding road improvement projects for the proposed fertilizer plant.