Borealis, Agrifos to develop world-scale ammonia project on Texas Gulf

Polyolefins, base chemicals and fertilizers group Borealis has reached a preliminary agreement with project development company Agrifos Partners to jointly develop a world-scale ammonia project through Gulf Coast Ammonia (GCA). 

The plant will be located within an existing chemical site along the Texas Gulf Coast. GCA is in final negotiations with a short list of strategic site owners and says it expects to make a final site selection within the coming few months.

The brownfield, hydrogen-based project is scheduled for mechanical completion and start-up in early 2019. The site will benefit from existing infrastructure and excellent logistics capabilities which will allow product supply to a variety of long-term off-takers and customers.

The final agreement with Borealis, which would be subject to its supervisory board approval, contemplates significant equity participation by Borealis in the project. Borealis would also enter into a long-term offtake agreement for approximately 40% of the ammonia produced by the plant.

"We have a clear strategy of expanding our global nitrogen business," said Markku Korvenranta, executive vice president for base chemicals at Borealis. "By participating in the development of, construction of and offtake from a world-scale project in the US, Borealis is able to secure long-term supplies of ammonia based on the attractive economics of US natural gas. 

It also is a key step in the Borealis goal to sell 10 million tons of nitrogen-based fertilizer products per year by 2020," he added. "Gulf Coast Ammonia's project is all the more compelling because it builds on existing site capabilities and assets along the US Gulf Coast."

GCA is a company formed by Agrifos Partners to develop a world-scale ammonia plant along the Texas Gulf Coast. The project will utilize hydrogen and nitrogen feedstock, with pricing linked to US natural gas indexes. Agrifos has extensive experience in acquiring, developing and operating fertilizer production assets. 

The company says it expects to make further announcements in the near future concerning additional product offtake commitments, feedstock supply arrangements, permitting and construction contracts.

Gulf Coast Ammonia has engaged Macquarie Capital to serve as its financial advisor for the arrangement of a non-recourse project financing. Macquarie Capital recently acted as advisor to Freeport LNG Expansion, L.P., a liquefied natural gas (LNG) project. The company has also engaged Vinson & Elkins LLP as legal counsel for the project. Vinson & Elkins has recent experience with ammonia projects in the US Gulf, having served as outside counsel to Dyno Nobel for its ammonia manufacturing plant in Waggaman, Louisiana.