Spiritwood fertilizer plant plans move ahead

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Planning continues for the CHS nitrogen fertilizer plant the company expects to locate in the Spiritwood Energy Park, according to Brian Schouvieller of CHS.

The plant will use natural gas captured from the Oil Patch in western North Dakota in the production of nitrogen farm fertilizers like anhydrous ammonia.

Schouvieller, senior vice president of the agriculture business group for North America for CHS, and other members of the CHS management team met with local officials for a status update on the project Tuesday. The project began with an idea from North Dakota Farmers Union leaders, who made a pitch to CHS, which has now taken the lead on the project.

“There are many phases to this project,” he said. “We’re moving deliberately through the phases. This is the single largest investment CHS has made as a company.”

Schouvieller said the project continues to meet CHS’s expectations as it now moves into what is referred to as the front-end engineering and design or FEED stage of the planning process. The CHS Board of Directors approved an additional $25 million in funding to complete this segment of the planning.

“A project of this size and scale takes a lot of people resources to go through the processes,” he said. “Everything has a process — nothing out of the ordinary — but you have to go through the process.”

The FEED study includes determining what technology the plant will use. The Spiritwood plant is considered an off-the-shelf design meaning the plant design has been used elsewhere. Once CHS determines which of the available designs it will use, engineers will determine what permits for air and water emissions will be necessary and fine tune the amounts of raw materials of water, natural gas and electricity used to produce the nitrogen.

Schouvieller said each input has its own set of variables. For example, the plant will use about 4,000 gallons of water per minute. There are several sources of water available including deep aquifers, treated waste water and fresh water.

“Which combination of sources offers the best value?” he said. “There are three possible natural gas pipelines in the area. We’re engaged with all three about cost and availability.”

The FEED study is anticipated to take between seven and nine months with a final decision on the project not anticipated until sometime near the end of 2013. If the project goes ahead, it meets one of the goals CHS set for itself.

“We want a secured domestic supply of nitrogen for the region,” Schouvieller said. “That makes sense for our company.”

Many of the American nitrogen fertilizer plants shut down around 2005 when the cost of natural gas rose. At the same time the demand for nitrogen fertilizer increased, especially in the Northern Plains, as corn acres continued to increase.

“The corn acres are moving north and west,” he said. “There is more nitrogen used for corn crops than for small grains.”

This led to the bulk of the nitrogen fertilizer used in this region to be imported from the Middle East, according to Dan Mack, vice president for operations and transportation for CHS. Imported fertilizer takes about 77 days to reach North Dakota and travels by ship from the Middle East, across the Atlantic Ocean to Galveston, Texas and then by rail to North Dakota.

“We expect the importation of fertilizer to drop by 2016,” Mack said. “The U.S. can compete favorably if natural gas prices stay low.”

Mack estimated that the Spiritwood plant would produce about one/third of the nitrogen fertilizer sold by CHS in the Northern Plains.

Schouvieller said the plant would not sell nitrogen directly to farmers.

“We understand there is a need to have that,” he said. “If we do something like that it would be outside the plant.”

Rail and trucks will be used to ship the nitrogen around the region. The mix of trucks and rail cars will vary but each year it would require about 10,000 rail car loads to haul about 60 percent of the nitrogen with between 25,000 and 35,000 truckloads required to haul the remaining 40 percent.

Schouvieller said the FEED study should be completed in the next nine months. Efforts to recruit equity investors will follow along with gaining any air and water emission permits from the North Dakota Department of Health

Once those things are accomplished, the construction could start in 2014 with an estimated 31- to 36-month active construction period. This would be followed by startup and operation of the plant in early 2017.

Estimated costs for the project range from $1.1 billion to $1.4 billion depending on the technology provider. Discussions concerning tax or other incentives from North Dakota and the Jamestown/Stutsman Development Corp. are also under way, according to Schouvieller.

The plant will employ between 100 and 150 people with a mix of management, engineers and production workers.

Local officials applauded the information contained in the update.

“I’m excited they want to engage the community,” said Jamestown Mayor Katie Andersen. “Everything is looking good so far. These things take a long time so it is best to keep the community informed.”

Sun reporter Keith Norman can be reached at 701-952-8452 or by email at knorman@jamestownsun.com

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