With the news that BASF and Yara are evaluating a possible joint venture into a world-scale ammonia plant in the US, it is clear that both companies are keen to further strengthen their respective operations in the region.
The world’s leading chemical company aims to further reinforce its backward integration in downstream manufacturing activities.
For Yara, the possible joint venture on the US Gulf Coast represents the opportunity to further strengthen its presence in the country.
But could this announcement also be significant from a carbon dioxide (CO2) perspective?
Evaluation of a possible BASF-Yara investment comes at a time when supply and quality issues exist in the global CO2 market, with difficulties in meeting demand centres and the quality of the source types that could potentially bridge this gap in supply.
Exact details of the potential JV are currently unclear, including any location or capacity, rendering it impossible to jump to any conclusions concerning the CO2 potential. This is also, of course, only a possible JV – the two companies are at this stage evaluating investment. Further, there is no mention of CO2 in the announcement from BASF.
What we do know is, however, ammonia production typically provides a low-cost feedstock for CO2.
Further, in an interview with gasworld magazine in 2008, Yara Industrial estimated that of the then installed capacity of liquid CO2 in Europe (4-5 million tpy), approximately 70% was based on raw gas from ammonia production. The remaining percentage was derived from reformers at refineries, from ethylene oxide production, and from natural wells, which all demand higher initial investment as well as higher variable cost to produce food-grade CO2.
At a time when supply issues exist in the market, the ultimate goal with respect to supply is the construction of plants closer to (market) demand hubs, as well as scaling-up capacities and reducing production costs. The further assumption is to use the by-product and proven technologies which will sustain a low-cost raw feedstock.
Low-cost feedstock can be the traditional production from ammonia, ethylene oxide, and (natural gas) processing plants, all as natural gas feedstock – something that today is considered abundant and cheap.
The link between ammonia production and CO2 sourcing has been well-proven by Yara itself in the past. While the company delivers solutions for sustainable agriculture and the environment, its Industrial segment converts energy, natural minerals and nitrogen from the air into essential products for industrial applications. Yara’s CO2 product is intrinsically linked to its Upstream segment, recovered from ammonia production by a steam reforming process and providing an efficient platform for the CO2 business.
Not only is this one of the purest production methods available for food and beverage grade CO2, it is also the most cost efficient. Yara Industrial’s CO2 products include gaseous carbon dioxide, liquid carbon dioxide, and solid carbon dioxide.
Time will ultimately tell if there is to be any CO2 source potential as a result of any new ammonia production, or if there is to be any BASF-Yara joint venture at all, in fact.
If such an investment does materialise, however, there is known to be a platform for efficient CO2 opportunities linked to ammonia operations. This could be seen as particularly significant in the US, estimated to be by far the largest consumer of merchant CO2 (see table above) globally.