The nitrogen fertilizer industry is planning a huge expansion in 9 states

[cali]

Record Junk Sale Funds Fertilizer After Texas Blast: Muni Credit

An Iowa agency is set to offer the largest-ever U.S. municipal junk bond sale to finance a fertilizer plant two weeks after an explosion at a Texas distributor of crop nutrients killed 14 people.

<snip>

The nitrogen fertilizer industry is proposing about $20 billion of new plants and almost $2 billion of expansions across nine states and three Canadian provinces, according to Mark Gulley, a New York-based analyst at BGC Financial LP.

Among the planned projects is CF Industries Holdings Inc. (CF)’s proposed $1.7 billion expansion of a site in western Iowa. CF is the largest U.S. maker of nitrogen fertilizer. An ammonium nitrate blast at the same location in 1994, when it had different ownership, killed 4 workers.

<snip>

http://www.bloomberg.com/news/2013-04-29/record-junk-sale-funds-fertilizer-after-texas-blast-muni-credit.html

[Newest Reality]

1. Oh boy.

That sounds like some explosive growth.

The nitrogen fertilizer business appears to be booming.

Well, we can trust them to expand with safety in mind for workers and communities.

[MineralMan]

2. Time to start composting, I guess.

Those farmers are going to need a new source of fertilizer. I'm being sarcastic, actually.

Growing food on the massive scale needed by a population of 310 million requires a lot of fertilizer. It has to be manufactured somewhere. Household composting isn't going to supply that need.

And, for those of you who are composting for your backyard garden, I just put out a fire this weekend in my neighbor's neglected compost heap. They were out of town. I went into my backyard, and saw smoke coming out of it. So, I broke it down and put the smoldering fire out with my garden hose. The neighbors were grateful, but it made quite a mess in their backyard. Once I had it out, I put a sprinkler on top of it and left it running, to make sure it stayed out. Compost fires suck.

If I hadn't put it out, it would have ended up burning down their detached garage, which was adjacent to the heap.

[n2doc]

3. Expect a huge expansion of the Gulf of Mexico Dead Zone too n/t

[FarCenter]

4. Were it not for the Haber process the world population would be a good deal smaller

Fertilizer generated from ammonia produced by the Haber process is estimated to be responsible for sustaining one-third of the Earth's population.[6] It is estimated that half of the protein within human beings is made of nitrogen that was originally fixed by this process; the remainder was produced by nitrogen fixing bacteria and archaea.[7]

http://en.wikipedia.org/wiki/Haber_process

[reformist2]

5. This is a direct result of fracking, cheap natgas. Fun, fun, fun.

[1-Old-Man]

7. Could be to some extent but the economics have to work on the production side

When you think about it the price of raw materials (natural gas) for the production of nitrogen fertilizer is going to be essentially the same for all producers, so increases supplies resulting from fracking (sub-strata rock fracturing) might result in a decrease in cost of the finished product, and that would probably increase use to a measurable extent, but it would not increase use of the fertilizer all that much. Its good to keep in mind that the present cost of natural gas, which is very low, is a recent thing. You need only go back 5~7 years to see prices three times what they are today but then you only have to go back another 5~7 years to find prices right where they are today - and there was no great increase in demand for nitrogen fertilizer the last time gas prices were at this level. See what I'm sayin'? Just a decrease in the price of natural gas alone is not enough to spur a huge increase in the demand for the fertilizer that is made from it. We can see that because it wasn't all that long ago when prices for gas were low and demand wasn't much higher then than it is now. If I had to take a guess I'd say that the new plants are probably being built because someone found a cheaper way to make the fertilizer that requires entirely new production facilities.

[reformist2]

8. US is going to become a low-cost producer of fertilizer globally.

Because of fracking, the US has one of the lowest prices of natural gas in the entire world. And that is going to lead to a manufacturing boom in any industry where natgas is a major input cost. That's the way I figure, anyway.

[1-Old-Man]

10. I'm not too sure that's true

I don't know this to be a fact but I very much suspect that natural gas is less expensive in parts of the middle east than it is here.

Something else comes to mind here too, and maybe this is relevant and maybe not, you decide. If you grow corn and at the end of the season you wish to take it to market you will find that because of its bulk transportation of it is somewhat expensive. But if you take that corn and turn it into alcohol it becomes what I'd call more value-dense, which is to say that the value of the corn is retained but its bulk much decreased, which makes transportation cost less.

Natural gas isn't traded internationally very much. For many years our country has imported about as much of it as we export; some comes into the country in the north-east and some is exported from the north-west and the amounts are usually about equal. When it comes to moving the stuff across seas there aren't many ports that can accept it, many ships that can transport it, and not enough price differential between most places to make it profitable. Interestingly enough at least some of the ships that are used to transport it across the Atlantic actually use a portion of their cargo to fuel the ship. They typically burn about 3% of the gas they carry to power the ship for a trans-Atlantic crossing.

As I understand it in places like the Saudi oil fields the gas is simply burned rather than used, flaring I believe they call it. Now if they were to take that gas, which has essentially no cost, and process it into fertilizer then they might be able to undercut the prices of the rest of the world, 'cause after all, its hard to compete with a product for which the ingredients are free.

[Buzz Clik]

6. Well...

The new plant in southeast Iowa “will have state-of-the- art technology and the highest safety standards,” Omar Darwazah, Orascom’s investor relations manager in Cairo, said via e-mail. “Some safe, easy-to-handle and non-explosive alternatives are available that provide the same nutrients to the soil” as ammonium nitrate, and the facility will produce those instead, he said.

So, what's the problem?

[pipoman]

9. Yep, nitrogen based fertilizer

is responsible for increased yields, consistent production, and is relatively safe if handled correctly...it isn't going anywhere, nor should it until/unless there is a better/cheaper alternative..which there may be according to the article..

[NoGOPZone]

11. I can't be the only one that initially read that as 'explosion' nt

[tkmorris]

12. No you aren't

I opened this thread specifically to see if anyone else had read it that way. At first I thought it was an Onion piece.