Australian fertilizer, explosive and industrial chemical group Incitec Pivot (IPL) plans to shut its Gibson Island fertilizer plant in Brisbane, Queensland in December 2022 when a prevailing feedstock gas supply contract expires.
The decision to cease manufacturing with natural gas at the end of 2022 comes as it has been unable to secure an economically viable long-term gas supply agreement. The firm will undertake a feasibility study into industrial-scale production of green ammonia at Gibson Island and this will be progressed to potentially repurpose the facility, IPL said.
The closure of manufacturing activities at the 50-year old Gibson Island plant will see IPL source urea, sulphate of ammonia and other specialty products from its existing international import supply chains to replace the manufactured products, IPL added.
IPL signed its existing agreement to buy gas from partners in the 9mn t/yr Australia Pacific LNG (APLNG) venture for its Gibson Island plant in June 2019. The planned plant closure also comes around a year after IPL announced plans to restart Queensland's Range gas project with its 50:50 partner Australian independent Central Petroleum, as part of efforts to supply gas to Gibson Island beyond the end of 2022.
The planned closure of Gibson Island comes at a time when domestic gas prices in eastern Australia are at around the same level as when IPL signed the gas agreement with APLNG. The AWX, the Argus assessment for month-ahead spot gas deliveries to Wallumbilla, was at A$9.53/GJ for December deliveries on 5 November, up by A13.5¢/GJ from A$9.39/GJ for November deliveries the previous week. The AWX assessment was around A$9.25/GJ at the start of June 2019.
Around 80pc of the gas produced in eastern Australia is either shipped as LNG or used as fuel for electricity for the three LNG plants located at the Queensland port of Gladstone. The amount of gas used by Australian manufacturers was around 6pc of the gas produced in the 2019-20 fiscal year to 30 June.
The lack of competitive gas supplies to Australian manufacturers also casts light on the Australian government's gas-led economic plan, whereby Canberra funds studies for exploration work in undeveloped basins to boost supplies to underpin domestic economic activity.
