http://www.go2itnetwork.com/sulfate-anhydrous/
Natural Gas Prices Experiences
It takes about 33,000 cubic feet of natural gas to produce one ton of nitrogen fertilizer. Fertilizers consume more than three percent of total U.S. natural gas use. The ethanol boom could dramatically impact natural gas prices.
Is the Place to be Energy? Or energy Service Companies?
Fracking
One of my favorite magazines is Forbes, and one of my favorite columnists is Ken Fisher. In the July 19, 2010 issue, Ken makes some comments about the changing nature of gas and oil exploration. This involves relatively newer techniques using an older technology whereby fluid at very high pressure is injected into a well, usually a natural gas well, thereby dramatically increasing output.
The more fertilizer produced, the more natural gas is utilized and the higher both eventually cost. And according to widely followed natural gas commentator Phil Flynn of Chicago-based Alaron Trading, “Ethanol plants are going to require natural gas consumption to produce electricity.” Flynn hadn’t yet conducted a study into how much natural gas consumption would be required for these plants, but said in a telephone interview that he could be pursuing this.
Another 78 plants are now being constructed. Flynn pointed out natural gas prices would benefit from the ‘front and back end’ of the ethanol boom.
Nearly 95 percent of U.S. ethanol distilleries use natural gas boilers. Cumulative ethanol production could surpass 12 billion gallons. But their estimates do not include increased fertilizer demand to increase corn yields.
Corn acreage is one of the largest consumers of nitrogen-based fertilizer. And because of the recent ethanol subsidies, more corn will be planted this year than in the past six decades. According to the U.S. Department of Agriculture, corn growers intend to plant 90.5 million acres in 2007. It takes about 450 pounds of corn to produce 25 gallons of ethanol fuel to power an SUV.
The recent ethanol boom has become a blessing for fertilizer companies and their share prices. Since this past summer, shares in Saskatchewan-based Potash Corp have more than doubled to a record $191.46/share. The company is the world’s largest potash producer and a significant producer of nitrogen fertilizers. Shares in Illinois-based CF Industries have nearly tripled in the same period. Both have benefited from relatively lower natural gas prices in the face of strong demand for their products.
Ken’s thought is that this advancement of technology will keep natural gas prices cheap for a very long time. He thinks $2 per thousand cubic feet is a logical result which is about 40% of today’s price.
In 2004, about 12 million tons of nitrogen nutrients were consumed. But the increased corn planting has begun causing shortages in nitrogen fertilizers, according to Potash chief executive William Doyle. He told Bloomberg News last week that some farmers are not receiving sufficient fertilizer supplies because transportation facilities are nearly overloaded with shipments. This could impact fertilizing in mid summer if supplies continue to remain tight.
Ken recommends that you buy the service companies providing these technologies to the energy industry and recommends several names.
He could be right. Major gas fields that were formerly unproductive are now providing massive amounts of gas. New fields that were previously ignored are now bonanzas. The price of gas has fallen dramatically and now rests around $5, and stubbornly refuses to move upward.
They cite all kinds of reasons including economic recovery increasing demand. They cite rapid decline rates for the new technology. Famous speakers appear on ‘Larry King Live’ to promote the use of natural gas. Etc.
Corn planting takes place now through May in the Midwestern U.S. Fertilizing is generally done for two to three weeks at corn planting time. “Knee high by the Fourth of July,” describes when the second fertilization is done. This refers to the height of the corn and represents the last fertilizer application for the growing season. Side dressing is said to give plants a boost and provide an easy, smooth and better harvest.
What to Invest In? Resources.
We certainly agree that resources are the place to invest, and we also agree that service companies are good bets. But look at all of the companies servicing the industry. Several drillers have given up the business because oil and gas explorers couldn’t raise the financing necessary for new wells. The stock price of numerous service companies are within the range that they were in before the great fall in October 2008, especially the juniors and smaller companies where the Cymorfund specializes..
We talked with an Ohio farmer who told us, “Even though we farmers are complaining about the additional cost of fertilizer, we can not afford to not apply adequate amounts for corn production.” He explained, “If 28-percent Nitrogen costs me $100/ton more, and I use one-third ton per acre, that is an additional cost of $33/acre. With a yield of 150 bushels/acre, the cost is $0.22 more per bushel. ” There is a better return in higher corn-producing states, such as Iowa and Illinois, where yields are 200 bushels per acre.
“In 2000, my cost for NH3 was $242/ton,” he said. This year’s cost has nearly doubled to $580/ton. For the 2001 planting season, he paid $165/ton for 28-percent liquid nitrogen. For every one dollar increase or decrease in natural gas prices, fertilizer prices can swing up or down by 95 cents.
The alternate way to look at this, is that these companies will not likely jump in price. If they sustain profits over a long period, or appear to be earning super profits, then the price of their stock will increase, and sometimes nicely.
The problem is that no-one guesses correctly all the time as to what stocks to buy.
For this farmer’s fertilizer applications, he prefers 28-percent liquid nitrogen for each of handling and application. While anhydrous ammonia (NH3) can also be used, and is cheaper per unit of nitrogen, he finds it is less safe for use. NH3 is also a favorite among the illegal methamphetamine-manufacturers, which siphon off the ammonia from farmer’s nursing tanks. Urea is volatile and used mainly for wheat, but it also used by western Corn Belt farmers.
A recent Energy Information Administration outlook forecasts benchmark natural gas prices rising by 9.2 percent in 2007 and increasing another 3.7 percent in 2008. World demand for fertilizers grew by 13 percent between 2001 and 2005, according to The Fertilizer Institute. After China and India, the U.S. is the world’s third largest nitrogen producer.
You may want to study additional information here to do with Sweet Crude Oil Price and Crude Oil Assay.
Determine the Enthalpy change in hydration of Anhydrous Magnesium sulfate (MgSO4)