Farm Foundation & USDA Office of Energy Policy
Agriculture as a Producer & Consumer of Energy
Stephen R. Wilson President & Chief Executive Officer
June 24-25 2004
CF Member Owners
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Total Energy Consumed on U.S. Farms in 2002
Pesticides 6%
Diesel 27%
Fertilizer 28%
Gasoline 9%
LP Gas 5% Electricity 21% Natural Gas 4%
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Nitrogen Fertilizer Production
Natural Gas
“Natural gas is the primary feedstock used in producing nitrogen fertilizers”
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Nitrogen Fertilizer Production
“The hydrogen from
Natural Gas
Anhydrous Ammonia
Air
natural gas is reacted with nitrogen from the air to produce anhydrous ammonia.”
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Nitrogen Fertilizer Production
Products
Ammonia
O2
Nitric Acid
Liquid Am Nitrate
Am
Nitrate
UAN
Natural Gas
Anhydrous Ammonia
UAN Blending Urea
Solutions
Air CO2
Granulation
Urea
“Ammonia is used directly as a fertilizer or
Ammoniated Phosphates
Ammoniated
Phosphates
used to produce other
forms of fertilizers”
Phos Acid
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U.S. Ammonia Cash Production Cost
$ Per Ton
250 200 150 100 50 0 95 96 97 98 99 00 01 02 03 04
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Upgrading
Natural Gas Cost
U.S. Ammonia Production Capacity Change Since 1999
Beginning FY 1999 Assumed Permanent Closures Additions to Capacity Expansions/Restarts Debottlenecks Total Net Change 000 Tons 20,168 5,550
640 489 1,129
-4,421
Total % of Capacity Permanently Closed
15,747 27.5%
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Fertilizer Prices Paid By Farmers April Prices
$ Per Ton 450
400 350 300 250 200 150 100 50 1998 1999 2000 2001
Urea
Ammonia
UAN 30%
2002
2003
2004
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U.S. Nitrogen Supply
Million Product Tons
25
Offshore Canada Domestic
20
15
10
5
0 1998 1999 2000 2001 2002 2003 2004
Est.
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U.S. Nitrogen Fertilizer Demand By Product
Million Nutrient Tons
Average 2000-03
Ammonia Urea 3.24 3.01
Change 27.0% 25.1%
UAN
Am. Nitrate DAP/MAP Other
3.07
0.58 1.03 1.04
25.6%
4.8% 8.6% 8.6%
Total N Demand
11.98
100.0%
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Anhydrous Ammonia Distribution
Pipeline
Rail
Truck
Barge
11
Offshore Ammonia Imports – FY 2003
Direct Application 13%
Industrial/ Upgrade 41.2%
DAP/MAP Production 45.5%
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$/Ton 100
80 60 40 20 0
Ammonia Price Spread Gulf vs. Midwest
Current 10-year average
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
Fertilizer Years 1990-Current
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U.S. Dry Urea Supply
Million Product Tons
Est.
10 8 6
Offshore Imports
Canada
4 2 0 98 99 00 01 02 03 04
Domestic Production
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U.S. Urea Cash Cost vs. Gulf Barge Price
$ Per Ton
250 200 150 100
U.S. Cash Production Cost Gulf Barge $
50 0 J02 M M J S N J03 M M J S N J04 M M
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U.S. Urea Imports
Million Tons
6
Other
4
Middle East
2
Canada
0 94 95 96 97 98 99 00 01 02 03 04
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U.S. UAN Supply
Million Tons 28% Equivalent
15
Imports
12 9 6
Domestic Production
3 0 1998 1999 2000 2001 2002 2003 2004
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World UAN Capacity
Western Europe United States
Central Europe FSU
Source: Fertecon
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Solutions
Comprehensive energy bill that includes a natural gas title which addresses the concerns of the fertilizer industry
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Natural Gas Costs
- $US/MMBtu
Russia $0.90 US $6.00+
Ukraine $1.50 Trinidad $1.40 Middle East $0.60
Venezuela $0.75
Indonesia $1.20
Argentina $1.25
Source: Fertecon, PotashCorp
Solutions
Comprehensive energy bill that includes a natural gas title which addresses the concerns of the fertilizer industry Insure that world producers using government-controlled natural gas fully cover their true production costs — Russia WTO
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