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Terra Suspends Fertilizer Production at OK Facility on High Gas Costs

Top fertilizer manufacturer Terra Industries Inc. has indefinitely suspended all production at its Woodward, OK plant in the near term because of high natural gas costs. The shutdown is due to mechanical repairs and catalyst changes, but Terra will not resume production in the near term because the gas costs haven't been offset by price increases in nitrogen products and methanol, the company said.

Terra's five North American plants typically consume 100 Bcf of natural gas annually. A $1/Mcf hike in the price of gas adds approximately $14-15 million to the company's gas bill, according to CEO Michael L. Bennett (see NGI, Oct. 17).

The Woodward facility's management and staff will make repairs, inspect equipment and change out some process catalysts through the first half of December, which will permit the facility to resume more efficient production in the second half of the month, or at a later date when demand and selling prices increase, and/or "gas costs decrease to the point where the facility can operate with positive cash flow," the company said in a statement. Terra expects to fulfill its Woodward sales commitments during the shutdown from inventories at Woodward and other Terra locations.

"Continuing high natural gas costs make it imprudent to build nitrogen product inventories that are not covered by firm sales orders," said Bennett. "While we cannot predict when market changes will permit us to restart the Woodward facility, we are confident that we have the product supply and logistics capabilities to fulfill all Terra sales commitments during the shutdown and to meet our customers' future needs."

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