Clearfield County, Pennsylvania

KeyState, ‘River Hill Fertilizers, Fuels & Chemicals’
Advanced Manufacturing & Power Generation
Clearfield County, Pennsylvania

Even with abundant natural gas feedstock, the US remains a net importer of ammonia and nitrogen fertilizers.

This imbalance is particularly true and confounding for Appalachia and the 15-State, Northeast and Mid-Atlantic Region with abundant gas yet with no urea and nitrogen fertilizer production.  This has resulted in an historic dependence on international imports, particularly those coming from Russia and the Middle East.  East Coast farmers, factories and consumers have been frustrated with dependence upon higher cost, lower quality, higher emissions, unreliable, internationally supplied fertilizers, fuels and chemicals.

KeyState will counter this ongoing crisis by producing and displacing East Coast imports of 60%+ of these Urea and Urea Ammonium Nitrate (UAN) fertilizer imports with higher quality, lower cost reliable American supply.  The US trade imbalance would be reduced by more than $250,000,000 per year and US food, energy and economic security are strengthened.[1]

KeyState is an advanced manufacturing and power generation facility which integrates onsite natural gas extraction with onsite auto-thermal reforming of the methane/CH4, separating the ‘H’ from the ‘C’, then using the hydrogen combine with nitrogen pulled from the air, ammonia/NH3 is produced.  A majority of the CO2 is recycled by synthesizing ammonia and CO2 for urea fertilizer and chemical production. The remaining CO2 is to be geologically stored. All is powered using our own exothermic process steam and natural gas or hydrogen fired turbines.  The +$2B project has completed Concept and Pre-FEED Engineering on the initial plant configuration and capacities but in response to market and policy changes has expanded capacities, increased the number of products and added a larger plant site & rail siding, all which require a Revision of the Pre-FEED FEL 0, 1, & 2 which is underway.  2 years of engineering and permitting and 2.5 years of construction and commissioning are anticipated with commercial operations in 2031.  (Federal & State decisions on KeyState permit acceleration is pending which would allow construction to commence the end of 2026.)

All technologies to be used are proven (TRL9) with many large-scale applications successfully deployed in the US and globally, including for Auto-thermal Reforming, Ammonia Synthesis, Air Separation and Urea Synthesis.  Technology providers are among the top recognized industry firms with multiple deployments in the USA over the last 10+ years.  Black & Veatch is the project design/build partner and EPC, a leading US engineering firm recognized for very large-scale chemical and energy projects.  The Oil & Gas Climate Initiative, Climate Investment provided KeyState early stage funding  along with the local founding partners and off takers.  No technology or equipment originates from and there are no associations with ‘Foreign Entities of Concern’.

KeyState has a significant competitive advantage first, in proximity to market and logistics cost and second, in natural gas feedstock cost and price stability.  KeyState’s target market is the 15-state Northeast & Mid-Atlantic region without ammonia, urea production and which is served primarily by international imports.  Second, KeyState will extract and provide the entire gas feedstock to the Project at cost of production including landowner royalty from its 5,000-acre gas asset under a 20-year 200bcf gas agreement.  This price savings compared to Henry Hub represents more than $100,000,000 in enterprise value over 10 years.  More than $30,000,000 has been invested in gas field infrastructure including state and township roads, water impoundment ponds, well pad sites and other improvements.

KeyState eliminates virtually all upstream methane emissions in natural gas extraction and transport using our onsite, ‘captive’, ‘closed-source’ natural gas supply system and innovative emissions avoidance and monitoring technology, resulting in a dramatic reduction is gas waste and a lower-emissions-value-added gas feedstock.  This innovation will demonstrate and document once and for all that American natural gas can produced with near-zero fugitive methane emissions.

KeyState’s business case and market, emissions and supply chain impacts can be summarized as ‘Displacing higher-cost, higher-emissions, mostly imported, essential products with lower-cost, lower-emissions, domestically produced, essential products’.   For example, KeyState’s 100,000 tons per year (tpy) of ‘Blue’ ammonia sales will utilizes 17,700,000 kg of Qualified Clean Hydrogen and will displace the majority of ‘Gray’, conventional ammonia sales in the Northeast and Mid-Atlantic states.

These competitive advantages have allowed KeyState to enter into 10-year off take exclusivity agreements with volume and pricing structure commitments, to date covering more than 70% of KeyState’s production tonnage, representing more than $250,000,000 in annual revenue and with the final 30% of tonnage under letters of interest pending exclusivity agreement negotiations.

80% of KeyState’s products will be move by rail and 20% by truck.  Adequate rail loading area and siding to move 3 products at large-scale is vital, but rare.  KeyState is fortunate to have purchased the former ‘River Hill Coal, Bedford Rail Tipple’, a ‘Construction-Ready’ 20-acre rail yard located in Karthaus Township which moved 100 railcars of coal per day in a previous era.  Likewise, KeyState is fortunate to have secured a purchase option agreement with the same land-owner for an adjacent 170-acre plant site.  This site was previously prepared and permitted for the waste-coal fired, 580 MW, ‘River Hill Power Plant’.  More than $50,000,000 of private and public funds were invested in site improvements in the early 2,000s, but with uncertain federal policy, the project could not secure construction financing and was abandoned.  This was a terrible blow to investors, taxpayers and the job-seeking public.

For Appalachia, KeyState River Hill Fertilizers, Fuels and Chemicals will open a new economic era by demonstrating the physical and economic vertical integration of natural gas extraction with manufacturing, using local gas feedstock to create local manufacturing jobs.  For North-Central Pennsylvania, a region suffering from the decades long decline of coal and resulting job loss, tax base shrinkage, and opportunity reduction, ‘KeyState’s River Hill project will directly increase employment by 1,252. This direct employment will support employment in the region and the commonwealth through indirect and induced employment by another 1,704 jobs – supporting 2,956 total jobs. In just five years, this project will generate more than $500 million in labor income, adding nearly $1.3 billion to Pennsylvania’s economy, with total economic output of more than $3 billion. Most importantly, the sustained economic growth of the ongoing plant operations will support more than 1,200 jobs and over $700 million in economic output year-over year…all while supplying the greater Mid-Atlantic/Northeast United States with a vital commodity utilizing Pennsylvania’s abundant natural resources.’ According to the Pennsylvania Manufacturers Association recently published KeyState Economic Impact Study’[2].

KeyState won acceptance into the Appalachia Regional Hydrogen Hub (ARCH2) for pioneering work in reducing emissions in natural gas production, and by vertically integrating natural gas extraction with manufacturing, and by recycling and storing CO2.  KeyState received a provisional grant award for ARCH2 of $70,000,000 to be provided across 4 phases of development. This $70,000,000 represents less than 4% of KeyState’s total, $2B, project cost but is an essential financing tool for attracting other investment to rural Pennsylvania when substantially applied to engineering and early development cost.

KeyState represents an exceptional return on the taxpayer’s $70,000,000 ARCH2 investment.  According to the recent Pa. Manufacturers Association Economic Impact Study, federal tax revenue generated over the first 5 years of the Project’s construction and operations will be more than $151,000,000.  Over the typical 60-year life span of an ammonia facility, the return on taxpayer’s $70M grant to KeyState would be over $2B[3].  Over the first 5 years of development and operations, KeyState is projected to generate more than $37,000,0000 of township and county tax revenue and $10,000,000 per year ongoing.  To put this in context, the entirety of Clearfield County’s budget for 2024 was $41,000,000.

More than $12,000,000 of development funds have been spent or committed through the completion of Budget Period 1 with overall more than $80,000,000 invested in the plant site, rail yard and gas field upgrades and infrastructure. The anticipate ARCH2 Budget Period 2 grant of $29,000,000 would provide under 50% of the Front-End Engineering & Design with strategic vendor and financial partners providing the remainder for the Project to reach FID.  For construction financing, KeyState will leverage its strong off take agreements for project financing which will include a mix of private equity especially utilizing Federal Qualified Opportunity Zone designations and Pennsylvania Tax Equity Financing (below), public credit markets, with a favorable opportunity to access Tax-Free Municipal Bonds.

KeyState’s business case does not use hydrogen production tax credits or related provisions from the Inflation Reduction Act.  KeyState will access 45Q tax credits in the geological storage of 230,000 tpy of CO2.  And, KeyState may be eligible for up to $50,000,000 of transferable Pennsylvania state tax credits under the Local Resource Manufacturing Tax Credit[4].

The majority of KeyState’s jobs for ongoing operation will not require a college degree, and KeyState is working with local high schools and vocational schools along with the building trades to establish effective apprenticeships, internships and certification programs.  To attract college graduates, KeyState’s corporate offices and future training center are in nearby Innovation Park on the Penn State University Campus.  With these combined efforts KeyState will develop a great workforce and partner with the President’s ‘1 Million Apprenticeship Initiative’.

[1] 7-year average NE & Mid-Atlantic imports = 629k tpy of urea and 738k tpy of UAN fertilizer: Green Markets

[2] ‘KeyState: River Hill IMPLAN Economic Impact Study’, 5.6.25

[3] IMPAN Study = $35,466,108 in annual federal tax revenue p.10

[4] LRM Tax Credit = 47¢ per mcf of dry gas used in manufacturing petrochemicals and fertilizers up to $56MM in total credits