Abby L. Harvey
GHG Monitor
9/12/2014
Cenex Harvest States (CHS) announced late last week that it will go ahead with a $3 billion nitrogen fertilizer manufacturing plant to be built in Spiritwood, N.D with or without a sought-after loan guarantee from the Department of Energy. The CHS project would convert natural gas into ammonia for use in fertilizer and is expected to reduce CO2 emissions by 592,000 tons per year. CHS is currently in the process of attempting to obtain a $1 billion loan guarantee from DOE, though regardless of the outcome of their application, the project will move forward, the company said. “At this time we are in Phase 1 of the review process during which the innovative aspects of the project are reviewed for eligibility under the program’s criteria. We have responded to additional questions from the agency and await a determination as to whether we will be move to Phase 2 during which the overall project is considered,” CHS spokeswoman Lani Jordan told GHG Monitor this week.
DOE has been making available a total of $8 billion in loan guarantees to qualifying projects which reduce, avoid or sequester greenhouse gasses. Projects must fall into at least one of four categories; advanced resource development, carbon capture, low-carbon power systems or efficiency improvements. The proposed project would fall into the first category “advanced resource development,” which lists, among many others, projects which use associated gas production to reduce flaring. Sen. John Hoeven (R-N.D.) has been urging the DOE to approve the guarantee for several months.
At this point, CHS has committed to foot the bill for the project entirely should no outside funds be secured. "CHS is a financially strong company with the balance sheet strength to undertake this significant investment. We believe this fertilizer plant will deliver solid returns on our owners’ investment in addition to providing them with an essential crop input." Tim Skidmore, CHS executive vice president and chief financial officer, said in a CHS press release issued last week. That is not to say that the company will not seek additional investors, however. "CHS is proceeding today as the plant’s sole investor. However, because our owners’ interests are at the heart of what we do, we will always pursue ownership of strategic assets and partnerships that will help us continually add value to their businesses,” Carl Casale, CHS president and chief executive officer, said in the release.
Project Costs Approx. $3 Billion
According to the release, the new plant would be largest investment ever made by CHS and, in fact, the largest private investment made in the history of the state. The new plant would utilize natural gas from the Bakken shale formation. When the project was initially proposed in 2012, costs were estimated at $1.2 billion, but that total has since grown to the current $3 billion estimate. A construction date is yet to be set for the project, though it is expected by the end of the year. “Right now we don’t have a specific date for groundbreaking, but hope is fairly soon once final details are completed and before [North Dakota] winter sets in,” Jordan said.
