June 24-25 2004
description
Transcript of June 24-25 2004
Farm Foundation & USDA Office of Energy Policy
Agriculture as a Producer & Consumer
of EnergyStephen R. Wilson
President & Chief Executive Officer
Farm Foundation & USDA Office of Energy Policy
Agriculture as a Producer & Consumer
of EnergyStephen R. Wilson
President & Chief Executive Officer
June 24-25 2004
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CF Member Owners
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Total Energy Consumed on U.S. Farms in 2002
Diesel 27%
Gasoline 9%
LP Gas 5%
Pesticides 6%
Fertilizer 28%
Electricity 21%
Natural Gas 4%
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Nitrogen Fertilizer Production
NaturalGas
“Natural gas is the primary
feedstock used in
producing nitrogen
fertilizers”
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Nitrogen Fertilizer Production
AnhydrousAmmonia
NaturalGas
Air
“The hydrogen from
natural gas is reacted
with nitrogen from the
air to produce
anhydrous ammonia.”
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Nitrogen Fertilizer Production
Nitric Acid
Urea
CO2
LiquidAm Nitrate
UANBlending
Granulation
AmmoniatedPhosphates
Phos Acid
UANSolutions
Urea
AmmoniatedPhosphates
AnhydrousAmmonia
NaturalGas
Air
Ammonia
“Ammonia is used
directly as a fertilizer or
used to produce other
forms of fertilizers”
Products
Am
Nitrate
O2
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U.S. Ammonia Cash Production Cost
$ Per Ton
0
50
100
150
200
250
95 96 97 98 99 00 01 02 03 04
Natural Gas Cost
Upgrading
8
000 TonsBeginning FY 1999 20,168
Assumed Permanent Closures 5,550
Additions to CapacityExpansions/Restarts 640Debottlenecks 489 Total 1,129
Net Change -4,421
Total 15,747
% of Capacity Permanently Closed 27.5%
U.S. Ammonia Production Capacity
Change Since 1999
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Fertilizer Prices Paid By Farmers
April Prices
50
100
150
200
250
300
350
400
450
1998 1999 2000 2001 2002 2003 2004
Ammonia
Urea
$ Per Ton
UAN 30%
10
U.S. Nitrogen Supply Million Product Tons
0
5
10
15
20
25
1998 1999 2000 2001 2002 2003 2004
OffshoreCanadaDomestic
Est
.E
st.
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U.S. Nitrogen Fertilizer Demand By Product
Million Nutrient Tons
Average 2000-03 Change
Ammonia 3.24 27.0%
Urea 3.01 25.1%
UAN 3.07 25.6%
Am. Nitrate 0.58 4.8%
DAP/MAP 1.03 8.6%
Other 1.04 8.6%
Total N Demand 11.98 100.0%
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Anhydrous Ammonia Distribution
Pipeline Rail
Truck Barge
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Offshore Ammonia Imports – FY 2003
DAP/MAP Production
45.5%
Direct Application13%
Industrial/Upgrade
41.2%
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Ammonia Price SpreadGulf vs. Midwest
0
20
40
60
80
100
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
Fertilizer Years 1990-Current
10-year average
Current
$/Ton
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U.S. Dry Urea Supply Million Product Tons
0
2
4
6
8
10
98 99 00 01 02 03 04
OffshoreImports
Canada
DomesticProduction
Est.
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U.S. Urea Cash Cost vs. Gulf Barge Price
$ Per Ton
0
50
100
150
200
250
J02 M M J S N J03 M M J S N J04 M M
U.S. Cash Production Cost
Gulf Barge $
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U.S. Urea ImportsMillion Tons
0
2
4
6
94 95 96 97 98 99 00 01 02 03 04
Canada
Other
Middle East
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U.S. UAN SupplyMillion Tons 28% Equivalent
0
3
6
9
12
15
1998 1999 2000 2001 2002 2003 2004
Domestic Production
Imports
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World UAN Capacity
Source: Fertecon
United StatesUnited States
Western Europe
Western Europe
Central EuropeCentral Europe
FSUFSU
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Solutions
Comprehensive energy bill that includes a
natural gas title which addresses the
concerns of the fertilizer industry
Source: Fertecon, PotashCorp
Natural Gas Costs- $US/MMBtu- $US/MMBtu
US$6.00+
US$6.00+
Trinidad$1.40
Trinidad$1.40
Russia$0.90
Russia$0.90
Indonesia$1.20
Indonesia$1.20
Middle East$0.60
Middle East$0.60Venezuela
$0.75Venezuela
$0.75
Argentina$1.25
Argentina$1.25
Ukraine$1.50
Ukraine$1.50
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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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