Houston, 1 November (Argus) — CF Industries will construct new ammonia and urea/UAN units at its existing complex in Donaldsonville, Louisiana, and Port Neal, Iowa, the company said today.

The projects will produce 2.1mn st/yr of ammonia, potentially 2-2.6mn st/yr of urea and up to 1.8mn st/yr of UAN solution, depending on how the producer chooses to upgrade the ammonia. Intended production at the new urea and UAN plants is scheduled to commence in late 2015 in Donaldsonville while the ammonia plant will start in 2016. The Port Neal project also should come on line in 2015.

The market was aware of CF Industries' intentions to increase capacity, as most major producers are looking at the feasibility of such expansions in view of record low natural gas prices and high nitrogen fertilizer prices yielding wide margins. Producer economics look to remain favorable for years, provided long-term input supply contracts are obtained, minimizing the producer's risk exposure.

“The expansion of CF Industries' capacity, at these locations in particular, allows the company to take further advantage of the global cost advantage of North American natural gas,” CF Industries said today. “Donaldsonville is served by five natural gas pipelines at essentially Henry Hub economics and Port Neal is well-positioned to access existing gas supply from the Rockies, midcontinent US and Canada, and the increasing supply expected to come from the Williston basin.”

The company already has allocated $3.8bn for the projects and is poised to move forward based on having necessary logistics in place from its existing operations at both complexes. Additionally, CF Industries' location in Louisiana provides it with access to the Mississippi river system, by which the majority of fertilizer product is transported into the US corn belt, which accounts for more than half the nation's fertilizer demand.

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