Woodside agrees US$2.35bn deal for OCI clean ammonia plant

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WOODSIDE is buying a low-carbon ammonia plant in the US for US$2.35bn as it looks to expand into a growing market for cleaner energy and chemical feedstocks.

OCI is building the plant in Beaumont, Texas and is scheduled to hand it over to Woodside once it’s ready to start production in 2025. The first phase will produce 1.1m t/y of ammonia and there is space to double production, though a final investment decision on the second phase is not expected until 2026.

Woodside CEO Meg O’Neill said the purchase will help the LNG major manage its transition to a future requiring lower carbon energy.

“The potential applications for lower carbon ammonia are in power generation, marine fuels, and as an industrial feedstock, as it displaces higher-emitting fuels,” O’Neill said. “Global ammonia demand is forecast to double by 2050, with lower carbon ammonia making up nearly two-thirds of total demand.”

The plant will synthesise ammonia using nitrogen and hydrogen supplied by Linde. Linde is investing US$1.8bn in an on-site complex to provide these feedstocks to OCI. It will include an air separation unit for the nitrogen and an autothermal reformer to convert natural gas into hydrogen and CO2.

The CO2 will be passed to ExxonMobil which is developing a local CCS project to store emissions from industry in the region. However, this facility is not expected to start operations until six months after Woodside’s ammonia synthesis plant begins operations.

Woodside reports that phase 1 of the project is 70% complete with all major mechanical equipment delivered and installation either completed or underway. It says the project has a ten-year payback period.

It comes as OCI has reported a 12% drop year-on-year quarterly income following high gas and low nitrogen prices, and pressure from shareholders to sell assets.

In July, Woodside bought US LNG firm Tellurian in a US$900m deal set to double its LNG capacity. Though its plans for further LNG expansion in Australia could be upended on reports that its A$30bn (US$19.7bn) Browse LNG project is on course to be rejected by the Western Australia Environmental Protection Agency.