Shale gas boosts OCI into Iowa biggest investment ever
The Iowa Fertilizer Company (IFC) a subsidiary of the Egyptian company Orascom Construction Industries (OCI) made the final investment decision (FID) to build a world-scale fertilizer plant in Iowa, USA.
OCI selected the location near Wever, in the Lee County, southeastern Iowa, to develop its greenfield ammonia and urea plant.
On marketing side the soaring prices of the grains and the sizes of the regional markets in Iowa, Illinois and neighboring states in the Midwest contributed to make the decision to invest $1.3 billion capital expenditure in this greenfield fertilizer project.
USA import 54% of their fertilizer consumption
According to the US Department of Agriculture, USA is the world biggest producer of corn but import 54% of its fertilizer, mostly from Trinidad and Tobago.
This unbalance was justified as long as USA was importing natural gas.
But since USA is becoming self-sufficient in natural gas with the development of the shale gas up to the point of turning a net exporter of gas, the question came up naturally to produce these fertilizers locally, as close as possible of the farmers, instead of importing them.
To build its fertilizer plant, Orascom is acquiring 500 acres near Wever, approximately 100 kilometers southwest of Davenport in Iowa:
– Along a natural gas pipeline that can provide the feedstock
– Four miles away from the Mississippi River to export fertilizer to the Corn Belt.
To trigger the final investment decision, Iowa proposed a tax incentive package of $100 million as the project should employ 2500 persons during the three years of construction phase and 165 direct jobs while the fertilizer plant in operations.
In buying locally the farmers in Iowa will avoid all the peaks of the nitrogen fertilizer spot markets representing up to $740 million per year savings.
IFC awarded EPC contract to OCI Construction Group
– 2 million t/y of ammonia
– 2 million t/y of urea
Then Iowa Fertilizer will produce:
– Urea ammonia nitrate (UAN)
– Diesel Exhaust Fluid (DEF), and environmentally friendly fuel additive.
Using KBR‘s state-of-art technology, OCI Construction Group with key partners for engineering services.
Maire Technimont won Iowa Fertilizer ammonia plant
The Italian company Maire Tecnimont SpA received a Letter of Intent (LOI) regarding the ammonia plant to:
– Provide engineering services
– Supply all the materials on a lump sum turn key basis
This LOI should be converted into formal contract on the next six months, but in the meantime Maire Tecnimont received the instructions to proceed with the engineering services.
Stamicarbon BV and Uhde booked Iowa Fertilizer urea plant
Stamicarbon BV is a Dutch company acquired in 2009 by Maire Tecnimont from the Dutch chemical company DSM.
Stamicarbon booked the order from Iowa Fertilizer company to design the process of the urea plant.
While ThyssenKrupp Uhde (Uhde) was awarded the engineering and procurement services for the urea plant.
Maire Tecnimont, Stamicarbon and ThyssenKrupp Uhde received notification from the OCI Construction Group to re-use their experience in the Egyptian and Algerian nitrogen fertilizer project to proceed on fast track with the Iowa Fertlizer project in order to benefit from the shale gas supply and run into commercial operations by 2015.