OCI NV, a Dutch fertilizer and chemical maker, said on Sept. 8 it will invest several hundred million dollars to convert U.S. natural gas to ammonia in the face of sky-high European gas prices.

The proposed facility, near an existing plant in Beaumont, Texas, will produce 1.1 million tonnes per year of the hydrogen-rich liquid from U.S. shale gas and replace lost production from Europe's gas shortage. Ammonia is easily transported and can be converted to hydrogen for use as a clean-burning fuel.

More companies are looking to produce ammonia, typically used to make fertilizer, to reduce carbon emissions from burning natural gas and other fossil fuels. Japanese electric utility JERA this week said it will produce hydrogen in the United States, convert it to ammonia and export the liquid to Europe.

OCI's Geleen, Netherlands, ammonia facility has been operating at less than 50% capacity since late last year due to Europe's high gas prices. Fertilizer and other industries have been hit by soaring gas prices since Europe moved away from Russian supplies over Moscow's invasion of Ukraine.

The proposed U.S. plant will supply an OCI import terminal in Rotterdam to receive and distribute ammonia to European customers.

OCI's Texas ammonia plant will be tied to a carbon capture and storage site to reduce greenhouse gas emissions, Chief Executive Ahmed El-Hoshy said in an interview. He declined to provide details. However, the carbon sequestration link makes the project eligible for tax incentives for reducing CO2 generated from processing gas.

The Biden administration's new climate incentives for removing carbon from industrial processes will advance ammonia "as a key driver of the energy transition," OCI Chairman Nassef Sawiris said in a statement.

First production at the Texas ammonia facility could come in early 2025, and the site will be designed to allow future production to double, to 2.2 million tonnes per year in the future, El-Hoshy said.