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Published May 09, 2013, 05:40 PM

Plans for $1.5 billion fertilizer plant in ND officially unveiled

Officials with Northern Plains Nitrogen announced May 9 that they hope to build a $1.5 billion nitrogen plant in the northeast North Dakota city of Grand Forks.

By: Jonathan Knutson, Agweek

GRAND FORKS, N.D. — The Upper Midwest’s fast-growing corn industry could be getting a major boost.

A proposed nitrogen fertilizer plant, if built, could make nitrogen — crucial to good corn yields — less expensive and more available in the region.

“We’d love to have a nitrogen plant right here in the area,” said Duane Dows, a Page, N.D., farmer involved in the project.

Officials with Northern Plains Nitrogen announced May 9 that they hope to build a $1.5 billion nitrogen plant in the northeast North Dakota city of Grand Forks.

The plant would convert natural gas currently being flared from oil wells in western North Dakota. It would make anhydrous ammonia, urea and UAN liquid fertilizer, with the three marketed in the north-central United States and in the southern part of Manitoba and Saskatchewan.

If all goes well, the plant would be up and running in about four years.

Don Pottinger, CEO of Northern Plains Nitrogen, citing legal restrictions, wouldn’t discuss financing.

But he said some potential investors “with deep pockets” are interested in the project.

Following is a quick look at what promoters of the plant are proposing:

•Production capacity: 2,200 tons per day, or more than 600,000 tons per year.

•Location: Northwest of Grand Forks, near the city’s wastewater treatment plant.

•Timetable: Construction anticipated to begin in the spring of 2015, with the plant in operation during the spring of 2017.

•Workforce: At the peak of construction, 2,000 people would be employed. The plant, once completed, would have about 135 full-time employees.

Worries about imports

The U.S. imports about half of the nitrogen fertilizer it uses, with Trinidad (an island nation in the Caribbean) accounting for nearly half of imports, according to The Fertilizer Institute, a fertilizer industry trade organization.

Normally, much of the imported nitrogen, a key fertilizer needed in almost all aspects of plant growth, comes up the Mississippi River on low-cost barges.

The historic drought of 2012, however, reduced water levels, limiting the size and number of barges that can come up the Mississippi.

Even before problems with Mississippi barges, there was strong interest in building a nitrogen plant in North Dakota.

Last summer, the North Dakota Corn Growers Association announced it hoped to build such a plant.

The group will be involved with the proposed Grand Forks plant.

Darin Anderson is president of Northern Plain Nitrogen’s board of directors. He’s a Valley City, N.D., farmer and president of the North Dakota Corn Growers Association.

Dows, who grows corn, is treasurer of Northern Plains Nitrogen’s board of directors.

Other board members include farmers from North Dakota and South Dakota.

Pottinger has many years of experience in production agriculture and the fertilizer industry.

“There’s a need for more North American (nitrogen) production,” he said.

North Dakota Gov. Jack Dalrymple, who spoke briefly at the May 9 announcement, said, “I’ve been telling people for years that we need a nitrogen part in this part of the state.”

Dalrymple is part of a family farming operation in Casselton, which is in eastern North Dakota.

Two plants in the works

CHS Inc., working with the North Dakota Farmers Union, is planning to build a $1.4 billion nitrogen fertilizer plant in Spiritwood, N.D., also using natural gas from oil production.

Pottinger said the market can support two plants.

“There’s a need for a pile of nitrogen fertilizer,” he said

Woody Barth, president of the North Dakota Farmers Union, said the proposed Grand Forks plant doesn’t affect plans for the Spiritwood plant.

The need for nitrogen fertilizer is strong, he said.

Ultimately, “the market will decide” if two plants are needed, he said.

Price advantages

Corn has been on the upswing in the Upper Midwest for years. Its acreage in North Dakota shot from 1.2 million in 2002 to an estimated 4.1 million this year. Corn acreage also has risen in Minnesota, South Dakota and southern Canada.

Building the plant in Grand Forks puts it “in the market,” reducing the cost of transporting fertilizer from the plant to customers, said Doug Stone, who will be in charge of marketing fertilizer there.

Nitrogen fertilizer is a globally traded commodity, so the price of fertilizer sold by Northern Plains Nitrogen would be set primarily by the global market.

But having a fertilizer plant in the Upper Midwest should allow its customers to pay a little less for nitrogen than they otherwise would, Stone said.

Though corn would be the main beneficiary, other crops grown in the area that use nitrogen fertilizer also would gain if the plant is built.

“Having it (nitrogen) produced here would give us a more reliable supply. And it should be less expensive,” said Kevin Waslaski, a Langdon, N.D., farmer and president of the U.S. Canola Industry.

North Dakota is the leading producer of canola, which, like corn, is a heavy user of nitrogen.

Location, location, location

Northern Plains Nitrogen considered a number of locations, both in and out of North Dakota, before selecting Grand Forks, said Larry Mackie, the company’s chief operator officer.

He had four decades of experience in nitrogen plant development and operations.

A number of factors, including water supply, transportation and suitable land, led to the selection of Grand Forks, population 56,000.

Mackie promised that the plant will be built and operated in the safest way possible.