Ammonia producer has sight on Westbank location
4th June 2012 · 0 Comments
By Susan Buchanan
Dyno Nobel International, based in Utah, would like to build an $800 million ammonia plant in Waggaman, a predominantly African-American community on the West Bank—across the Mississippi River from Harahan. Ammonia is strong stuff and is listed as an “extremely hazardous substance” in the Emergency Planning and Community-Right-to-Know Act, passed by Congress 25 years ago.
The company, a subsidiary of Incitec Pivot Limited in Australia, is conducting a $30 million feasibility study on the Waggaman site, and next year will announce a decision on whether to build. Production would begin in 2015.
Last week, Louisianan Economic Development Secretary Stephen Moret said “LED will finalize an incentive package for the project before the company’s final investment decision.” He didn’t describe the incentives but they could include property and payroll tax breaks for ten years, based on what the state recently gave other companies—including Corexit maker Nalco—to build plants. The Jefferson Economic Development Commission or JEDCO is helping LED prepare an incentive package for Dyno Nobel.
At this juncture, the benefits of the proposed plant appear to be mainly financial while the costs are health-and-safety risks that could affect neighbors the most.
On the plus side, the ammonia plant would create 60 new jobs, while nearby Avondale Shipyard has bled jobs recently. On the downside, however, even the best-run ammonia plants have equipment failures and are vulnerable to weather threats that cause leaks or worse, experts say. Cornerstone Chemical Co.’s Fortier Manufacturing Complex, the site considered for Dyno Nobel’s plant, has been written up for recent emissions violations. And Dyno Nobel’s fertilizer and chemical facility in Deer Island, Oregon is being investigated by the feds for an August 2010 ammonia leak during a power outage.
Over a decade ago, an ammonia plant owned by Cytec Industries closed on the same spot in Waggaman that Dyno Nobel is eyeing now, following a surge in natural gas prices. Louisiana chemical makers rely on natural gas for fuel and as a building block for their products. After prices peaked at $16.00 per million BTUs in late 2005, natural gas prices dropped below $2.00 this spring.
The proposed plant would be built on a “brownfield chemical complex site,” according to Dyno Nobel. Brownfields are underused or abandoned industrial and commercial sites available for reuse. A federal brownfield tax deduction is available to companies spending on environmental remediation. The state of Louisiana, however, stopped offering brownfield tax credits as 2009 ended, according to LED.
John Sutherlin, a political science professor at the University of Louisiana at Monroe and a national expert on brownfields, said a brownfield that’s revived for an industrial activity doesn’t have to be as thoroughly remediated as a site that will be used for residences. “They have to be cleaned up but they don’t have to be pristine,” he said. “People aren’t going to raise their kids there.”
He said once a brownfield has been remediated and given the go-ahead for a new use from the feds and other authorities, banks are suddenly willing to provide financing. Developing the old Waggaman plant site may make financial sense now, Sutherlin said, but he wonders if Dyno Nobel might abandon it at a later date if natural gas prices, which are cyclical, start to rise. “In that case, you’d have a brownfield on your hands again,” he said.
As for safety, Sutherlin who has visited Cornerstone Chemical and other industrial sites around the country, said even the best-run ammonia plants have incidents and leaks.
Cornerstone Chemical and Cytec have been cited for unauthorized discharges, mainly air emissions, according to DEQ records. Last Nov. 11, an ammonia leak on River Road on the West Bank from overhead equipment that was transferring ammonia from a ship to a Cornerstone storage facility, closed the road for awhile. “The ammonia began dripping from a flange onto the asphalt,” the DEQ incident report said. Seventeen hours after the leak was reported, and after 50 pounds of ammonia fell on the road, the faulty equipment was repaired.
In Oregon, Dyno Nobel’s plant at Deer Island, north of Portland, had an August 2010 ammonia leak—stemming from a power outage and a valve that was left open—that’s being investigated by the feds. Last week. Environmental Protection Agency spokesman Mark MacIntyre, based in Seattle, Wa., would only say “we politely decline all opportunities to discuss this matter.” Dyno Nobel also refrained from commenting on the investigation.
Beyond health and safety issues, critics wonder if Louisiana’s subsidies to chemical plants are necessary. Plant owners might want to locate on the lower Mississippi River anyway and they benefit from the state’s abundant natural-gas supplies. So why subsidize them at a time when the Louisiana legislature is considering steep cuts to public colleges and health care during a budget crunch? Shouldn’t these plants pay their fair share of taxes?
James Garner, a New Orleans trial lawyer and chemical engineer—who grew up in St. Bernard Parish near the Domino Sugar refinery, said the U.S. has lost its manufacturing base to China and developing countries, though some factory jobs are starting to return. Chemical plants in Louisiana have long provided high-paying jobs for high school grads. “We’ve had a brain drain of people with advanced degrees moving to other states but we still have a lots of high school grads who need jobs,” he said.
Garner said he doesn’t like to see education cuts in Louisiana. As for subsidizing plants, he said “presumably the state has looked at the tax breaks that other states are offering these companies.” He added “we need the jobs, and people who are employed buy homes and cars and shop in the community.”
Garner believes the ammonia plant can be operated safely as long as DEQ remains vigilant. “Some states my not want chemical plants but others do,” he said. He noted that Alabama and Mississippi gave auto companions incentives to lure them to build plants.
Sutherlin weighed in on DEQ’s record, saying “they’re much more responsive, transparent and better at getting data out to the public now than they were ten years ago.” And he noted “they also have two of the best brownfield specialists in the country on their staff.”
Nonetheless, last December the EPA’s Inspector General criticized Louisiana for not doing enough to enforce the nation’s Clean Air Act. The nonprofit Louisiana Bucket Brigade and the Washington, D.C.-based Environmental Integrity Project asked EPA in December to require that Louisiana step up its air-pollution enforcement and collect emission fees from polluters.
Meanwhile, the Jefferson Economic Development Commission seems to be comfortable with building chemical plants in the parish. In a May 23 statement, JEDCO’s executive director Lucien Gunter said a partnership between Dyno Nobel and Cornerstone “could tremendously boost economic development throughout the region, and hopefully attract other chemical companies to the complex.”
As for its history, the 800-acre chemical park in Waggaman—formerly owned by the Building Block Chemicals division of Cytec Industries, Inc.—was acquired by an affiliate of Miami-based H.I.G. Capital early last year and rebranded as Cornerstone Chemical Co.
Cornerstone produces melamine, acrylonitrile and sulfuric acid—used in water treatment, oil recovery, agriculture, plastics, furniture and flooring. If the feasibility study is a go, Dyno Nobel’s ammonia plant would be integrated with Cornerstone’s infrastructure. Dyno Nobel would build on land leased by Cornerstone, which would provide utilities and services. Some of Cornerstone’s employees would run the Dyno Nobel plant.
The proposed plant is expected to produce 750,000 metric tons of ammonia yearly. Primary customers would be Cornerstone for use in its products and Dyno Nobel itself for use in its fertilizer and explosives. Remaining products would be sold.
The ammonia plant would create 50 permanent jobs for Cornerstone Chemical and 10 jobs for Dyno Nobel, the companies predict. Salaries would average nearly $58,000 a year plus benefits. The Cornerstone complex already employs 441 workers.
As for people living near Louisiana’s industrial sites, ten years ago Shell bought out residents of Diamond, an African-American community troubled by explosions and odors from nearby NORCO in St. Charles Parish. In southwest Louisiana, residents of the African-American town of Mossville—located near 14 chemical plants and refineries—have filed lawsuits and complaints against the plants and the Environmental Protection Agency.
This article was originally published in the June 4, 2012 print edition of The Louisiana Weekly newspaper