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Ag industry advised to ‘stay calm’ regarding chemical security regulations

Featured, News

The Department of Homeland Security does not want to interfere with the viability of the agriculture chemical industry or farming interests, Larry Stanton, acting director of the Department of Homeland Security’s Chemical Security Compliance Division, told Green Markets at last week’s Chemical Sector Security Summit.

The conference, held June 11-13 in Falls Church, Va., drew more than 350 attendees, and featured speakers on a range of security issues affecting the chemical industry. Stakeholders that make, sell, or use agriculture chemicals should “stay calm,” Stanton suggested, while DHS finalizes the list of chemicals that it wants protected from attack or use by terrorists.

Ammonium nitrate, urea, and anhydrous ammonia appeared on the preliminary list in various threshold quantities, and will likely remain there, Stanton said. He added that DHS looked closely at some 4,200 comments submitted in response to its preliminary list of “chemicals of interest,” out of a desire to form a true partnership with the many groups involved. The final list is expected in July, and the agricultural chemical industry “will be okay” with the results, Stanton predicted.

Many groups, however, including the Agricultural Retailers Association (ARA), looked at the proposed list issued April 2 and argued that thousands of agricultural businesses pose low risk and should not be subject to burdensome regulation (GM May 21, p. 12). ARA also argued that urea should be removed from the list, and that screening threshold quantities for anhydrous ammonia should be changed.

Last week’s three-day summit was convened just outside the nation’s capital by DHS and the Chemical Sector Coordinating Council. It was intended to give stakeholders an update on federal efforts to finalize regulations aimed at making U.S. chemical facilities more secure, and offer specifics on what will be required to implement them.

Many facilities will be regulated and eventually inspected by DHS, depending on the type and amount of chemicals that could be used by or targeted by terrorists. “We need to develop a picture of the risk,” DHS Secretary Michael Chertoff told conference goers, noting the department’s Chemical Security Assessment Tool (CSAT), available at www.dhs.gov/xprevprot/programs/gc_1169501486197.shtm. Demonstrations were offered to help agriculture retailers and distributors gain a better understanding of what type of information facilities are expected to provide during the screening process.

Those facilities identified as high risk will have to tell DHS how they plan to secure their site and protect any potentially dangerous chemicals with a security vulnerability assessment (SVA), including a plan to deal with potential threats. This will be done through a DHS website still in development.

The filings will be due at the end of the year after DHS determines the level of risk for each facility, but Stanton suggested that facilities should start now to prepare. Fail to meet deadlines and “you’re going to be in deep trouble,” he warned.

That sentiment was echoed by Chertoff. “We will hold everyone accountable,” he said, and DHS won’t allow cheating for competitive advantage. A system is being put in place, however, to protect sensitive information both from potential terrorists and competitors.

Regulation will be based on a four-tier approach, with the top tier comprised of hundreds of the most recognizable risks in the chemical industry. Half of the estimated 5,000 to 6,500 regulated sites are expected to be tier four, the lowest risk, Chertoff said. He also stressed that the inspection process for the bottom two tiers will likely be underway by this time next year.

DHS tried to put the risks in perspective and noted tools to help improve awareness, including its Chemical Security Awareness Training website at www.test.chemicalsecuritytraining.com. “There are bushes and there are terrorists, but there is not a terrorist behind every bush,” H.M. Leith of AcuTech Consulting Group told one workshop. There are, however, a “rainbow of prospective adversaries,” Leith said, and planning decisions should be based on the complexity of the facility.

SVA programs are available from the Synthetic Organic Chemical Manufacturers Association (SOCMA) at www.socma.org. ARA also offers retailers an SVA tool developed by the Asmark Institute that uses a DHS-approved methodology developed by the Center for Chemical Process Safety (CCPS). Under the regulations, Tier 4 facilities may utilize alternative SVA programs meeting DHS criteria.

When it comes to chemical fertilizers, DHS is primarily concerned about theft or diversion, Stanton told Green Markets, and the Drug Enforcement Agency website has information that helps determine a legitimate customer. Theft is an obvious problem, Stanton noted, but diversion can involve bribery of customer service personnel. And you’ve got to “make sure to red flag potential problems.”

Ammonia pipeline rupture likely caused by construction, excavation activity, says NTSB

Ammonia, Featured, News

The National Transportation Safety Board said June 14 that it has determined that a 2004 anhydrous ammonia pipeline rupture and release (GM Nov. 8, 2004) was probably caused by construction equipment or excavation activity. The rupture released 204,000 gallons (4,858 barrels) of anhydrous ammonia in Kingman, Kan.

“We are very fortunate that such highly toxic chemicals of the size and scope involved in this accident were not released in a populated area,” said NTSB Chairman Mark Rosenker. “Had this same quantity of ammonia been released near a town or city, the results could have been catastrophic.”

The released material created a cloud, but there were no injuries associated with the accident. Chemicals from the pipeline entered a nearby stream in an environmentally sensitive area and killed more than 25,000 fish, including some fish from threatened species.

Some 30 homes were evacuated soon after the release. Local emergency responders told Green Markets that it was probably the worst time for such an accident as there were low wind speeds, low temperatures, and high humidity.

At about 11:15 am on Oct. 27, 2004, an 8 5/8-inch diameter steel pipeline operated by Enterprise Products Operating LP ruptured and released the ammonia in an agricultural area about 6 miles east of Kingman, Kan. The pipeline is owned by Magellan Midstream Partners LP.

NTSB said the probable cause of the rupture was a pipe gouge created by heavy equipment damage to the pipeline during construction in 1973, or subsequent excavation activity at an unknown time that initiated metal fatigue cracking and led to the eventual rupture. NTSB said contributing to the severity of the accident was the pipeline controller’s failure to accurately evaluate available operating data and initiate a timely shutdown of the pipeline.

NTSB said a drop in pipeline pressure, indicating abnormal conditions or a possible compromise in pipeline integrity, set off alarms displayed on the computerized pipeline monitoring system. Shortly after the first alarm the pipeline controller, in an attempt to remedy the low pressure, increased the flow of anhydrous ammonia into the affected section of pipeline. A total of 33 minutes elapsed between the time when the first alarm indicated a problem with the pipeline and the initiation of a shutdown.

In its initial report to the National Response Center, the pipeline operator’s accident reporting contractor reported a release of at least 20 gallons of ammonia, telling the NRC that an updated estimate of material released would be reported at a later time. No such report was ever made. Because of the inaccurate report, the arrival of representatives from the Environmental Protection Agency was delayed by a full day, affecting the oversight of the environmental damage mitigation efforts.

“The severity of this release of dangerous chemicals into the community could have been prevented,” noted Rosenker. “The safety recommendations that we have made, if acted upon, will reduce the likelihood of this type of accident happening again.”

NTSB made the following safety recommendations:

To the Pipeline & Hazardous Materials Safety Administration:

  1. Require that a pipeline operator must have a procedure to calculate and provide a reasonable initial estimate of released product in the telephonic report to the National Response Center.
  2. Require that a pipeline operator must provide an additional telephonic report to the National Response Center if significant new information becomes available during the emergency response.
  3. Require an operator to revise its pipeline risk assessment plan whenever it has failed to consider one or more risk factors that can affect pipeline integrity.

To Enterprise Products Operating LP:

  1. Provide initial and recurrent training for all controllers that includes simulator or non-computerized simulations of abnormal operating conditions that indicate pipeline leaks.

NTSB’s full report will be available on its website in several weeks at www.ntsb.gov.

Fertilizer sales up 80.7 percent at SaskPool; company takes over at Agricore

News

Fertilizer sales were up 80.7 percent for the third quarter ending April 30, 2007, at Saskatchewan Wheat Pool Inc.’s Agri-Products division – $52.4 million versus the year-ago $29.0 million. SaskPool cited higher selling prices and increased volumes.

SaskPool said that potential fertilizer shortages in Western Canada this spring caused farmers to take delivery of fertilizer supplies early. The same was true of canola seed and crop protection products, including gyphosate and preseed products. Moving into spring, fertilizer prices were near record highs, said SaskPool, which noted that estimated seeded acreage illustrates a shift from spring wheat to canola, barley, and oats, with the acreage of these three going up 1 million acres each. Canola acreage is expected to increase 1.6 million acres to 14.8 million acres, up 12.1 percent over last year’s 13.2 million acres. The previous record was 14.2 million acres in fiscal 1995. This is a particular boost for the company, as canola requires more inputs than cereal crops, noted SaskPool.

Ag-Products also saw a 50.3 percent boost in crop protection sales, to $11.4 million, up from $7.6 million. YTD was up 30.1 percent, to $22.5 million from $17.3 million.

The Ag-Products division reported total sales of $93.4 million versus the year-ago $56.3 million. Sales in SaskPool’s retail operations rose 67 percent, and the WCFL fertilizer production segment rose 62 percent. Third-quarter segment EBITDA was $9.8 million, versus nil during the year-ago period. Nine-month net sales were up 11.5 percent, to $222.4 million versus the year-ago $199.5 million. Nine-month EBITDA was $6.0 million versus a year-ago loss of $4.8 million.

SaskPool-wide, third-quarter net income was $9.2 million (EBITDA $24.6 million) on sales of $402.3 million, versus the year-ago loss of $8.3 million ($17.5 million EBITDA) and $336.5 million. For the nine-month period, SaskPool had net earnings of $12.0 million (EBITDA $48.7 million) on sales of $1.2 billion, versus the year-ago loss of $13.0 million (EDITDA $28.6 million) and $978.2 million.

In other news, Agricore United’s shareholders have approved the continuance of AU under the Canada Business Corporations Act (CBCA) and the plan of arrangement pursuant to which SaskPool will acquire all of the outstanding limited voting common shares of AU, and AU will redeem all of the outstanding Series A convertible preferred shares not tendered to SaskPool’s offers, which expired on June 12, 2007.

For an interim period, AU will become a wholly-owned subsidiary of SaskPool and will be delisted from TSX. Also, SaskPool’s president and CEO, Mayo Schmidt, will take on the same titles at AU, with the SaskPool board replacing the former AU board. The two companies will eventually be consolidated.

In addition to its grain and food processing businesses, the merged company will operate 276 agri-product sites, from Manitoba to the Peace River District in B.C. As previously reported, during the process of the purchase of AU, SaskPool agreed to sell certain grain and agri-product assets, including input outlets, to James Richardson International and Cargill Inc. (GM May 14, p. 1, April 2, p. 1).

UAP starts up new Alabama dry/liquid facility

News Briefs, South Central

Selma, Ala.-City commission and economic development officials joined with United Agri Products, the operating arm of UAP Holding Corp., Greeley. Colo., for ribbon-cutting ceremonies at the opening of a new bulk fertilizer and blending facility June 6 at Selma’s South Dallas Industrial Park, according to UAP officials. The new plant becomes the second in this community for UAP, which serves a 175-200 mile area around Selma in southeast and southwest Alabama. UAP spokeswoman Karla Kimrey said the new operation, which is expected to employ 12 people, is on rail siding and provides 2,500 st of dry and 1,000 gallons of liquid fertilizer storage. The project is in two phases, with the bulk fertilizer warehouse and blending equipment already completed, and the liquid fertilizer tank farm due to be finished in early July. Cost of phase one is put at $1.4 million. Phase two, consisting of additional warehousing space and an office building, is scheduled to begin construction in the fall. The contractor is Stuvre Construction from Iowa. Kimrey said UAP selected the latest model of a Ranco volumetric blender, which meters each product from individual bins. The other UAP facility, located nearby on Old Montgomery Highway, will continue in operation. The Selma expansion is in keeping with UAP’s plans to grow the fertilizer and seed portion of its business.

Tennessee Farmers beefs up Covington operations

News Briefs, South Central

Covington, Tenn.-Tennessee Farmers Cooperative (TFC) expects to have its new fertilizer storage facility up and running by the end of June at its Tipton Farmers Cooperative north of Covington. The facility is expected to hold 12,000 st, and includes a blending plant. Other parts of the new state-of-the-art crops center began operations in mid-February, including a 60 x 120 foot chemical storage building, 100 x 180 foot seed storage building, and a 48 x 60 foot office building. In the meantime, at the former Tipton Farmers Covington location, TFC has opened its second Stockdale’s: America’s Rural Outfitter. This is TFC’s new concept store, branching out to provide more diverse and expanded product offerings. TFC’s first Stockdale’s debuted near Chattanooga late last year (GM Jan. 29, 2007).

Renovations complete at Agrico facility

Canada, News Briefs

Mississauga, Ont.-Agrico Canada Limited/Limitee reports that the substantial renovation at its Lindsay Farm Centre in Lindsay, Ont., is complete, and that it plans a June 28 open house at the state-of-the art ag supply outlet, now located on Little Britain Road. Agrico says improvements include a better delivery system, the fastest tower fertilizer blender in the area, a wider range of ag tools, and safer storage. Agrico assumed some of the product lines of Plaunt Farm Service Inc., the former owner of the property. Agrico says the location is now more than a farm store because it also sells pet food, bird seed, clothing, and garden tools.

Fertinal awarded $94 M in hurricane claim

Mexico, News Briefs

Mexico City-Grupo Fertinal S.A. has been awarded US$94 million, plus interest, by a federal appellate court in Mexico to compensate the company for 2001 damage from Hurricane Juliette to its mines in Baja California Sur. The ruling is against Seguros ING. S.A. de C.V., the insurance company of ING in Mexico. A lower court ruled in Fertinal’s favor in 2005.

The Andersons gain fertilizer from power projects

Eastern Cornbelt, News Briefs

Maumee, Ohio-The Andersons Inc. will be handling all the fertilizer produced as a co-product by advanced emissions control systems to be installed by two power plants located in Ohio, company officials have confirmed. American Municipal Power-Ohio (AMP-Ohio) announced recently that it has committed to using Electro-Catalytic Oxidation (ECO), developed by Powerspan of Portsmouth, N.H., on the proposed American Municipal Power Generating Station (AMPGS) in Meigs County, and has executed a memorandum of understanding with The Andersons to process and market the ammonium sulfate produced by the process. No such agreement was disclosed in the earlier announcement by FirstEnergy Corp. that it also plans to install Powerspan’s ECO on two units of its R. E. Burger Plant in Shadyside, Ohio, but the utility added that the fertilizer produced as a byproduct will be highly marketable. The Andersons spokesman Gary Smith said he expected a similar arrangement with FirstEnergy through the alliance his company has with Powerspan that grew from the realization that “this makes sense for us to be a participant.” He declined to say how long the alliance has been in existence or to disclose any further details. However, Denny Addis, who heads The Andersons plant nutrient group, reported in the AMP-Ohio press release, “Powerspan’s state of the art multi-pollution control technology promises to produce high quality ammonium sulfate plant nutrient for our Midwest customer base. Serving AMP-Ohio’s plant nutrient operational and distribution needs is a natural extension to our core production and distribution business.” Andersons President and CEO Mike Anderson added, “We are pleased to partner with AMP-Ohio on this important and environmentally pro-active project. We are excited to be part of this project and a member of the AMP-Ohio and Powerspan team.”

Little loss of Simplot fertilizer in derailment

News Briefs, Pacific N.W.

Mt. Home, Idaho-No injuries or exposures were reported and loss of product was minimal after two tanker cars containing liquid fertilizer derailed and tipped over on their sides, according to the Union Pacific. UP spokesman Mark Davis said it took most of the day to right the cars and load them on over-the-road flatbed trucks for removal. The two cars contained 32-0-0 liquid fertilizer being moved from Simplot’s Port Comfort, Tex., terminal to a Simplot Grower Solutions retail unit in Idaho, reported company spokesman Fred Zerza. He said the product was removed from the cars and only a minor amount of the non-hazardous 32 percent solution leaked from the top of one of them. The cause is still under investigation.

Foundation releases new science curriculum aids

News Briefs

Washington-The Nutrients for Life Foundation has announced the availability of its science curriculum supplement for middle and high school – Nourishing the Planet in the 21st Century. The Foundation says each six-lesson supplement is the product of extensive field testing and correlates to the National Science Education Standards. The supplement suggests hands-on experiments that allow students to explore nutrients, the properties of soils, and the ways in which plant-soil interactions influence plant growth and crop nutrient levels. The module is available online at http://www.nutrientsforlife.org/curriculum.aspex. To date, over 1,500 teachers have signed up to receive a copy. In addition to online availability, print copies are available at 202-962-0490, or by e-mail at kmathers@nutrientsforlife.org. “Before developing this curriculum, we polled teachers from across the country to determine their science classroom needs,” said Kathy Mathers, Foundation executive director. “When we found there is a lack of information available on bringing the science of plant nutrients into classrooms, we set out to create Nourishing the Planet in the 21st Century. We believe the end result will help teachers convey an important topic and equip students with the tools to better understand the critical role fertilizers play in food production and the environment.”