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BP to Sell CF Industries 2.2 Bcf of Certified Natural Gas
to Decarbonize Ammonia
BY CAROLYN DAVIS
Feb 28, 2023
BP plc clinched a deal to sell 2.2 Bcf of certified natural gas this year
to fertilizer giant CF Industries Holdings Inc.
![](images/images_03_03_2023/CF-Industries-Donaldsonville-Complex-Ammonia-6-Plant-20230118.png)
CF, which uses natural gas as feedstock, said the sale of the
independently certified natural gas is the first of its kind for use in
industrial manufacturing. Financial details of the transaction were not
disclosed.
“This initial purchase of certified natural gas is an
important step in CF Industries’ decarbonization journey and reinforces
our commitment to be at the forefront of low-carbon ammonia production,”
said CEO Tony Will. “The independent, transparent and third party-audited
process to validate lower methane emissions intensity ensures that we are
genuinely achieving Scope 3 emissions reductions from purchasing certified
natural gas.
“At the same time, we believe the resulting lower
lifecycle carbon intensity of ammonia production will further enhance the
appeal of decarbonized ammonia as a clean energy source for hard-to-abate
industries.”
The fertilizer company, considered the world’s
largest, has set a goal to reduce 10% of its Scope 3 emissions by 2030.
Scope 1 are the direct emissions from operations, while Scope 2 refers to
indirect emissions from energy consumption. Scope 3 denotes end-user
emissions, or those created by a company’s customers.
Test And Verify
MiQ helped BP to certify some Haynesville
Shale natural gas. The auditor also has
agreements to certify natural gas for, among others, Chesapeake
Energy Corp., Comstock
Resources Inc., EQT
Corp. and ExxonMobil.
Certified gas is produced by companies whose
operations are independently verified by a third-party auditor such as MiQ.
The third parties provide a factual assessment of methane emissions
intensity, which is the ratio of methane emissions to natural gas
produced.
“CF Industries is the first
industrial giant to use MiQ-independently
certified natural gas to significantly
reduce Scope 3 emissions from its production processes,” said MiQ CEO
Georges Tijbosch. “We’ve seen multiple utilities across the U.S. purchase
independently certified gas to reduce their emissions, and this key
commitment by CF Industries should be a trigger for other natural gas
users in hard-to-abate industries to prioritize the minimization of their
supply chain emissions through certification.”
The purchase agreement with BP would allow CF to
confirm its systems can track the certified gas supply through the ammonia
production process.
CF’s ammonia production network is used to enable
green and blue hydrogen production, as well as to manufacture nitrogen
products for energy, fertilizer, emissions abatement and other industrial
activities. The company has a bevy of projects underway, many designed to
reduce carbon dioxide (CO2) emissions.
CF secured a memorandum of understanding (MOU) in
January with Jera
Co. Inc. “for the first significant volumes of ammonia as a
clean energy source,” Will said. The deal could supply up to 500,000
metric tons/year of “clean” ammonia beginning in 2027.
[Want
today’s Henry Hub, Houston Ship Channel and Chicago Citygate prices? Check
out NGI’s daily natural gas price snapshot now.]
Another joint venture with Mitsui & Co. Ltd. for
the Blue Point Complex could lead to exporting blue ammonia from
Ascension Parish, LA. A final investment decision is set for later this
year. If the complex proceeds, it would take about four years to
complete.
ExxonMobil has been tapped to transport
and permanently store CF’s captured CO2 in Vermilion Parish, LA. The
integrated major, which is developing a 125,000-acre CO2 storage
facility in the parish, in turn reached an agreement with EnLink
Midstream LLC to transport the CO2 through its pipeline network.
“Looking ahead, we believe that the global nitrogen
supply-demand balance and global energy cost structure will continue to
present attractive margin opportunities for our cost-advantaged
network,” Will said.
During 4Q2022, CF’s cost for natural gas used for
production in cost of sales averaged $6.88/Mcf, compared with $6.00 a
year earlier. For 2022, gas costs averaged $7.18, versus $4.21 in 2021.
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Spokane, Washington. 99212
www.exactrix.com
509 995 1879 cell, Pacific.
Nathan1@greenplayammonia.com
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