IDEAS home Printed from https://ideas.repec.org/p/ags/nddaae/133410.html
   My bibliography  Save this paper

Economics of Using Flared vs. Conventional Natural Gas to Produce Nitrogen Fertilizer: A Feasibility Analysis

Author

Listed:
  • Maung, Thein A.
  • Ripplinger, David G.
  • McKee, Gregory J.
  • Saxowsky, David M.

Abstract

The feasibility analysis begins by examining the economic potential of using flared natural gas as a feedstock to produce a low-cost, reliable, and sustainable supply of nitrogen fertilizer for North Dakota farmers. Specific objectives include • Determining the most profitable facility size, location, and configuration for a natural gas nitrogen fertilizer production facility in North Dakota. • Calculating the financial returns and capital requirements of gas-based nitrogen fertilizer production. • Identifying possible business structures for the fertilizer production facility. Project objectives are achieved by evaluating the technological and economic feasibility of alternative nitrogen fertilizer production and distribution systems. • Flared Gas Collection: the economics of flared gas collection in western North Dakota analyzes the availability of flared gas supplies. • Ammonia Plant Preliminary Design: several ammonia production plants based on commercially available technologies are used to estimate capital and operating cost. • Business Structure: the effect of alternative business structures, including new generation cooperatives, on incorporation, capitalization, taxation, and fertilizer marketing are investigated. • Facility Siting: factors in determining optimal plant site include fertilizer form (e.g. ammonia, urea), technological and economies of scale, transportation and utility infrastructure, and nitrogen fertilizer demand. The use of natural gas in western and eastern North Dakota and co-location by existing coal-fired power plants or refineries are considered. Topics originally intended to study but not yet completed or are no longer relevant include • Preparing a financial pro forma, including pro forma balance sheet, income and cash flow statements for the nitrogen fertilizer production plant to demonstrate the financial viability of the enterprise. • Incorporating a supply chain model to estimate storage and transportation costs and efficiencies, including capturing and retaining value, and reducing cost and risks. • Determining the willingness of food manufacturers, bioenergy producers, and other current and potential buyers of North Dakota crops to pay the premiums for green inputs. • Estimating the impact of using of green fertilizer on farm profit. The focus of the study was refined when initial findings revealed that initiating an enterprise to capture and process flared gas was not economical at this time, but that relying on the energy industry to supply conventional natural gas for fertilizer manufacturing is more feasible at the present time. However, a premium for crops produced with green inputs and need for carbon sequestration in the future should be subsequently studied at appropriate times.

Suggested Citation

  • Maung, Thein A. & Ripplinger, David G. & McKee, Gregory J. & Saxowsky, David M., 2012. "Economics of Using Flared vs. Conventional Natural Gas to Produce Nitrogen Fertilizer: A Feasibility Analysis," Agribusiness & Applied Economics Report 133410, North Dakota State University, Department of Agribusiness and Applied Economics.
  • Handle: RePEc:ags:nddaae:133410
    DOI: 10.22004/ag.econ.133410
    as

    Download full text from publisher

    File URL: http://ageconsearch.umn.edu/record/133410/files/Department-APUC%20Report.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wilson, William W. & Shakya, Sumadhur & Dahl, Bruce L., 2014. "Dynamic Changes in Spatial Competition for Fertilizer," Agribusiness & Applied Economics Report 174402, North Dakota State University, Department of Agribusiness and Applied Economics.
    2. Demierre, Jonathan & Bazilian, Morgan & Carbajal, Jonathan & Sherpa, Shaky & Modi, Vijay, 2015. "Potential for regional use of East Africa’s natural gas," Applied Energy, Elsevier, vol. 143(C), pages 414-436.

    More about this item

    Keywords

    Environmental Economics and Policy; Production Economics;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:nddaae:133410. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/dandsus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.