Woodside to Pay $2.35B for Early Mover U.S. Blue Ammonia Project

 

Australian oil and gas company Woodside is continuing its bold moves to expand its portfolio and grow its presence in North America. The company will pay $2.35 billion to take ownership of an under-construction blue ammonia manufacturing plant on the Texas coast which the company says will give it “an early mover advantage in the growing lower carbon ammonia market.” Today’s move comes just two weeks after Woodside said it would pay $1.2 billion to acquire Tellurian including its owned and operated U.S. Gulf Coast Driftwood LNG facility.

OCI Global, based in the Netherlands, has been working on the development of the blue ammonia plant which is due to begin operations in 2025 in Beaumont, Texas. OCI will continue to manage the construction, commissioning, and startup of the facility and will continue to direct the contractors until the project is fully staffed and operational, at which point it will be handed over to Woodside.

“Global ammonia demand is forecast to double by 2050, with lower carbon ammonia making up nearly two-thirds of total demand,” said Woodside CEO Meg O’Neill while pointing to the transaction as part of the company’s strategy to address energy transition. “This transaction positions Woodside in the growing lower carbon ammonia market.”

OCI Clean Ammonia is billed as the world’s first large-scale, low-carbon intensity hydrogen-based greenfield ammonia facility. They will be targeting both domestic and international customers. At first, they expect demand from the traditional ammonia users but that it will quickly expand to energy applications and ammonia as a hydrogen carrier.

Phase 1, which started construction in December 2022, has a design capacity of 1.1 Mtpa. When it enters production in 2025, it will be using natural gas for production. The companies believe the big opportunity comes in 2026 when they anticipate transitioning to lower-carbon ammonia production. It will be derived from natural gas paired with carbon sequestration.

A supply agreement is already in place to initially source nitrogen and lower carbon hydrogen feedstock primarily from Linde. ExxonMobil will provide Linde with the carbon capture capabilities which are expected to be available in 2026.

The U.S. Gulf they said is a strategic location that will allow the facility to serve both the U.S. market and export clean ammonia as a hydrogen carrier to markets around the world such as Europe and Asia, as well as catering to expected significant demand from new applications including power and shipping fuels. The vision calls for the blue ammonia to be delivered to customers using future zero-carbon ammonia-fueled engine ships.

Anticipating strong demand growth, the design includes plans for a second 1.1 Mtpa production train as Phase 2. Woodside said in announcing the transaction it expects a final investment decision for Phase 2 in 2026. They estimated it would cost a further $1.2 to $1.4 billion.

OCI in announcing the deal emphasized the strength of the project and its skill in moving the project into construction. They did not explain the decision to sell 100 percent interest in the project to Woodside, which they called “the rightful custodian for this landmark asset.” They said they expect Woodside to continue to add significant value to the project and advance the energy transition.

For Woodside, OCI Clean Ammonia joins its investment in an LNG facility and export operation located near Lake Charles, Louisiana. Woodside expects to make an investment decision to proceed with Phase 1 of the LNG facility in the first quarter of 2025. The project is already permitted by U.S. regulators with 11 Mtpa for Phase 1 and a further 5.5 Mtpa for Phase 2. The project is permitted for a total of five trains in four phases, which if completed has a total permitted capacity of 27.6 Mtpa of LNG.