Gas prices force production halt By CHRISTOPHER CLAUSEN THE ENTERPRISE

BEAUMONT - High prices for natural gas, and low prices for their finished product, has forced one company to temporarily stop production at its Beaumont plant.

Terra Industries Inc. of Sioux City, Iowa, has idled its Beaumont Methanol plant for the month of December, company officials confirmed Wednesday.

They stressed all of the plant's 48 employees are still employed at the plant located at the Dupont Co.'s Beaumont Works industrial park in Mid-County.

For now, the employees are concentrating on plant maintenance, training and other tasks instead of producing methanol and ammonia products.

The company uses natural gas to produce ammonia for use in fertilizers and methanol for use by chemical plants to make paint solvents and removers as well as the gasoline additive MTBE.

The Beaumont plant has an annual production capacity of 280 million gallons of methanol and 255,000 tons of ammonia.

Terra Industries annually produces 320 million gallons of methanol and more than 9 million tons of ammonia products.

"We're optimistic that at some point this natural gas (prices) will break,'' said Nick DeRoos, cq plant manager of Beaumont Methanol.

When natural gas for delivery in December moved above $6 per million British thermal units in late November, the company decided to idle the Beaumont and Blytheville, Ark., plants, said Mark Rosenbury,cq senior vice president and chief administrative officer of Terra Industries.

The company has five U.S. plants, one in Canada and two in the United Kingdom

Monday, natural gas for January delivery closed above $9 per million Btus on the New York Mercantile Exchange as a blizzard and severe cold front approached the Midwest where 30 percent of all homes are heated by natural gas.

Prices began retreating Tuesday when meteorologists said it would not be as cold for as long as they had thought on Monday.

Wednesday, natural gas for January delivery fell 60.8 cents, or 7.5 percent, to close at $7.537 per million Btu on the Nymex. That is three times higher than a year ago. In September, the highest price forecast by the New York Mercantile Exchange, the federal Energy Information Administration and others was $5.50 per million Btus.

Both DeRoos and Rosenbury said the company will decide on restarting production in late December based on methanol and natural gas prices.

"The economics need to be right to justify it starting up," DeRoos said. He said methanol prices have been improving all year.

In January 1999, low methanol prices forced the company to stop production at Beaumont Methanol for about a month.

Natural gas supplies have dwindled all year as electrical utilities bought gas to burn and produce electricity during a hotter than normal summer in an expanding economy.

Meanwhile, natural gas supplies were not being restocked as quickly because production companies were waiting for energy prices to rebound and stabilize from 1999's prices which were 10 year lows.

Publicly traded on the New York Stock Exchange under the symbol TRA, Terra Industries reported a net income of $6.2 million or 8 cents per share for the third quarter which ended Sept. 30 compared to a net loss of $16.9 million, or 23 cents per share in 1999's third quarter.

The improvement was due to higher selling prices -from 12 to 57 percent - for its products, as well as increased sales volumes, the company reported.

But that good news was partially offset by a 52 percent jump in natural gas costs, the company said then.

Since then, electric utilities nationwide, including local provider Entergy Corp., and natural gas providers, including Port Arthur provider Southern Union Gas Co., have sought and won the right to charge customers more to cover the higher fuel prices.

Other companies including Dupont and Goodyear Tire & Rubber Co. have said that high natural gas prices hurt profits.

Natural gas producers are now scrambling to catch up.

Of the drilling rigs exploring nationwide last week, 844 sought gas, 242 sought oil and two were listed as miscellaneous, Houston-based Baker Hughes Inc. reported.

A year ago, the total rig count for all three categories was at 813, the company said.

Contact business editor Christopher Clausen at 838-2876 by e-mail at cclausen@hearstnp.com

12/14/2000

http://www.hearstnp.com/cpapers/bea/bea141573.shtml

-- Martin Thompson (mthom1927@aol.com), December 14, 2000

Answers

Ammonia for fertilizer. This country produces the large food supplies by use of fertilizers. The spring will be here soon with a shortage of fertilizer.

-- David Williams (DAVIDWILL@prodigy.net), December 15, 2000.