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Published August 27, 2012, 09:54 AM

Fertilizer patch?

N-Flex LLC will provide more information to the North Dakota Industrial Commission, which ordered more details as it considers whether to put $1 million into the company’s system to make anhydrous ammonia fertilizer from a series of mobile natural gas-to-fertilizer plants in the state.

By: Mikkel Pates, Agweek

FARGO, N.D. — N-Flex LLC will provide more information to the North Dakota Industrial Commission, which ordered more details as it considers whether to put $1 million into the company’s system to make anhydrous ammonia fertilizer from a series of mobile natural gas-to-fertilizer plants in the state.

Doug Goehring, North Dakota Agriculture Commissioner and a member of the commission with the governor and attorney general, says N-Flex LLC presented plans at the Aug. 20 meeting and may come back with more information for the commission’s next regularly scheduled meetings on Sept. 24 or Oct. 23.

N-Flex founder Neil Cohn is seeking the $1 million share of a $4 million project. It would be spent during 18 months to develop a pilot project that would use a mobile nitrogen reactor to make anhydrous ammonia and other byproducts. The other matching investors would pay for three-quarters of the project. The Oil and Gas Research Council had reviewed the proposal and forwarded it with a positive recommendation.

N-Flex wants to capture natural gas, a byproduct of oil drilling in North Dakota. About a third of the gas is burned off because the pipelines for collecting it aren’t yet in place. Natural gas is an ingredient in making both the anhydrous ammonia gaseous fertilizer and the solid urea form.

“We’re looking for more information; we requested a few more documents, some of which could be considered confidential,” Goehring says.

Some of the information is financial, including costs associated with the project.

Cohn says he is working with the Industrial Commission to get a complete list of necessary information, which he says his company will provide over the next several months. Cohn says N-Flex is incorporated in New York state, but soon will have a Bismarck, N.D., office, and has partners in Omaha, Neb., and Sioux Falls, S.D.

Effects

The commission wanted to know the potential impact of a sudden rise in natural gas prices. “We we were assured that wouldn’t be an issue,” Goehring says. He says the team members working on the project have “in-depth knowledge about the fertilizer business and the technology.”

Some of the testing will involve evaluating how the equipment and procedures work in extreme cold or warm environments. Goehring says the company would be working on that through the coming winter.

At first blush, Goehring says it appears the project has promise, with revenue for mineral owners, the state and the company. The project also could provide much-needed access to nitrogen fertilizer, which the agriculture commissioner says serves the public good.

“It’s about food security,” Goehring says, adding that it has potential for using natural gas that is flared and wasted.

“It looks like a wasted resource,” Goehring adds. “The Environmental Protection Agency doesn’t like to see emissions.”

Gathering gas

Goehring says some wells have been created in remote areas, and it often takes oil companies time to get gas-gathering lines into them. The state allows some flaring, but the oil exploration companies must show their ability to hook into the infrastructure, which may mean a gathering line that takes the gas to a main and then to a processing facility.

“We see the gas being flared off, but we allow it to a point but work with the industry to make sure they have a plan in place to get hooked up as quickly as possible,” Goehring says.

In areas where it’s hard to quickly install gathering lines, the N-Flex project might be an opportunity to use the gas at the wellhead.

“It’s another revenue stream and we are creating some fertilizer and another public benefit,” he says.

N-Flex anticipates a series of 50 to 100 fertilizer plants operating in the state, Goehring says. Each “micro” mobile plant would make 1,100 tons of anhydrous ammonia a year, the proponents say. A “mini” modular unit could produce 22,000 tons per year.

Goehring says the company must work out how to take tankers to storage facilities, perhaps in multiple locations, for later distribution by rail, truck or retail outlets. Byproducts could be used for butane, propane and gasoline production.

The industrial commission acts as the board of directors for the state-owned Bank of North Dakota, the state Mill and Elevator and other economic projects. Money for the project would come from a $2.7 million fund, generated by oil and gas taxes.

Project players

Cohn spent a decade with Glencore International, developing base metal markets in Latin America, India and China. In 1998, he established a carbon trading desk at Natsource, facilitating 100 million tons of carbon offsets and building Natsource into a large private sector environmental finance fund.

Other co-founders are Paul Batcheller and Hans Vrijenhoef. Batcheller is a partner in PrairieGold Venture Partners, Sioux Falls, a former adviser to former Sen. Tom Daschle, D-S.D., on economics, science and technology. He is on the board of South Dakota Bio, the Dakota Development Resources and the state of South Dakota’s Research and Commercialization Council. Vrijenhoef is co-founder of MICRO Chemie BV, an independent Dutch ammonia storage company that operates in the Port of Rotterdam, and recently was sold to OCI.

Also, Glen Buckley, from the Gainesville, Fla., area, is responsible for ammonia off-take partnerships, sales and logistics. He is a former chief economist and partner in NPK Fertilizer Advisory Service, and is retired from CF Industries, where he was chief economist and director of agribusiness analysis for nearly 30 years. He is a past chairman of the U.S. Grains Council, among other things.

The N-Flex project is separate from a $1 billion farmer-owned project being promoted by the Northern Corn Development Corp. This would be a traditional fertilizer plant that would hook into a mainline where gas was already traveling through a pipeline. Goehring says he sees the two concepts as potentially complementary.

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