With winter setting in for the long haul, two indicators havebecome a constant. Natural gas prices continue to stay pegged inthe upper echelon, and fertilizer producing companies continue toscale back their natural gas-intensive process of producing itemssuch as ammonia and methanol.

Upon the evaluation of the current economics at work, leadingfertilizer producer Terra Industries, which reported last month thatit was selling off a portion of its December gas contracts, announcedyesterday that in light of current gas prices, it has not committed topurchase January gas for a number of its facilities (see Daily GPI, Dec. 12, 2000).

In fact, the company said most of its North American facilitieshave been idled, including: Blytheville, AR; Beaumont, TX;Woodward, OK; and Port Neal, IA. Terra also idled one of two setsof ammonia and upgrading plants at its Verdigris, OK facility. Intotal, Terra said these cutbacks equate to 66%, 60%, 76% and 100%of Terra’s North American ammonia, UAN, urea and methanolmanufacturing capacity, respectively.

“While nitrogen fertilizer and methanol prices have increasedsignificantly, we cannot generate positive cash flow from most ofour North American plants at current natural gas prices of nearly$10 per million British thermal unit,” said Michael L. Bennett,Terra’s executive vice president. “We are keeping all of ourfacilities staffed so that we can resume production quickly as webelieve warmer weather will likely cause a significant natural gasprice decrease.”

The company added that it will resume operation at thefacilities when the natural gas prices, or the fertilizer pricesreach levels that would allow for positive cash flows from thefacilities.

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