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
1
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%
2
Nitrogen Fertilizer Production
Natural
Gas
“Natural gas is the primary
feedstock used in
producing nitrogen
fertilizers”
3
Nitrogen Fertilizer Production
“The hydrogen from
natural gas is reacted
Anhydrous
Ammonia
Natural
Gas
Air
with nitrogen from the
air to produce
anhydrous ammonia.”
4
Nitrogen Fertilizer Production
Products
Ammonia
O2
Natural
Gas
Anhydrous
Ammonia
Nitric
Acid
UAN
Blending
Am
Nitrate
UAN
Solutions
Urea
Air
CO2
“Ammonia is used
directly as a fertilizer or
used to produce other
forms of fertilizers”
Liquid
Am Nitrate
Granulation
Ammoniated
Phosphates
Urea
Ammoniated
Phosphates
Phos Acid
5
U.S. Ammonia Cash Production Cost
$ Per Ton
Upgrading
250
200
150
100
Natural Gas Cost
50
0
95
96
97
98
99
00
01
02
03
04
6
U.S. Ammonia Production Capacity
Change Since 1999
Beginning FY 1999
000 Tons
20,168
Assumed Permanent Closures
5,550
Additions to Capacity
Expansions/Restarts
Debottlenecks
Total
640
489
1,129
Net Change
-4,421
Total
15,747
% of Capacity Permanently Closed
27.5%
7
Fertilizer Prices Paid By Farmers
April Prices
$ Per Ton
450
400
Ammonia
350
300
250
Urea
200
150
UAN 30%
100
50
1998
1999
2000
2001
2002
2003
2004
8
U.S. Nitrogen Supply
Million Product Tons
25
Offshore
Canada
Domestic
Est.
20
15
10
5
0
1998
1999
2000
2001
2002
2003
2004
9
U.S. Nitrogen Fertilizer Demand By
Product
Million Nutrient Tons
Average
2000-03
Change
Ammonia
Urea
UAN
3.24
3.01
3.07
27.0%
25.1%
25.6%
Am. Nitrate
DAP/MAP
Other
0.58
1.03
1.04
4.8%
8.6%
8.6%
11.98
100.0%
Total N Demand
10
Anhydrous Ammonia Distribution
Pipeline
Truck
Rail
Barge
11
Offshore Ammonia Imports – FY 2003
Direct Application
13%
Industrial/
Upgrade
41.2%
DAP/MAP
Production
45.5%
12
$/Ton
100
Ammonia Price Spread
Gulf vs. Midwest
80
60
Current
10-year
average
40
20
0
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
Fertilizer Years 1990-Current
13
U.S. Dry Urea Supply
Million Product Tons
Est.
10
Offshore
Imports
8
6
Canada
4
Domestic
Production
2
0
98
99
00
01
02
03
04
14
U.S. Urea Cash Cost vs. Gulf Barge Price
$ Per Ton
250
Gulf Barge $
200
150
100
U.S. Cash Production Cost
50
0
J02 M
M
J
S
N J03 M
M
J
S
N J04 M
M
15
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
16
U.S. UAN Supply
Million Tons 28% Equivalent
15
Imports
12
9
6
Domestic Production
3
0
1998
1999
2000
2001
2002
2003
2004
17
World UAN Capacity
Western
Europe
United States
Central
Europe
FSU
Source: Fertecon
18
Solutions
 Comprehensive energy bill that includes a
natural gas title which addresses the
concerns of the fertilizer industry
19
Natural Gas Costs
- $US/MMBtu
Russia
$0.90
US
$6.00+
Venezuela
$0.75
Ukraine
$1.50
Trinidad
$1.40
Middle East
$0.60
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
21
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