LSB Industries will fully acquire the El Dorado CCS project, enabling blue ammonia production and benefiting from US tax incentives.
LSB Industries is moving ahead with plans to gain complete ownership of the El Dorado carbon capture and storage (CCS) project in Arkansas through a newly signed agreement with carbon management company Lapis Carbon Solutions. The development marks a significant step in LSB’s strategy to strengthen its position in the low-carbon ammonia market while expanding its carbon reduction capabilities at its El Dorado production complex.
The CCS project is expected to become operational by late 2026 or early 2027. Once completed, the facility will be capable of capturing as much as 500,000 tonnes of carbon dioxide emissions each year from LSB’s ammonia manufacturing operations. The captured CO2 will then be permanently stored underground, helping reduce the environmental impact of ammonia production and supporting the company’s transition toward cleaner industrial operations.
Through the implementation of this project, LSB aims to significantly increase its production of blue ammonia, a lower-carbon alternative to conventional ammonia produced using carbon capture technology. The company estimates that the project will enable annual blue ammonia production of approximately 380,000 tonnes. LSB is already considered one of the larger ammonia manufacturers in the United States, with total annual production capacity ranging from around 900,000 to 927,000 tonnes.
To support the development and execution of the project, LSB is expected to invest nearly $95 million. The funding will be directed toward several key phases of the project, including engineering development, permitting activities, construction work, and operational milestones required to bring the CCS system online. The investment reflects the company’s long-term commitment to low-carbon industrial production and emissions management.
According to LSB Industries President and Chief Executive Officer Mark Behrman, obtaining full ownership of the El Dorado CCS project will provide the company with increased operational flexibility. He noted that full control over the project would allow LSB to more effectively manage future growth plans and assess additional expansion opportunities at the El Dorado site. The company believes that direct ownership will simplify decision-making and strengthen its ability to adapt the project to future market conditions and regulatory developments.
Once the facility begins operating, LSB expects the project to generate between $25 million and $30 million in annual earnings and cash flow. In addition to operational revenues, the project is also positioned to benefit from the United States government’s Section 45Q tax credit program, which provides financial incentives for carbon capture and permanent sequestration projects. Under the current structure, companies can receive tax credits valued at $85 per tonne of CO2 that is captured and permanently stored underground.
The economics of carbon capture projects in the United States improved further following amendments made in July to the Section 45Q program. The revised policy aligned tax incentives for carbon sequestration and carbon utilisation projects, granting both the same credit value. Previously, utilisation-focused projects qualified for only $60 per tonne, creating a disparity that had faced criticism from segments of the industrial gas and carbon management industries.
