CF Industries today outlined cost estimates for its planned blue ammonia project in Louisiana, saying it is optimistic about prospective returns when only accounting for traditional ammonia markets.
The 1.4 million metric ton plant at CF’s Blue Point Complex in Ascension Parish is expected to cost around $4bn all-in, CEO Tony Will said on a call today, adding that an ongoing FEED study should sharpen those cost estimates further.
That price tag is justified when considering only existing markets for ammonia, he said, and is further justified with the addition of new, energy-related applications and emerging carbon pricing schemes, such as CBAM.
The company expects ammonia pricing to hold around $450 per metric ton, which along with the 45Q tax credit should allow for “a reasonable rate of return on the kind of investment that we’re looking at at making here,” Will said.
Will conceded that ammonia pricing will likely move around, especially given the expectation for the Gulf Coast Ammonia facility and others to come online. “But as we project forward, we expect a tightening in the [supply and demand] balance, even in traditional applications,” he said.
He added: “And so even before you get to new applications for clean ammonia, there’s an argument to be made that that plant is justifiable. I think if we are successful in bringing on a couple of the potential partners that we are deeply in discussions with that want to take some of that production into brand new applications, it even justifies it further.”
“The partners that we’re having conversations with are similarly comfortable being able to invest in a project in that kind of range,” he added.
Executives previously clarified that they would seek to align JERA Co. and Mitsui to aggregate demand under a single project. CF recently signed a joint development agreement with JERA under which the Japanese power company would take a 48% stake in the facility and offtake 500,000 tons of ammonia annually. It previously made an arrangement with Mitsui to jointly develop a blue ammonia plant under similar terms.
New applications for ammonia along with regulatory pressures could provide further upside to ammonia pricing. Europe, under CBAM, could provide a $150 per ton margin uplift for low-carbon ammonia, the company said.
Pending completion of the FEED study and final governance issues, the company is targeting the middle of 1Q25 for a final investment decision on the project, Will said.
CF will also invest approximately $100m into its Yazoo City Complex in Mississippi to build a CO2 dehydration and compression unit to enable up to 500,000 metric tons of CO2 under an agreement with Exxon.
