US' CHS delays decision to advance North Dakota nitrogen plant

02 April 2014 20:06 Source:ICIS News

HOUSTON (ICIS)--CHS is delaying a decision to proceed building its proposed nitrogen fertilizer plant in North Dakota until it can further review the project, specifically looking at cost estimates, the largest US farmer-owned cooperative confirmed on Wednesday.

CHS has been planning to build a nitrogen facility in Spiritwood, North Dakota that could produce 2,200 tonnes of ammonia per day by the second-half of 2016.

To that end, the company had been working on the front-end engineering and design study for the plant, which was expected to create 160 full-time jobs.

It was originally anticipated the plant would cost $1.2bn but subsequent cost estimates have climbed into a range of $1.5-2.0bn.

CHS said it was delaying to advance the project to the construction phase due to significantly higher-than-expected construction and labor cost estimates. No timeframe was provided on when a final decision would be made on the project.

“Given that the potential project would be the single largest in CHS history and the largest in the state of North Dakota, we must be stewards of our owners’ capital and evaluate every opportunity to find solutions in the most responsible and strategic manner,” CHS said.

“Preliminary estimates for engineering and construction ranged from $1.5-$2.0bn, but further study revealed additional project infrastructure and labor costs. At the current cost estimate, the project will not generate the targeted returns on capital and would not be viable.”

CHS had recently discussed possible financial considerations with North Dakota officials, to improve the project’s potential returns, but no details on options or incentives were specified.

The plant is expected to contribute an estimated $23bn in additional local and state economic revenue over a 20-year period.

By Mark Milam