German chemicals giant BASF is tying up with Norwegian fertiliser company Yara International to build a world scale ammonia plant at BASF’s site in Freeport, Texas. 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. 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. I would like to thank BASF for putting trust in Yara and we look forward to a long and good relationship,” said Torgeir Kvidal, President/CEO of Yara International.

“Through the joint investment with Yara, we can take advantage of world-scale production economics and the attractive raw material costs in the US. We will thus strengthen our Freeport Verbund and the competitiveness of our polyamide 6 value chain in the region. We look forward to a successful partnership with Yara,” said Wayne T. Smith, member of the Board of Executive Directors of BASF SE, responsible for the Chemicals segment.

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 tonnes/year. Each party will off-take ammonia from the plant in accordance with its equity share. Total capital investment for the plant is estimated at US$600 million. Yara will in addition build an ammonia tank at the BASF terminal bringing Yara’s total investment to US$490 million. BASF will in addition upgrade its current terminal and pipeline assets.

The hydrogen technology reduces capex and maintenance significantly compared to a traditional natural gas based ammonia plant. The technology also allows for lower carbon dioxide emissions. 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 U.S. Gulf coast. KBR, Inc, Houston, Texas, 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 while BASF will operate the plant and the export terminal.