Lapis Energy partners with Arkansas ammonia plant to develop state's first CCS project

Texas-based hydrogen and carbon capture and sequestration development company Lapis Energy is bringing a CCS project to an ammonia plant in southern Arkansas, making it the state's first CCS development to date, the company said in a statement.

The project will be developed in partnership with LSB Industries, the owner and operator of the ammonia facility in El Dorado, Arkansas. Lapis said it will make the full capital investment for adding CCS to LSB's ammonia plant, which will transform the plant's products into blue ammonia, or that produced with a lower carbon footprint.

"We are very excited to partner with Lapis and take our first step to becoming a supplier of low carbon of 'blue ammonia'— allowing us to participate in what we believe will become a large future market," LSB Industries CEO and President Mark Behrman said in an April 28 statement.

LSB's plant is "uniquely located above deep geological formations with the capacity to sequester decades of CO2 production from the plant," Behrman said. The addition can help customers decarbonize their supply chains in the near term while waiting for zero-carbon ammonia production technologies to become more economical. It can be used to decarbonize power generation, bunker fuel, and as a carrier for hydrogen.

Blue ammonia was assessed at a premium of $30.55/mt to conventional ammonia CFR US Gulf Coast May 2, or $1,400/mt on an outright basis, according to price assessments from S&P Global Commodity Insights. Blue Ammonia premiums in Northwest Europe and Far East Asia April 29 were assessed at $70.85/mt and $44.85, respectively.

The Arkansas project, slated to be complete in 2025 will initially sequester 450,000 mt/year of CO2 in saline aquifers while generating 375,000 mt/year of blue ammonia. The project will be able to increase that amount "based on potential debottlenecking projects at the facility," LSB said.

Once in place, the project will reduce LSB's Scope 1 emissions—those associated with a company's direct activities—by 25% from current levels.

The project will also be eligible for tax credits under 45Q, a federal program that awards $50/mt to projects that permanently store CO2 and $35/mt to projects that use captured carbon for enhanced oil recovery.

Lapis Energy

The agreement with LSB comes three months after Lapis Energy received origination funding from the private equity firm Cresta Fund Management. The investment enables Lapis to partner with emitters across the globe to pursue decarbonization strategies through utilizing CCS and hydrogen technologies.

"Our vision for Lapis playing a significant role in enabling industrial decarbonization in both the United States and internationally is becoming a reality and, in working with LSB, we are privileged to be at the forefront of large-scale carbon capture and sequestration projects," Lapis CEO Hamish Wilson said.

In an interview earlier this year, Lapis Vice President Reg Manhas said that while Lapis expects to focus on blue hydrogen projects in the near term, that focus could shift to greener production methods as more companies adopt long-term green hydrogen strategies. Manhas said the company is actively looking for partners in the US, UK, the EU, and Southeast Asia.

Dallas-based Lapis was formed in 2020 through the merging of Viridis Resources, a CCS sub-surface exploration company, and BluEnergy, a low carbon consulting company.