FocusUS shale gas boom is spurring nitrogen fertilizer plans

15 November 2012 17:35  [Source: ICIS news]

HOUSTON (ICIS)--The rapidly growing supply of natural gas in the US resulting from the boom in resource extraction from the nation's shale deposits has propelled a lengthy list of companies to announce plans for the new or expanded production of nitrogen fertilizers.

“The abundant supply of shale gas here in the US has changed the game for many companies in the nitrogen market,” said The Fertilizer Institute (TFI) vice president of public affairs Kathy Mathers.

Among the interests planning to take advantage of the newly available gas supplies are North America's largest fertilizer producers and several farmer-funded organizations.

Most recently, Illinois-based CF Industries announced 1 November that it plans to spend $3.8bn (€3.0bn) on new ammonia and urea/urea ammonium nitrate (UAN) units at locations in Louisiana and Iowa.

CF said its board has approved budgeting $2.1bn for building new ammonia, urea and UAN plants in Donaldsonville, Louisiana, and $1.7bn for new ammonia and urea plants in Port Neal, Iowa.

The company expects the plants to start production in 2015 and 2016.

The two projects will produce 2.1m tonnes/year of ammonia, 2.0m-2.6m tonnes of granular urea and up to 1.8m tonnes of UAN solutions, CF said.

CF said the expansion will allow it to capitalise further on the global cost advantage of North American natural gas.

Donaldsonville is served by five natural gas pipelines tied to Henry Hub prices, and Port Neal can tap existing gas supplies from the Rockies, mid-continent US and Canada. More natural gas is expected to come from the Williston Basin in North and South Dakota.

Meanwhile, CF is in the midst of a $1.5bn debottlenecking effort at several of its existing ammonia plants

Abundant natural gas from North Dakota's Bakken shale formation also prompted a consortium of commodity groups in the northern plains, including the North Dakota Grain Growers Association, to announce plans for the construction of a $1.5bn nitrogen fertilizer plant to be located in the Williston Basin.

Canada-based Agrium said on 7 November that it is close to naming a location in the Corn Belt for a proposed new nitrogen fertilizer plant.

Agrium's board of directors is expected to approve budgeting for the greenfield project sometime prior to June 2013.

Missouri and Kentucky are likely candidate locations, sources said.

Norway-based Yara has said it is considering building a nitrogen fertilizer plant in Belle Plaine, Saskatchewan, to produce Urea, urea ammonium nitrate (UAN) and diesel exhaust fluid (DEF).

North America's largest agricultural cooperative, Minnesota-based CHS said it is taking steps toward construction of a more than $1bn nitrogen fertilizer manufacturing plant to be located at Spiritwood, North Dakota.

The CHS plant would be designed to produce 800,000 tonnes/year of ammonia.

CHS is investing $10m in this first feasibility phase.

The Egyptian group Orascom Construction Industries (OCI) is building a new nitrogen fertilizer complex in Weaver, Iowa.

The new complex will be run by Iowa Fertilizer Company, a wholly owned subsidiary of OCI.

The $1.4bn project will have a 1.5m-2.0m tonnes/year capacity to produce ammonia, urea and UAN.

Construction work is scheduled to begin before the end of 2012 and the complex will
open in mid-2015.

US engineering firm KBR has been retained by Ohio Valley Resources to design a fertilizer complex to be sited in Spencer County, Indiana.

"If all of the proposed new nitrogen fertilizer plants are built, they would represent more than 10m new tonnes of urea, a 50% increase in the production of UAN, and a 50% increase in the domestic supply of ammonia available for direct soil application," said Glen Buckley, consultant with NPK Fertilizer Advisory Service.

"With all of the new capacity, the world will be really long in urea," Buckley said.

Buckley, who has more than 30 years of experience in the US fertilizer industry, said some of the announced projects are unlikely to be built.

"After CF announced its major expansion plans, all of the projects proposed by the farmer-funded groups are likely to go away," Buckley said.

"There will not be any announcements," he said. They will simply not be heard of again.

($1 = €0.78)

By: Frank Zaworski
+1 713 525 2653

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