BASF, Yara break ground on new ammonia project on Texas Gulf Coast

Yara International and BASF broke ground today on a world-scale ammonia plant at the BASF site in Freeport, Texas, officials announced on Monday.

Total capital investment for the plant – which is expected to come online in 2017 – is estimated at $600 million. 

As part of the project, Yara will build an ammonia tank at the BASF terminal, while BASF will upgrade its current terminal and pipeline assets for the export of ammonia from the new plant.

"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.

The plant will have a capacity of about 750,000 tpy and will be owned 68% by Yara and 32% 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.

"BASF is in a period of significant investment in North America," said Wayne T. Smith, CEO of BASF. "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 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, according to company officials. 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.

Houston-based KBR 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, while BASF will operate the plant.

Peak construction for the project will create up to 550 jobs. Once completed, operation of the plant will add approximately 35 full-time BASF positions in Freeport.