LSB sets likely 2025 milestone for US-based, CCS-derived low-carbon ammonia derivative

LSB Industries will supply up to 150,000 st/year of low-carbon ammonium nitrate solution to Freeport Minerals Corp. under a new five-year deal that challenges skepticism of market demand and the willingness to pay for differentiated product.

"We're pretty sure that this is the first low-carbon ammonia offtake signed in the US where a large portion of the associated carbon emissions have been captured and sequestered," Jakob Krummenacher, vice president of clean energy at LSB Industries, told S&P Global Commodity Insights at the World Hydrogen North America Conference in Houston May 22.

Other producers have successfully captured and sequestered emissions in the ammonia process. Often the carbon has been injected into the ground for use in enhanced oil drilling, Krummenacher added, "but it's still very questionable and not seen as a value add by the market."

In the deal, announced earlier May 22, LSB will supply Freeport(opens in a new tab) with the low-carbon ANS for its US copper mining operations. The ANS will be supplied from LSB's facility in El Dorado, Arkansas, where, in conjunction with Lapis Energy, it plans to produce low-carbon ammonia using carbon capture and permanent sequestration as ammonia or to use downstream to produce ANS and other nitrogen products.

Ammonia production from the El Dorado facility will be capable of a carbon capture rate of 50% of on-site emissions, with the ANS having roughly a 30% emissions savings, Krummenacher said.

The ANS offtake is expected to start Jan. 1, 2025, with a phase-in of low carbon contracted volume, "where, for the first year, there's a formula that is related to conventional ammonia, with it then increases because of the value of the CCS," Krummenacher said regarding volumes ramping up during the phasing period based on Environmental Protection Agency approval and conditions in its contract.

Low-carbon ammonia market guidance

"[This agreement] basically shows the market that there are some people that view a value in this low-carbon product, and it all has to do with how much value they get on the end-supply chain," Kummenacher said.

Given low-carbon ANS will be used in copper mining, "it would have a low carbon footprint, but also their operations will have a lower carbon footprint, helping them meet their sustainability goals," Krummenacher said. "We view low-carbon ammonia to be adopted in all the sectors that use ammonia as a feedstock, like nitric acid and downstream of nitric acid products, for example."

Chemical companies with sustainability goals and targets, and that are buying renewable power, "eventually at some point they will be introducing some level of low carbon ammonia into their processes because of that," Krummenacher added.

Derivatives certification important

"Certification is very important, but it's not ready yet," Krummenacher said with respect to the status of low-carbon hydrogen and derivatives-certification schemes in the US.

ADNOC delivered(opens in a new tab) the world's first certified bulk commercial shipment of low carbon ammonia derived using CCS May 14 to Japan's Mitsui for use in clean-power generation.

"But the way that we design the agreement is that we're going to allocate an amount of CO2 that will be sequestered to these tons of ANS that are going to be sold," Krummenacher said. "From the buyer's point of view, they know that a certain amount of carbon will be permanently sequestered and know what the reduction is."