Nitrogen+Syngas 388 Mar-Apr 2024
31 March 2024
North American nitrogen
NORTH AMERICA
North American nitrogen
The US is experiencing a new boom in nitrogen projects, with a number of carbon capture ammonia plants under development.
Global ammonia capacity continues to grow. Capacity was assessed at 239 million t/a in 2023, but this could grow by another 15 million t/a to 254 million t/a by 2028 in terms of firm projects, and speculative projects could take that much higher. North America is the epicentre of many of these new projects, with abundant cheap shale gas and an established offshore oil industry in the Gulf of Mexico which can take sequestered carbon for enhanced oil recovery or other long term storage. There are already over 20 blue hydrogen to ammonia projects announced in the US, and while many will not get final investment approval, some already have. It could turn the US into the leading exporter of low carbon hydrogen within just a few years, depending upon how many of these projects come to fruition.
Carbon capture
Autothermal reforming (ATR) is becoming the preferred technology for carbon capture. Heat for the reaction is generated inside the reformer rather than the furnace typical for a steam methane reformer (SMR). This means that all of the carbon dioxide produced in the reaction is entrained in the process stream, making it easier to separate carbon from the feed and removing the need for flue gas treatment. However, it also requires an oxygen feed for the process, which means an expensive air separation unit (ASU). This is why most existing ‘grey’ ammonia capacity is based on less capital intensive SMR plants. For ammonia production, though, this does also mean that the ASU can be a source of nitrogen for the reaction. It is however why many of the new projects are centred around new ATR-based ammonia plants rather than conversions of existing SMR ammonia units.
Current projects
Of the raft of blue ammonia projects announced over the past couple of years, the one that is closest to completion is OCI’s new 1.1 million t/a blue ammonia plant development at Beaumont, Texas, where the company already operates 300,000 t/a of ammonia and 1.4 million t/a of methanol capacity. One of the ways that OCI has shared the project risk is by subcontracting the plant’s hydrogen supply to Linde. As a result, OCI is ‘only’ having to spend less than $1 billion on the ammonia synthesis section, with Linde – already a major supplier of hydrogen to a network of refineries and other industrial customers in the US Gulf Coast – supplying blue hydrogen ‘over the fence’ from a new clean hydrogen facility. Linde will build, own and operate a $1.8 billion on-site hydrogen complex which will include autothermal reforming with carbon capture, plus a large air separation plant to supply nitrogen to the ammonia plant and oxygen to the reformer. The new complex will be integrated into Linde’s extensive Gulf Coast industrial gas infrastructure. Up to 1.7 million t/a of carbon dioxide will be sequestered. Ground was broken on the project in late 2022, and according to OCI it remains on course for start-up in 2025.
Other projects have yet to clear the FID hurdle, but many major players are actively involved in project development. CF Industries has announced a 52-48% tie-up with Mitsui to develop blue hydrogen and ammonia production, though of a slightly darker shade of blue, as only 60% of emissions are planned to be captured. The companies have secured a site in the US Gulf Coast and are looking at ammonia technology providers. CF Industries would operate the plant and Mitsui would offtake the ammonia and sell it into Japan and elsewhere in Asia. Front end engineering design was completed in 4Q 2023, and the companies are now looking at ways to reduce the project’s carbon footprint further via two new studies, one evaluating autothermal reforming technology as an alternative, and a second looking at the cost and viability of adding flue gas capture to a steam reforming ammonia plant. Both FEED studies are expected to be completed in 2H 2024.
Last year BASF and Yara announced a collaboration on a 1.2-1.4 million t/a blue ammonia plant for the US Gulf Coast with 95% carbon capture. Yara would sell clean ammonia for fertilizer production and BASF would integrate it into its downstream chemical business. The two companies already jointly operate a conventional ammonia unit at BASF’s Freeport, Texas site using hydrogen supplied by Praxair. The project is also at the FEED stage at present.
LSB Industries is partnering Japan’s Inpex on a 1.1 million t/a blue ammonia project in the Houston Ship Channel, with KBR selected as ammonia technology supplier. A pre-FEED study is expected to be completed in 2Q 2024, with a full FEED study to follow. Also involved is Air Liquide, who will work with Inpex on syngas and hydrogen production using Air Liquide’s autothermal reforming technology, and its own carbon capture technology. The project aims to capture at least 95% of direct CO2 emissions from hydrogen production with 1.6 million t/a of CO2 captured and permanently sequestered from this project. Air Liquide would also be responsible for onsite nitrogen and oxygen production, using its own air separation unit technology. Inpex and Air Liquide have already worked together on a 700 t/a blue ammonia pilot project in Niigata, Japan, which started construction last year.
Other potential projects include Air Products in Ascension Parish, Louisiana. The $4.5 Louisiana Clean Energy Complex would feed into Air Products hydrogen pipeline network, which stretches from Texas City to New Orleans. Air Products said last year it was proceeding with the project, though there has been local opposition. Finally, and far more speculatively, St. Charles Clean Fuels, co-owned by Sustainable Fuels Group and Copenhagen Infrastructure Partners, is budgeting $4.6 billion for up to 8,000 t/d of blue ammonia production with 90% carbon capture.
Alternative to LNG
One possible driver for blue ammonia exports from America is the potential for restrictions to US LNG exports. President Biden recently paused new approvals for US LNG export projects, and it remains uncertain how long that pause will be for. If it continued into a second Biden term, for example, it might drive the expanding US gas industry to look for other ways to monetise its production, for example as ammonia. However, at present the pause is only for LNG projects aimed at exporting gas to countries that do not have a free trade agreement with the US, and will not affect any projects that are currently in operation or under construction. Donald Trump has also said that he would remove the restrictions “on day one” of a new term of office, if elected.
Do costs add up?
In spite of all of this project activity, though, it has not been all plain sailing for blue ammonia projects. Nutrien last year shelved plans for a $2 billion, 1.2 million t/a blue ammonia plant at its existing nitrogen complex in Geismar, Louisiana. The plant would have used autothermal reforming with carbon capture and storage to produce blue hydrogen from fossil gas with 90% emissions reduction. An offtake agreement was already in place with Mitsubishi for 40% of production. However, project costs had risen, and clearly the existing offtake agreement was not enough. In its notice suspending work on the project, Nutrien cited “continued uncertainty on the timing of emerging uses for clean ammonia”, and said that there was not yet sufficient evidence to justify the assumption of a premium in the near term for low carbon ammonia. Even IRA tax credits “didn’t get us over the hurdle in terms of the economics of the project at this point”, according to Trevor Williams, Nutrien’s president for nitrogen and phosphates. ExxonMobil is likewise backing away from a blue hydrogen project at its Baytown refinery in Texas, saying IRA credits for blue hydrogen are not sufficient to justify the investment.
The US inflation reduction act (IRA) has helped kickstart this tsunami of blue ammonia via its 45Q tax credit. This offers producers $85/t of CO2 sequestered geologically in deep gas basins, or $50/t of CO2 used for enhanced oil recovery (EOR). At present, it is likely that most of the CO2 generated in these plants will be used for EOR.
CRU estimates that the additional cost of carbon capture and storage for blue ammonia production increases the cost by around $120/tonne ammonia. Producing one tonne of ammonia generates between 1.6 and 3.2 tonnes of carbon dioxide, depending on the technology. For autothermal reforming it is 1.6 tonnes/tonne NH3 , for steam reforming around 1.8 tonnes/ tonne, and the highest figures are for coal gasification. This means that 45Q is only crediting producers with $76/t ammonia if they use the ATR route and capture 95% of emissions (although this figure goes up to $129/t for geological storage). The gap between the tax credit and the additional cost of production means that blue ammonia must be regarded by consumers as a premium product for which they are willing to pay an additional premium. Enhanced oil recovery is a way of recovering some cost – around $40/t CO2 , or about $60/t ammonia, again meaning that in theory the process breaks even. But it means that costs can be quite marginal and there are all kinds of variables – the distance that the CO2 must travel to be pumped, the nature of the underground field and expected rates of oil recovery etc.
On the demand side, it remains to be seen whether low carbon fertilizers can charge an additional premium, and that depends upon food retailers being able to differentiate products made with them to consumers. This is likely to be a longer term process and unlikely to make farmers pay more in the short term. On the other hand, power plant operators in e.g. Japan and ship owners are more of a captive market, in that they must use a low carbon fuel, and if they have engines or plants designed to run on ammonia, they have little choice but to buy low carbon ammonia at the going rate.
Likewise, cheap US gas costs mean that carbon taxes such as Europe’s CBAM mean that blue producers could have a ready premium market just across the Atlantic. But this may depend upon producers meeting more stringent EU regulations on exactly how low carbon the blue ammonia is; carbon capture rates of 60% may not cut it with European authorities. This is still an evolving market, and how customers value low carbon ammonia and what additional value they put on it could be critical to some of the large investment decisions coming up, and whether they pay off.
