Pembina, Marubeni to establish blue ammonia supply chain linking Alberta to Japan

North American midstream company Pembina has forged an agreement with one of Japan's largest trading firms to establish an end-to-end blue ammonia supply chain that will link Western Canada ammonia to Japan and other Asian markets, Pembina said.

Pembina Pipeline announced the signing of a memorandum of understanding with Marubeni May 30 in which the companies will jointly develop a production facility on Pembina-owned lands. The facility will produce low carbon hydrogen and ammonia near Fort Saskatchewan, Alberta.

The plant is anticipated to produce up to 185,000 mt/year of blue hydrogen that will be converted into 1 million mt/year of low carbon ammonia. It will also use carbon capture technology that will reduce a "significant amount" of CO2 emissions, Pembina said.

Alberta Carbon Grid

Developers expect that the plant will have the potential to transport and sequester the carbon via the Alberta Carbon Grid, a proposed network of carbon transportation and sequestration wells being developed by Pembina and TC Energy. The carbon grid, originally announced in 2021, will have a 20 million mt/year capacity once fully constructed in 2027.

The blue ammonia would be transported via rail to Canada's western coast for shipping to Japan and the wider Asian market.

Stu Taylor, Pembina's senior vice president, said the project supports global decarbonization efforts "by exporting low-carbon energy derived from natural gas responsibly produced in Western Canada."

"The project is an example of Pembina's ability to leverage its existing asset base and core competencies to develop new integrated value chains, including carbon capture, utilization and storage and low-carbon energy such as hydrogen, and ammonia as a hydrogen carrier and fuel source," Taylor said in a statement.

Platts, part of S&P Global Commodity Insights, assessed the price of conventional grey hydrogen produced in Alberta at C$1.34/kg May 25 (including capex). Meanwhile, the cost of PEM-based green hydrogen in Alberta was assessed at C$7.21/kg, and alkaline-based hydrogen was assessed at C$5.90/kg.

Growing appetite for ammonia

Japan is expected to have a growing appetite for low carbon ammonia as a power generation fuel. Japan's Ministry of Economy, Trade and Industry projected that Japan's demand for ammonia used for power generation will be 3 million mt/year by 2030 and 30 million mt/year by midcentury.

The Middle East, North America and Oceania are identified as as the main suppliers for its ammonia supply chain. Last year, a ministry task force estimated that the Middle East could supply ammonia CFR price at $335-$339/mt, North America could supply at $413/mt and Oceania at $429/mt.

Per the country's Strategic Energy Plan, Japan plans to introduce 1% of hydrogen or ammonia in its power generation fuel mix by 2030. It also aims to begin burning 20% ammonia at its coal-fired plants by 2030.

Already, major Japanese utilities are making investments in ammonia. Earlier this year, the country's biggest power generator, JERA, agreed to offtake up to 500,000 mt/year of ammonia from Yara International and CF Industries beginning in 2027. JERA is also exploring the potential of jointly developing ammonia projects and other blue ammonia purchase agreements with the two companies.