N America shale gas to prompt new nitrogen project - Agrium

14 September 2011 16:36  [Source: ICIS news]

HOUSTON (ICIS)--The North American shale gas boom will eventually prompt construction of a greenfield nitrogen project, a senior executive at Canadian fertilizer major Agrium said on Wednesday.

Nitrogen fertilizer producers have so far be held back on new projects to benefit from shale gas - unlike the many chemicals firms planning crackers and plant expansions.

Bruce Waterman,  Agrium  executive vice president and chief strategy development and investment officer, said the main issue holding back a nitrogen project is risk sharing.

“The question right now is what kind of a gas contract can you get” to share gas cost and price risks between natural gas producers and fertilizer makers, Waterman told analysts during at a webcast investor conference in New York.

Waterman said as a fertilizer producer, Agrium would clearly feel that the best party to take oil and gas price exposure is an oil and gas company, but, “obviously, if you are an oil and gas producer, you would rather your customer take that price risk”.

“I think it [an agreement on risk sharing] will happen, but we are not quite there yet,” Waterman said.

“I am actually quite a believer in shale gas, which will keep costs low in North America,” he added.

Waterman also noted how quickly the North American gas supply situation changed in the wake of the shale gas boom.

“It’s funny, it wasn’t that many years ago when people were asking when southern US [nitrogen] producers were going to shut down because of high gas prices,” he said.

For more on fertilizers, visit ICIS Fertilizers
For more on Agrium and other producers visit ICIS company intelligence

By: Stefan Baumgarten
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