Nielsen, K.F.

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The fertilizer-energy supply and demand situation for western Canada

University of Saskatchewan Research Archive

- 1 -THE FERTILIZER-ENERGY SUPPLY &~D DEMAND SITUATION FOR WESTERN CANADA Kenneth F. Nielsen Western Co-operative Fertilizers Limited 12 February, 1975. Agriculture in Western Canada is an energy-dependent industry. Vast acreages, a short growing season, relatively cool & dry climates, infertile soils and pest problems make it necessary to use machines, fertilizers & pesticides to farm economically. It is possible that Agriculture accounts for about a third of the energy consumed in Western Canada. However, unlike most other uses, Agriculture is involved in re-cycling energy and not just throwing it away after using it. For every calorie of energy consumed in Agriculture it is estimated that about three are produced. The Ammonia Building Block Nitrogen fertilizers require a source of hydrogen to combine with atmospheric nitrogen in making ammonia, the basic building block. Of the sources presently available as a supply of hydrogen (methane, electrolytic decomposition of water, coal gasification & others) the ~ 2 -least expensive one is methane - cH 4 . About 95% of natural gas is methane. About 46,000 cu. ft. of natural gas are required to make one ton of ammonia nitrogen. Of this 61% is feedstock. The simplified chemical reactions are: CH 4 + H2o 2NH 3 • Heat is required in the ammonia manufacturing process and natural gas is the preferred energy source because it is convenient to use, clean, and relatively inexpensive. Oil and coal are realistic alternatives for the heat required. At the present time, about 39% of the natural gas used to make ammonia is consumed as heating fuel. Natural Gas SuEElY of Natural Gas in l.Vestern Canada 1973 billions of cubic feet - BCF ExEort Eastern Province Production Use Balance Canada U.S .A. B.C. 319 112 207 0 207 Alberta 1,970 295 1, 6 75 709 865 Sask. 70 97 -27 0 0 Manitoba 0 74 -74 0 0 TOTALS 2,359 578 1,781 709 1,072 - 3 -While no figures are available to show the exact magnitude of natural gas reserves, they are considered ample for this rate of production for at least thirty (30) years. At that time, coal gasification technology should be. adequate to use the vast reserves of coal as a source of methane. Projected N Supply As can be seen in Table 1 the projected production capacities for N fertilizers in Western Canada increase from 585,000 tons per year in 1975 to 2,601,000 in 1985. The associated natural gas requirements are as follows: 1975 1980 1985 N Projections - tons 585,000 2,257,000 2,601,000 Natural gas Needed - BCF 26.9 103.8 119.6 % Used Based on l. 37 5.27 6.07 Alberta 1973 Production It can be seen that a relatively small part of the supply of natural gas is used for fertilizer nitrogen. The Future Since much of the future depends on political and not technical considerations, a quote is presented, for information purposes, from the Alberta Energy Resources - 4 -Conservation Board Report 74-V, page 21-22, published December 1974. " ...•• Based on the evidence at the hearing (June 1974} and the Board's own studies it believes there will be significant plant expansion of ethylene, ammonia, methanol, and their related products in Alberta. The evidence suggests that such development will occur intermittently during the forecast period but that a considerable increase in provincial gas requirement for petrochemical purposes would take place in the initial years of the forecast period. Although the Board believes that petrochemicals will be produced from a variety of feedstocks in the future, it expects natural gas to be the primary resource used by petrochemical plants to be developed for that production during the first ten (10} years of the forecast period. The Board forecast assumes that some 2.5 billion pounds per year of ethylene capacity in Alberta will use natural gas as a fuel. It also assumes that six (6} world-scale ammonia plants and four (4) world-scale methanol plants will use natural gas as a fuel and a feedstock source. In addition, the Board expects that some derivative up~ grading of these primary petrochemicals will take place in Alberta and has added appropriate gas volumes for such plants in its forecast." - 5 -The Board's forecast of natural gas requirements for petrochemical use in Alberta are: 1975 61 BCF 2004 239 BCF 30 year total 6500 BCF The summary classification and volumes used are as follows: Natural Gas Reguired BCF 30 Year 1975 2004 Total Residential & Commercial 149 274 6,610 Industrial (incl.petrochemical) 234 364 11,436 'l'ransportation 41 7 520 Electricity Generation 50 30 1,300 TOTALS 474 675 19,866 Conclusion The allocation of natural gas for manufacturing nitrogen (and other) fertilizers will be more than ample for the projected potential requirements in Western and Eastern Canada. The export of nitrogen fertilizers will grow and will be about one-half to two-thirds of production. - 6 -The net result of policies presently being developed and implemented will be more up-grading of the natural gas in Alberta and Western Canada and the exporting of manufactured products (see Table 2). This will mean that exports of natural gas to Eastern Canada and the U.S.A. will be materially reduced. DISCUSSION Question: Any tie in with phosphate rock import and potassium export? Answer: Hard to negotiate using one as lever to increase supply of the other (phosphate rock). It may be possible to negotiate a proposal of this nature at the commercial company level. Question: How is the world supply of phosphate rock? Answer: No problem with supply, main problem - is it economical to mine in certain locations. Question: What about supplies of phosphorus for spring '75? Answer: There will be a shortage. - 7 -TABLE 1. NITROGEN SUPPLY-DEMAND BALANCE FOR WESTERN CANADA Thousands of tons of N for year ending 30 June Supply Existing Capacity Approved additional capacity Expected additional approved capacity TOTAL CAPACITY Process losses TOTAL SUPPLY (TOTAL CANADA) Demand - Domestic Domestic Fertilizer Domestic Industrial TOTAL DOMESTIC {TOTAL CANADA) Available for Export from Western Canada (Available for Export from Canada) 1975 650 650 65 585 (1,206) 365 30 395 {845) 190 = (361) 1980 650 1,033 689 2,372 115 2,257 (3,004) 645 50 695 (1,401) 1,562 {1,603) 1985 650 1,033 1,033 2,716 115 2,601 (3,348) 920 70 990 (1,845) 1,611 (1,503) 920 cu. ft. Natural Gas ) for 40# N Unit Cost 0.75 per M Value .69 Factor 1 THE VALUE OF NATURAL GAS UP-GRADED AS A FERTILIZER AND USED IN AGRICULTURE 40# N Yield increase Milled applied ---7 of 7 bu/A of ) into 308 per acre Wheat lb. flour 0.15 per lb. 3.50 per bu. 0.17 per lb. 6.00 24.50 52.36 8.7 35.5 75.9 Baked into > 308 loaves of Bread 0.40 per loaf 123.20 178.6 co 

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The fertilizer-energy supply and demand situation for western Canada

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