CHS Inc. to build near Spiritwood | The North Dakota Corn Growers Association and commodity groups also announced plans to construct a nitrogen plant
The largest farmer-owner co-op-erative in the United States is planning to construct a $1.4 billion nitrogen fertilizer plant in North Dakota.
In mid-September, CHS Inc. announced its intent to build a plant near Spiritwood, N.D., which will use the state’s abundant supplies of natural gas to produce anhydrous ammonia, urea and UAN liquid fertilizer.
It plans to sell the nitrogen fertilizer to producers in the Dakotas, Minnesota, Montana and Canada.
Jack Dalrymple, North Dakota’s governor, endorsed the project as a boon for farmers in the region.
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“This potential for this type of project is great news for our farmers and for the entire state of North Dakota,” said Dalrymple, who participated in the CHS announcement in Bismarck.
“The CHS plant will help us further reduce the flaring of natural gas in western North Dakota and it will provide our farmers with a reliable supply of locally produced fertilizers in place of imports from foreign countries.”
The CHS announcement may be good news for North Dakota but it complicates matters for another group planning to build a nitrogen fertilizer plant in the region.
In July, the North Dakota Corn Growers Association and other commodity groups announced plans to construct a $1.5 billion, farmer owned fertilizer plant in the state.
Canadian producers have taken a leadership role in developing the farmer-owned plant, as the Keystone Agricultural Producers and the Manitoba Canola Growers Association are participating in a steering committee for the project.
Don Pottinger, a Minnesota consultant and business adviser to the consortium of growers, wasn’t shocked by the CHS announcement.
“We expected CHS to announce what they did because we run in the same circles,” he said from his home near Minneapolis. “What it does is underscore the point that there is a monstrous void in the area, in local production of nitrogen containing fertilizers…. That plant will go a certain distance to filling that need and other plants will too.”
Consequently, the farmer-owned plant is moving forward and will continue to seek investors.
Pottinger acknowledged that nitrogen from two large-scale fertilizer plants would likely overwhelm the North Dakota market. Yet, there is sufficient demand in the region.
“An area that includes North Dakota, southern Saskatchewan, southern Manitoba, Minnesota, South Dakota, parts of Montana and parts of Iowa. It’s a 30 or 40 million acre market.”
So far, CHS has selected a 200 acre site near Spiritwood and will soon begin the design and feasibility studies for its plant. The co-operative has committed $10 million to the feasibility phase of the project.
If construction proceeds as expected, CHS hopes to open the plant by 2016. Construction cost, based on CHS estimates, will be $1.1 to $1.4 billion.
CHS is based in Minnesota and is owned by American farmers and cooperatives. It operates about 70 farm service centres in 15 states, selling ag inputs, fuel, farm supplies and providing grain marketing services to 50,000 U.S. producers.
