Norwegian firm Yara International ASA and Germany-based BASF have agreed to set up an ammonia plant at the BASF site in Freeport, Texas, involving an investment of $ 600 million. As part of the project, Yara will build an ammonia tank at the BASF terminal and BASF will upgrade its current terminal and pipeline assets for the export of ammonia from the new plant - which is expected to come online in 2017.
"I am very pleased to be here today, initiating the construction of an important investment for Yara - alongside our partners at BASF. The building of the Freeport ammonia plant is a firm demonstration of how we deliver on our growth strategy," said Torgeir Kvidal, president and CEO of Yara, while attending groundbreaking ceremony for the new ammonia plant.
Wayne Smith, chairman & CEO of BASF Corporation and member of the Board of Executive Directors of BASF SE, said, “BASF is in a period of significant investment in North America. Through the joint investment with Yara, we can take advantage of world-scale production economics and the attractive raw material costs in the US; strengthening our operations in Freeport and the competitiveness of our customer value chain in the region."
The plant will have a capacity of about 750,000 metric tonnes per year and will be owned 68 percent by Yara and 32 percent by BASF. Each party will off-take ammonia from the plant in accordance with its equity share. BASF will use its share of ammonia from the plant to produce caprolactam, a key ingredient in the manufacture of nylons for carpet, textiles, film, monofilaments, and wire and cable. Yara will market the remainder mostly to industrial customers in North America, in addition to supplying the agricultural sector.
The hydrogen based process that will be used in the new plant significantly reduces capital expenditures and maintenance compared to a traditional natural gas based ammonia plant. A long-term supply agreement for nitrogen and hydrogen has been signed with Praxair Inc, the largest industrial gases company in North America, linking the feedstock variable cost to the advantageous natural gas prices available at the US Gulf coast.
KBR Inc, Houston (Texas), has been awarded a fixed price turnkey contract for the engineering, procurement and construction (EPC). The plant is expected to be completed by the end of 2017. Yara will manage construction of the plant; BASF will operate the plant.