Synergen hosts Q&A on ammonia plant project

A Houston-based company proposing to build an ammonia plant on Highway 34 west of Aurora hosted a Q&A session last week which drew approximately 35 people to the Bremer Center.
Poster boards lined the main conference room sharing detailed information about the Synergen Green Energy project, which officials say is still in the early stages of development. The proposed plant being considered for a 160-acre site near the CF Industries and Koch Fertilizer plants on Highway 34 is projected to create 100 permanent full-time jobs, generating $50 million in new property tax revenue over a period of 30 years.
John Hewitt, the company’s vice president and head of projects, said he thought the candid exchange was valuable and informative.
“Overall, the tone of the meeting I would say was very healthy because the people who came were really very curious about the project,” Hewitt said in a follow-up ANR interview. “They wanted to learn more and they were interested really about the big picture. Why Aurora, what’s the industry and how does it work? We were very happy to explain that story and think they were appreciative of what we were trying to do.”
One of the main points Hewitt said he hoped to convey is that the company understands that this is a very large project involving valuable local resources.
“One of the things that was important to us is to make sure that people understood this not a small undertaking,” Hewitt said. “It represents our commitment to the community for many years and many generations, so it’s not anything that we take lightly. Overall, there are some concerns but our overall takeaway is that there seems to a liking for the project and the benefits that it can bring.”
Hewitt repeated points he made when the proposal was first made public in January, emphasizing that a project of this scope and size needs a market for ammonia, a logistics solution to get that ammonia to market, a reliable source of affordable power, and up to 3 million gallons of water per day.
“There are very many favorable things because we were able to explain all of that to the people who came and they were like, ‘Ah, okay. It makes sense to us.’ A light bulb goes off. There’s a lot of curiosity and we were able to explain the back story to this whole thing. It was a very good meeting.”
In an effort to capture some of the questions asked and answers given in that Feb. 13 public meeting, the News-Register listened in, then followed up two days later with an hour-long phone interview. What follows are Hewitt’s detailed answers.

Water quantity
One of the key factors for determining the Synergen plant’s location will be access to water, as approximately 3 million gallons of water per day will be required. Synergen has an option to buy 160 acres of land just south of Highway 34 and received approval in December from the Upper Big Blue Natural Resources District to access that volume of water from the acquifer.
“We anticipated that because this is a very strong agricultural community and water is such a big issue we thought that there would be a lot of discussion around quantity use, by which I mean the amount of water there that we extract from the ground,” Hewitt said. “All the data (gathered in a large water use study by Olssen and confirmed by NRD’s third-party peer review) was on the aquifer over a 50-year period. The drawdown on the aquifer would be somewhere between 10 and 14 feet, which is really negligible and it’s almost impossible to measure at the edges because the impact is so small. What surprised us, quite honestly, was there seems to be less discussion about the extraction, and much more curiosity and interest in the wastewater side of things, and so I ended up ended up talking much more about that than the extraction side.”

Water quality
Of the water that would be extracted from the well at the plant, Hewitt said approximately 25 percent of that is consumed during the process of making ammonia.
“With the water we send to the electrolyzers, hydrogen atoms are scrapped out from the water so we collect the hydrogen atom and the oxygen atom is vented to the atmosphere,” he explained. “The other 75 percent is used as cooling water, and that is basically a falling film that we pump up to the top of our cooling towers and then we let that fall as rain over all of the hot pipes inside to cool it down.” 
Most of that water during the cooling process is splashed off as evaporated water, Hewitt said, leaving approximately 500,000 gallons of wastewater per day to be dealt with.
“We explained to people that wastewater is clean,” Hewitt said. “It’s concentrated water -- hard water -- but when we pull water out of the aquifer, we actually have a water treatment plant in the facility, so we actually soften it and improve it before we send it to the electrolyzers. We also put in some biologically friendly additives to soften the water, etc., so that when we use it for cooling it doesn’t coat the pipes with calcium and so on and so forth.” 
Hewitt said recirculating the 500,000 gallons of water for cooling purposes would not be environmentally healthy or economically feasible, leaving the company with three options as for what to do with the wastewater.

Three wastewater treatment options 
When asked what Synergen plans to do with its wastewater, Hewitt said the company is exploring three different options: 1. Sending it to the city of Aurora’s wastewater treatment facility; 2. Letting the wastewater run into surrounding bodies of water; or 3. Pumping the wastewater back into the Ogallala Aquifer. 
“We were careful to explain to people that we haven’t decided which of those options to use yet and the reason for that is that there are pros and cons associated with with all of those, some of them economic and some of them are sort of social benefits,” he explained. 
Synergen has already had meetings with city water department representatives, Hewitt noted, with another meeting planned later this month.
“If we go to the water department, it benefits the city in several ways,” he said. “At the present time they have surplus capacity that’s not being used so that’s means that the existing facility is not economically optimized. If we were to take that capacity, of course it means that they’ve become more efficient, that’s good for the city. 
“They of course are looking ahead and if we take that capacity, we’re sort of sucking up everything that they have,” he continued. “So we are looking at increasing that capacity, which is good for the city in the future, but it also means that the other infrastructure needs to be upgraded as well. There is discussion about increasing the size of the sewer pipeline.”
Hewitt emphasized that all of these discussions are conceptual at this point, adding that capital expenditures would be required as well.
“We understand that we would be asked to participate in contributing to that cap-ex (capital expenditure),” he said. “And of course, they’re saying that would be helpful to the city. We, of course, would have to also pay rent rates as a normal consumer and part of the discussion we have is to say if we contribute and you get our business, do we then get a rebate over time, etc.”
If the company were to pursue the option of releasing the wastewater into nearby waterways Hewitt said there would be fewer costs involved.
“We are trying to weigh the pros and the cons of that, but what we also have to understand, and I’ve been emphasizing this to people, is we’re still at a reasonably early stage of development -- about 20 percent -- so we still have to gather all of these other financial impacts and make sure that this is economically viable,” he said. “We don’t want people to think that this is a get-rich-quick slam dunk for us. It’s far from it. We still have to make sure that our investors are happy with the returns, etc., so we have to be very sensitive to the business case.”
The third option for what to do with the wastewater would be injecting it back into the Ogallala Aquifer, which Hewitt said is being explored.
“It’s not as easy as it sounds just to pump it back into the ground,” he said. “There’s a lot of capital equipment that’s required, etc., etc., and if we go that route, that’s also to say that there’s no benefit to the community in the way that there would be if we went through city water.”
Asked if there was any discussion about annexing the property into the city, Hewitt said no.
“At this time we’re only working with the county,” he said. “We’re collaborating with the city, but we’re not under that jurisdiction.”

NEXT STEP: County conditional use permit
In regard to working with Hamilton County officials on this project, Hewitt said the next step in a complex development process is in fact applying for a conditional use permit with the county. The Hamilton County Planning & Zoning Commission would review the request first, making a recommendation which would later be considered by the Hamilton County Board of Commissioners.
“We put our application in,” he reported. “We are expecting that the hearing will be in March. That said, we’re not trying to rush anything through and then there are a bunch of issues that the planning commission and ourselves are sort of finding out. If we can resolve all of that in time for March, that’s great. If we can’t, then we’ll give the planning people the time they need and will simply move to April.”

Impact on property values
One of the questions asked during last week’s public forum was about potential impact of neighboring property values if the Synergen plant is built. Hewitt began by saying that he is not an expert in real estate values, and that any response would be subjective.
“The property taxes etc., that people are assessed is based on the size of their property and the assets that they have on that land etc., so in terms of the property tax, this should have absolutely no impact either positive or negative,” he said.

Market for ammonia
Asked about the potential market for ammonia, Hewitt noted that there are a number of current uses involving large scale industrial applications and refrigeration, though the vast majority is consumed as ag fertilizer. 
“There is a very good quantity of ag ammonia produced in the U.S. today, but not all of it,” he reported. “The U.S. still imports over a million tons a year and those main producers come from the Middle East, from Russia, and believe it or not from Trinidad and Tobago in the Caribbean.” 
The main import routes into the U.S. are through the Gulf Coast, predominantly through New Orleans, Hewitt said. Ammonia is distributed up into the Midwest through the Mississippi, Missouri barge system, but it predominantly goes into the NuStar pipeline, which starts near New Orleans and runs north up into Iowa and branches westward into Nebraska. The NuStar pipeline ends up in Aurora, which is the most northerly and western end of the pipeline. 
“That pipeline was built as a transportation system to deliver the imported ammonia up through the central U.S.,” Hewitt said, noting that the product is transported in liquid form. “It is designed mainly to convey the ammonia north, west and east.”
Because Aurora is on the end of the pipeline, people sometimes ask how ammonia flows the other way. That question was asked at last week’s forum in Aurora as well.
“There are portions of the pipeline that can already pump liquid in both directions,” he explained. “In our discussions with NuStar, because there is going to be an increase in the amount of ammonia produced, they are looking themselves to upgrade their pipeline to increase the capacity and also to consider making the pipeline flow in either direction in more places.” 
NuStar owns the pipeline that delivers the ammonia, Hewitt said of what is sometimes a confusing issue, but they don’t own all of the storage tanks, the places where the ammonia is taken out. Those are owned by agricultural product retailers. 
“They’re owned by CF Industries and Koch Brothers and others like that and those are people who take out of the pipeline and store it,” he stated. “What will happen to us is we can put into the pipeline and you can imagine the pipeline is basically our big storage tank. If we are putting, let’s say 100 molecules in one place, and there’s 100 molecules being taken out elsewhere, ammonia is ammonia and the quantity within the pipeline stays the same. It doesn’t necessarily have to flow in two directions. We’re still able just to put it into the pipeline and treat it as if it was a giant storage tank.” 
NuStar may choose to reverse flow in certain places, Hewitt noted, but added that Synergen is not dependent upon that potential development. 
“If they ever did reverse the flow all the way down to the gulf I think that would be good for everybody because then they have more options to distribute their ammonia,” he said.

Impact on ammonia pricing 
Asked what impact a local ammonia production plant might have on the price local farmers pay for anhydrous ammonia, Hewitt had this to say.
“We don’t set the market price,” he explained. “We are just a wholesaler. We’re not going to be a retailer. We’re going to sell to those agricultural retailers and agents, etc. 
“We have a slight advantage over let’s say the traditional producers, because we’re in the backyard, so we don’t have to transport ammonia,” he continued. “It doesn’t have to be piped all the way up from New Orleans to get to the point so we don’t have that cost. Our production method of using electrolyzers, however, is more costly, so there’s a trade-off between the logistics and the production cost. We have to compete. The market sets the price, and we have to be able to work within those price areas.”

Price of power
As explained in an earlier interview, one of the main reasons Synergen focused its nationwide search for a site in Nebraska is the availability of affordable power. Hewitt repeated that point at this week’s forum as well.
“We only need electricity, water and nitrogen that we get from the air and the most expensive ingredient is electricity,” he said.  “Nebraska is incredibly fortunate because they have a publicly owned utility, NPPD, and it’s regulated. Because it’s publicly owned, it’s basically a not-for-profit, so you don’t have to pay the full markup that a big utility would take and put in their their balance sheet.”
In addition, Hewitt said 65 percent of NPPD’s power generation comes from nuclear, which is less volatile than say natural gas.
“The power prices in Nebraska have been very stable for very many years,” he noted. “If we were going to go to another area such as Louisiana, where they are a very clean because they burn natural gas, the energy price is incredibly volatile. You only have to have a Ukrainian war come along or something happening in the Middle East and you know those natural gas prices come under threat and they they go all over the map.”

Truck traffic at plant
Another question asked of Hewitt at the Q&A session was in regard to the added truck traffic that might be created along an already busy Highway 34 corridor.
“I’m a little uncertain, but it will be a very low number because the vast majority of our production is intended to go into the pipeline,” he responded. “If you look at our designs, we are already building truck-loading bays as we have designed the plant. We expect that we will have maybe four trucks a day, so if we’re doing truck loading six days a week, that would be 24 trucks a week. And if you extrapolate that out it is 96 trucks a month.” 
Hewitt was quick to add that the added truck traffic would be seasonal, coming only during the fertilizer seasons each spring and fall. He also noted that Synergen’s plan is to build turn-off and exit lanes from Highway 34, as well as improving and maintaining the portion of county road used to access the plant.

Job creation
One of the major benefits listed in Synergen’s proposal is the creation of 100 full-time jobs, which in turn are said to create added spin-off employment opportunities. Hewitt was asked to explain the job factor.
“We’d like to think that the jobs that we create won’t just pull in labor from surrounding towns,” he began. “Of course that will happen, but we hope that these jobs will mostly be in Aurora, and that people will reside in that area so they should hopefully be doing their business in Aurora, shopping in Aurora, buying cars in Aurora, going to hardware stores in Aurora, entertainment in Aurora, so on and so forth. 
“And then outside of that, we also see opportunity for general contractors as well,” he added. “In addition to the people that we have working in the plant we’re going to need outside contractors to do servicing and maintenance and other work for us, be it landscaping or whatever it’s going to be. Of course it won’t happen year one, but we expect to see as the plant develops and becomes more established, more and more jobs will get pulled in.”
The final question for Hewitt was if the public will have any other opportunities to speak directly to him and other company representatives.
“It’s definitely worthwhile,” he concluded. “We need to continue to do these. The question is when do we do the next one? We certainly plan to come back and do more of this. We just don’t see a downside. We only see an upside to doing this.”