Thriving through energy transition, Woodside acquires OCI’s lower carbon ammonia project

Australian energy company Woodside has entered into a binding agreement to acquire 100% of OCI Clean Ammonia Holding and its 1.1 million metric tonnes (mtpa) lower carbon ammonia project under construction in Beaumont, Texas, for an all-cash consideration of approximately $2.35 billion.

Described as the world’s first large-scale, low-carbon intensity hydrogen-based greenfield ammonia facility, the project entered the engineering stage in late 2021 and construction in December 2022. The facility is expected to produce the first ammonia in 2025.

Lower carbon ammonia production, derived from natural gas paired with carbon sequestration, is targeted for 2026 following the commencement of carbon capture and storage (CCS) operations.

Agreements for the feedstock and CCS capacity are in place under which the nitrogen and lower carbon hydrogen feedstock will be sourced primarily from Linde. The Linde feedstock facility is currently under construction, targeting completion in early 2026. Ahead of completion, an early supply of feedstock for the project will come from multiple suppliers, including Linde, from available capacity in the Gulf Coast.

The CCS services will be provided to Linde by ExxonMobil and are expected to be available in 2026.

The project will target conventional ammonia customers at start-up and will target lower carbon ammonia customers in Europe and Asia when CCS is operational.

The facility design also includes the second 1.1 mtpa production train in Phase 2. Phase 2 remains pre-final investment decision (FID). Woodside noted it will target FID-readiness for Phase 2 in 2026 with an expected gross capital expenditure range of $1.2 – 1.4 billion.

Woodside CEO Meg O’Neill said the acquisition supports Woodside’s strategy to thrive through the energy transition.

“This transaction positions Woodside in the growing lower carbon ammonia market. The potential applications for lower carbon ammonia are in power generation, marine fuels and as an industrial feedstock, as it displaces higher-emitting fuels. Global ammonia demand is forecast to double by 2050, with lower carbon ammonia making up nearly two-thirds of total demand.

“This Project exceeds our capital allocation framework targets for new energy projects. Both phases are expected to achieve an internal rate of return above 10 percent and payback of less than 10 years. This acquisition is a material step towards delivering our Scope 3 investment and abatement targets. Phase 1 has the capacity to abate 1.6 Mtpa of CO2-e and with the addition of Phase 2 the Project has the capacity to abate 3.2 Mtpa CO2-e, or over 60 percent of our Scope 3 abatement target.”