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Published June 02, 2014, 09:58 AM

Northern Plains Nitrogen to buy final rail access acres

Northern Plains Nitrogen LLP expects to buy its final rail access acres near Grand Forks, N.D., within a month, and by late summer expects to complete a pre-FEED (front-end engineering and design) study for its $1.8 billion fertilizer plant.

By: Mikkel Pates, Agweek

Northern Plains Nitrogen LLP expects to buy its final rail access acres near Grand Forks, N.D., within a month, and by late summer expects to complete a pre-FEED (front-end engineering and design) study for its $1.8 billion fertilizer plant.

Darin Anderson, president of the board of directors and a former North Dakota Corn Growers president from Valley City, N.D., says the project is “forging forward.”

The company announced in January it had broken escrow for the plant by exceeding its $3 million goal for up-front investments. Nearly 200 individuals invested, primarily farmers or people in agriculture-related businesses, Anderson says.

Data from the pre-FEED study will be used to complete federal air permits.

“We expect to be able to do that by late in the third quarter or early in the fourth quarter of 2014,” Anderson says. The pre-FEED study would be followed by a regular FEED study that would cost $20 million to $30 million.

Anderson says he’s read news reports about the separate CHS Inc. fertilizer plant near Spiritwood, N.D., being put on hold because of “significantly higher-than- expected construction and labor cost estimates.”

Costs of the CHS plant started at $1.2 billion, later increased to $1.5 billion, and then to $2 billion.

“We’ve looked at what would happen if our costs increase,” Anderson says. “We’ve done modeling and we’re still very satisfied with the potential returns.”

Once the pre-FEED study is complete for Northern Plains, there could be some cost adjustments.

“Nothing’s changed,” Anderson says. “We’ll be purchasing the remainder of the land in the next 30 days.”

The plant had already purchased a half-section, or 320 acres, but now will buy the rest, which provides rail access to Burlington Northern Santa Fe Railway.

Relying on imports

Anderson says the reported difficulties of bringing fertilizer to suppliers in the Northern Plains this spring “drives home the fact that we do rely heavily on (fertilizer) imports.”

He says if there hadn’t been a late spring and farmers hadn’t been delayed in planting because of weather, the supplies of nitrogen fertilizer would have arrived later than farmers would have wanted. Late fertilizer could mean added costs or lower yields.

Northern Plains Nitrogen is in talks with various potential partners. The pre-FEED studies and the air quality permits are important to the equity partners. Two of the possible partners have been identified as Chinese or Middle Eastern, but their names have not been disclosed.

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