Under the arrangement, NuStar will install a new 14-mile section of pipeline that will connect OCI’s Iowa Fertilizer Company (IFCo) facility with NuStar’s existing 2,000-mile ammonia pipeline, which starts in Louisiana and flows northbound to various points in the Midwest.
The agreement commits NuStar to provide transportation services under a long-term arrangement. To facilitate the project, OCI has committed $30 million in capital expenditures for new ammonia cooling and storage infrastructure.
The proposed infrastructure will allow OCI to economically transport ammonia out of the Gulf Coast, from where it plans to bring an additional 1.1m. tonnes per year of blue ammonia capacity online in 2025.
“We are pleased to partner with OCI to better serve the area’s agricultural needs by delivering more ammonia to help meet fertilizer demand for local and regional farmers and by providing additional ammonia to serve as feedstock for upgraded products,” said NuStar Chairman and CEO, Brad Barron.
“We expect this healthy-return, low-capital project to meaningfully increase utilisation of our system in 2024 and we are excited about the growing interest in ammonia – to reduce emissions and supply the globe – which we expect to generate significant additional opportunities for even greater utilisation of our ammonia pipeline system over the next several years.”
The senior executive believes the agreement will pave the way for similar deals as his company is “actively working with a number of potential customers interested in connections to our system, across our footprint, for a variety of different opportunities”.
“We are seeing growing interest in lower carbon ammonia from many different companies and potential customers,” he added in comments accompanying NuStar’s latest financial results.
“In addition to the ‘greening’ of ammonia expanding the market domestically, international demand is also driving interest in ammonia export, which could drive additional utilisation of not only our ammonia system but also, potentially, our St. James facility [in Louisiana], which has dock capacity that could support ammonia export.”
For his part, OCI Global CEO, Ahmed El-Hoshy, noted the “highly cost-effective project will allow us to safely and sustainably reach new customers, strengthens our position in the premium US Midwest market and is one further step in our ammonia logistics”.
“Our plant in Iowa has been central to our US operations since starting up in 2017 and we look forward to continued investment in the region,” he said.
The IFCo complex’s daily capacities are 2,425 short tons of ammonia, 4,740 short tons of UAN, 1,320 short tons of granular urea and 990 short tons of diesel exhaust fluid, according to a company factsheet.
In late 2022, OCI broke ground on the aforementioned low-carbon ammonia facility in Texas. The project’s site is adjacent to OCI’s existing integrated 1.4m. tonne/year methanol-ammonia production facility in Beaumont.
By Richard Ewing, Head of Ammonia