Farm Foundation

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Farm Foundation USDA Office of Energy
PolicyAgriculture as a Producer Consumer of
EnergyStephen R. WilsonPresident 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
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 is the primary feedstock used in
producing nitrogen fertilizers
NaturalGas
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Nitrogen Fertilizer Production
The hydrogen from natural gas is reacted with
nitrogen from the air to produce anhydrous
ammonia.
AnhydrousAmmonia
NaturalGas
Air
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Nitrogen Fertilizer Production
Products
Ammonia
O2
Nitric Acid
Am Nitrate
LiquidAm Nitrate
UANSolutions
UANBlending
NaturalGas
AnhydrousAmmonia
Urea
Air
Urea
Granulation
CO2
Ammonia is used directly as a fertilizer or used
to produce other forms of fertilizers
AmmoniatedPhosphates
AmmoniatedPhosphates
Phos Acid
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U.S. Ammonia Cash Production Cost Per Ton
Upgrading
Natural Gas Cost
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U.S. Ammonia Production Capacity Change Since
1999
000 Tons Beginning FY 1999 20,168 Assumed
Permanent Closures 5,550 Additions to
Capacity Expansions/Restarts 640 Debottlenecks
489 Total 1,129 Net Change -4,421 Total 15,747
of Capacity Permanently Closed 27.5
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Fertilizer Prices Paid By FarmersApril Prices
Per Ton
Ammonia
Urea
UAN 30
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U.S. Nitrogen Supply Million Product Tons
Est.
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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
Barge
Truck
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Offshore Ammonia Imports FY 2003
Direct Application 13
DAP/MAP Production 45.5
Industrial/ Upgrade 41.2
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Ammonia Price SpreadGulf vs. Midwest
/Ton
Current
10-year average
Fertilizer Years 1990-Current
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U.S. Dry Urea Supply Million Product Tons
Est.
Offshore Imports
Canada
Domestic Production
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U.S. Urea Cash Cost vs. Gulf Barge Price Per
Ton
Gulf Barge
U.S. Cash Production Cost
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U.S. Urea ImportsMillion Tons
Other
Middle East
Canada
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U.S. UAN SupplyMillion Tons 28 Equivalent
Imports
Domestic Production
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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
Middle East 0.60
Trinidad 1.40
Venezuela 0.75
Indonesia 1.20
Argentina 1.25
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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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