A low-emissions ammonia project set to break ground in Indiana just received a whopping +$1.56 billion conditional loan guarantee from the US Department of Energy. According to the DOE, the Wabash Valley Resources project will be the first to domestically produce low-emissions ammonia for local farmers in the Corn Belt. The funding is part of the US government’s plans to ensure domestic fertilizer supplies. It’s also a bet on ammonia as a clean fuel that could help “decarbonize” the shipping industry, an market that major oil companies are also looking to tap.
WVR’s project will repurpose a power plant in West Terre Haute, Indiana. By utilizing petcoke, a waste product generated during the oil-refining process, the facility will produce 500,000 metric tons of anhydrous ammonia annually. According to WVR, this equals a significant portion of the current annual usage within the Eastern Corn Belt. The company adds that using low-carbon ammonia increases the value of corn and ethanol in clean fuel jurisdictions (e.g., California) and increases market access internationally (e.g., Japan).
WVR’s new ammonia facility will permanently store carbon dioxide underground in nearby closed coal mines. WVR says its innovative approach of utilizing industrial waste in combination with carbon capture has the potential to be the first carbon-negative ammonia production process in the US. According to Williams, the facility will liquefy, inject, and permanently store 1.6 million metric tons of CO2 annually once it becomes fully operational while the ammonia produced at the Indiana plant will have as much as -80% lower emissions than traditional ammonia.
By sequestering carbon and investing in clean technologies, WVR’s project aligns with the DOE’s Energy Infrastructure Reinvestment (EIR) program which is authorized by the Inflation Reduction Act (IRA). Once it is fully operational in 2027, WVR expects to generate some $140 million every year in carbon sequestration tax credits, on top of the DOE loan.
Under the loan conditions, Wabash still needs to raise about $800 million in equity and meet other project milestones. According to Williams, the company has about 75% of that funding in place.
An initiative involving a dozen fossil-fuel companies including Exxon and Chevron, is one of Wabash’s investors. In fact, some of the biggest investments into low-carbon ammonia are coming from big oil companies, with many of them seeking to also tap into subsidies from the IRA. The future of the program is not guaranteed under a new administration, so companies have been rushing to get commitments before the end of the year.
Earlier this month, ADNOC, the national oil company of Abu Dhabi, signed an agreement with ExxonMobil to buy 35% in the US oil company’s Baytown, Texas, project. Under current plans, the facility would be the world’s largest producer of low-carbon hydrogen and ammonia and capture and store 7 million tons of CO2 per year. That means hundreds of millions of dollars every year in carbon sequestration tax credits.
In Beaumont, Texas, Australia-based Woodside Energy recently paid around $2.35 billion for a plant where it plans to make low-carbon ammonia. According to The Wall Street Journal, Woodside is also fielding calls from outside groups seeking to acquire a stake in the project. Woodside right now aims to sell its low-carbon ammonia to EU and Asia markets, where prices are higher than in the US.
Other planned projects include a ConocoPhillips/JERA low-carbon ammonia plant on the Gulf Coast, and a collaboration between CF Industries and Mitsui & Co in Louisiana. Additionally, BASF and Yara are said to be evaluating a low-carbon ammonia project on the Gulf Coast. (Sources: The Wall Street Journal, Power Engineering, S&P Global)
