A $1 billion construction project in Indiana could help solve the biggest problem facing Oklahoma's two largest industries.
The country's natural gas industry is desperately trying to create new and expanded markets for its fuel after prices plummeted over the past year.
At the same time, agriculture leaders are growing concerned about the supply and price of fertilizer, which is made largely from natural gas.
More than half of the country's fertilizer — or 10.8 million tons — was imported last year, according to the U.S. Department of Agriculture. The price of natural gas in other parts of the world is trading for two to five times more than it is in the United States.
“While we have been concentrating on weaning ourselves from foreign oil — which is a good goal — we have become dependent on foreign fertilizer necessary to produce our food,” Terry Detrick, president of American Farmers and Ranchers Insurance, said at the International Energy Policy Conference in Oklahoma City on Thursday.
“When natural gas is 70 to 90 percent of the cost of producing nitrogen fertilizer, it alarms me that we are importing fertilizer at an all-time high price,” he said.
Price could be just the beginning of the problems.
“How are we going to do our part to feed the estimated 70 percent increase of world population to 9 billion by 2015,” he asked. “Do you think that when China is hungry that we'll have any priority in obtaining fertilizer from them?”
A subsidiary of an Ohio-based coal company could provide at least part of the answer.
Powhatan Point, Ohio-based Ohio Valley Resources LLC, last month announced plans for a $1 billion nitrogen fertilizer plant in southern Indiana.
The plant would produce 2,400 tons of ammonia per day and 3,000 tons per day of the urea ammonia nitrate solution used in fertilizer.
The Indiana project still needs permitting approval, and construction likely will take about three years.
The new plant won't affect fertilizer prices any time soon, but over the next several years, that and other fertilizer and chemicals plants are likely to pop up throughout the country if domestic natural gas prices remain lower than the international rate.