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Indian Fertilizer Co-Op Seeking Global Tie to U.S. Shale Gas via Quebec & St. Lawrence Seaway

A yen for low-cost U.S. shale gas has spread all the way to India and the world's biggest fertilizer co-operative manufacturing and distribution conglomerate.

Enter Indian Farmers Fertilizer Cooperative Ltd. (IFFCO) of New Delhi which is setting out to build a plant on the St. Lawrence River in Quebec to use gas imported from the United States and sell products on agricultural supply markets across Canada and around the world.

Along with international fertilizer makers, the venture represents more than 50 million farmers who belong to 40,000 rural co-op organizations in India. The Quebec project is sponsored by a newly minted overseas arm: Entreprise IFFCO Canada Ltee., which is controlled by a wholly-owned global merchant subsidiary called Kisan International Trading Co. A much smaller Quebec counterpart, La Coop federee, also has in interest in the scheme.

The Indian fertilizer empire revealed its Quebec plan in filings this week with the National Energy Board (NEB), to support coordinated shale gas import pipeline projects sponsored by TransCanada Corp., Union Gas (Spectra), Enbridge Gas Distribution and Gaz Metro (see Daily GPI, April 17).

For C$1.2 billion (US$1.1 billion), IFFCO is planning to build a plant at Becancour, an industrial community on the south shore of the St. Lawrence River which is accessible year-round to freighter ships thanks to an ice-free deep water port.

The project is designed to use about 80 MMcf/d to make bulk cargoes of nitrogen-based urea fertilizer, giving Quebec – hitherto an importer of the farming material – new industrial stature as a national and international supplier of an agricultural essential.

Benefits of the project include work for up to 1,500 construction tradesmen, followed by permanent employment for 250 plant operating personnel and an estimated 500 indirect jobs in supporting supply and service roles, say the NEB filings.

IFFCO has been attracted to Quebec by “the potential of Canada as an investment hub for natural gas-based industries,” the NEB filings say.

Alberta is studded with fertilizer plants that use natural gas, but they are about 1,000 kilometers (600 miles) away from the nearest Pacific seaport at Vancouver and face increasing competition for gas supplies from steadily growing thermal oil sands extraction projects.

IFFCO is urging the NEB to grant speedy approval to the pipeline facilities, tariff and toll package sought by TransCanada, Union, Enbridge and Gaz Metro, which is aimed primarily at increasing access to U.S. shale gas exports and contested by remnants of the central Canadian tradition of relying on Alberta production.

“We would like to draw the attention of the board to the importance of the current schedule for the design and construction of the [Quebec fertilizer] plant in a very competitive commodities market,” says the IFFCO filing. “Uncertainty around the issues relating to transportation of natural gas and its toll has the potential to derail this investment and send a wrong signal particularly to foreign investors.”

Access to competitive gas supplies, at the Dawn storage and trading hub in southern Ontario that U.S. shale production reaches via border crossings from Michigan and New York State, is critical for the fertilizer project, IFFCO says.

“This project requires an investment of more than C$1.2 billion (US$1.1 billion) that cannot be made without certainty about the gas supply for the factory,” says the Indian fertilizer giant's filing with the NEB.

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