CHS approves $3bn Spiritwood nitrogen plant

CHS will proceed with construction of a proposed nitrogen fertilizer plant in Spiritwood, North Dakota, and plans for the facility to be operational in the first half of 2018.

The plant will produce more than 2,400 st/day (876,000 st/yr) gross ammonia which will be upgraded to urea, UAN and diesel exhaust fluid (DEF). The farmer-owned cooperative plans on primarily serving agricultural retailers within a 200-mile radius, including the Dakotas and parts of Minnesota, Montana and Canada.

CHS estimates the cost of the project at $3bn, up from initial projections of $1.5bn-2bn. The rise in capital expenditure caused the company to put the project on hold in April. CHS attributed the higher-than-expected cost to increased construction costs, likely owing to labor constraints in a state that has seen a boom in oil/gas shale development.

"Because of the size and scale of this investment, we needed to take the additional time to review costs and reassess areas where we could make modifications," CHS chief executive Carl Casale said. "We are now fully prepared to proceed with an investment that will add tremendous value to our member-owners, and further expand our global crop nutrients business platform."

Final plans for the project were approved by CHS' board of directors this week. Groundbreaking will take place after additional details are ironed out, CHS said.

CHS said it will be the lone investor for the project, which it called the "single largest private investment project ever undertaken in North Dakota." CHS is awaiting approval of its application for a $1bn Advanced Fossil Energy loan from the US Department of Energy. The company said the application is still in the first phase of review.

The plant will be served by the new 95-mile (153km) Wind Ridge natural gas pipeline built by WBI Energy.

Spiritwood is the second planned North Dakota urea plant to be approved. Dakota Gasification is currently building a $402mn, 1,100 st/day urea (401,500 st/yr) plant at its existing Great Plains Synfuels Plant in Beulah, North Dakota, that already produces 400,000 st/yr ammonia and 105,000 st/yr ammonium sulfate. Urea production is expected to begin in early 2017.

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