BASF, Yara to build new Texas ammonia plant

Yara International and BASF have agreed to build a world-scale ammonia plant at BASF’s site in Freeport, Texas, the companies announced today.

The plant will use hydrogen as raw material, reducing capital expenditures (capex), maintenance and carbon dioxide emissions significantly.

“I am very pleased to announce this highly value creating project together with BASF," said Torgeir Kvidal, CEO of Yara International. "The use of hydrogen as raw material reduces capex, maintenance and carbon dioxide emissions significantly. This project will further strengthen Yara’s position in the global ammonia market and increase our footprint in the US."

The ammonia plant will be owned 68% by Yara and 32% by BASF and located on BASF’s site in Freeport. The plant will have a capacity of about 750,000 tpy. Each party will off-take ammonia from the plant in accordance with its equity share. 

“Through the joint investment with Yara, we can take advantage of world-scale production economics and the attractive raw material costs in the US," said Wayne T. Smith, an executive board member at BASF responsible for its chemicals segment. "We will thus strengthen our Freeport Verbund and the competitiveness of our polyamide 6 value chain in the region."

Total capital investment for the plant is estimated at $600 million. Yara will in addition build an ammonia tank at the BASF terminal, bringing Yara’s total investment to $490 million. BASF will upgrade its current terminal and pipeline assets.

The hydrogen technology reduces capex and maintenance significantly compared to a traditional natural gas-based ammonia plant, according to project officials. The technology also allows for lower carbon dioxide emissions. 

A long-term supply agreement for nitrogen and hydrogen has been signed with Praxair, 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 has been awarded a fixed price turnkey contract for the engineering, procurement and construction. The plant is expected to be completed by the end of 2017. 

Yara will manage construction of the plant, while BASF will operate the plant and the export terminal.