Low natural gas prices and a “responsive regulatory environment” have prompted Australia’s Incitec Pivot Limited (IPL) to devote $850 million toward the construction of a world scale ammonia manufacturing plant on a brownfield site in Waggaman, LA, the company said Wednesday.
The plant, which is scheduled to begin production in the third quarter of 2016, would have the capacity to produced 800,000 metric tonnes per year, IPL said. Initial production of 300,000 tonnes is earmarked for IPL’s U.S. plants, and offtake agreements are in place with Transammonia Inc. and Cornerstone Chemicals Co.
The plant would be located at the Cornerstone chemical complex in Waggaman. IPL has contracted KBR Inc. for engineering, procurement and construction of the facility. IPL has six other ammonia plants around the world.
“Two years ago, IPL identified the unique opportunity to capitalize on a potential investment in the U.S. through a brownfield site, competitively priced energy, labor productivity and responsive regulatory environment,” said IPL CEO James Fazzino. “Also, this project leverages the ‘one off’ benefits of the brownfield site, utilizing existing infrastructure, including ammonia logistics and access to the U.S. ammonia market.”
Increased demand for natural gas from the electric power generation sector would be key to boosting gas prices over the next few years, but other areas for demand growth, including the industrial sector — for instance, increases in ammonia production — are also going to give prices an overdue shot in the arm, according to consultant ICF International (see Daily GPI, Feb. 14).
Barclays has said four U.S. ammonia facilities are planned to either restart or undergo expansion this year, adding about 70 MMcf/d of demand for feedstock gas (see Daily GPI, Dec. 20, 2012).
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