CHS official says cost of fertilizer plant ‘creeping up’
The final steps of the planning stage of the CHS Inc. nitrogen fertilizer plant are going smoothly although costs of the project are climbing, according to Brian Schouvieller, CHS senior vice president.
“I think we’re making progress and doing things that need to be done,” he said. “The FEED (front end engineering and design) study is done and we’re waiting on the final report, we’re working on getting a gas pipeline, we’re working on securing the water we need, and our air permits are in public comments and could be finalized in a few weeks.”
The planned plant was originally announced on Sept. 18, 2012, with an estimated cost of $1.2 billion. It will produce nitrogen fertilizer, which will be marketed by CHS in the Upper Midwest.
“During the pre-FEED study the number was $1.5 billion,” Schouvieller said. “It’s generally been creeping up to about $1.75 to $1.8 billion. But those are just estimates.”
The actual cost won’t be known until further into the engineering and bid process, he said.
“The biggest question is construction costs,” said Carl Casale, president and CEO of CHS. “To make sure you can get it constructed on budget and on time.
The size of the project may add to its cost, he said.
“Our presence will have an effect on labor prices,” Casale said, referring to the construction force the project will require.
Schouvieller said labor costs aren’t the only obstacle.
“We’re taking North Dakota weather into consideration,” he said. “There is a period of time each year you can’t get anything done.”
But Schouvieller calls these obstacles manageable.
A brochure distributed by CHS at the Winter Ag Expo has a proposed plant chronology that includes the CHS Board of Directors approving the plant design and early equipment purchases sometime this month. Engineering and construction contracts could be signed in February, and a final approval by the CHS Board of Directors is possible later this spring.
“We want to be moving dirt by this June,” Schouvieller said. “We want to have the project up and out of the ground at the end of the 2014 construction season.”
Actual production at the plant would start in the summer or fall of 2017, according to the brochure.
CHS has also begun the process of negotiating possible tax breaks with local governments.
Casey Bradley, Stutsman County auditor/chief operating officer, said the county had received an application from CHS and has it on the agenda for the Jan. 21 Stutsman County Commission meeting.
The application does not specify a percentage of property tax exemption but leaves that to future negotiations, Bradley said. The application specifies the fertilizer plant will employ 160 people at an average wage of $85,000 per year with benefits averaging $24,000 per year.
“We’re working with the county and state,” Schouvieller said. “We want to take advantage of the tax breaks but we don’t want to put a burden on any local government.”
Sun reporter Keith Norman can be reached at (701) 952-8452 or by email at email@example.com