With LSB Industries Inc.’s Pryor Chemical Co. nearing targeted rates for both anhydrous ammonia and UAN, the company is looking at tweaking current Pryor ammonia production to produce more tons than originally expected. And the company is eyeing the possibility of bringing up additional ammonia and nitric acid plants.
LSB told analysts March 3 that Pryor ammonia production is at a sustained rate, close to the targeted rate. The targeted rate has been 325,000 st/y of UAN and 35,000 st/y of excess ammonia.
LSB said it is shooting for an additional 30,000-55,000 st/y of ammonia from Pryor, above the initial target. It said this would bring market ammonia up to approximately 60,000-90,000 st/y, as opposed to 35,000 st/y.
LSB also hopes to pull the trigger in 2011 on a decision to bring two additional plants up at the Pryor site. These include 60,000 st/y of ammonia and 66,000 st/y of nitric acid. Barry Golsen, LSB vice chairman, president, and chief operating officer, said these are independent decisions and one could come up without the other, and that they are still subject to permitting as well as the company’s financial justification process. Beyond these two units, he said further facilities being brought up at Pryor are not short- or medium-term goals.
Jack Golsen, LSB chairman, CEO, and founder, said that just because 325,000 st of UAN is the target does not mean it will necessarily be produced. “It may be more profitable to maintain just 325,000 UAN and have all your increase in the sale of ammonia, because that’s where the market is, or maybe that the market for UAN drops and we have more ammonia to sell, but the market for ammonia is higher, then we’ll take that extra ammonia.”
He noted that the 325,000 st/y of UAN is the plan, but you steer down the road based on what the market is doing. So the company could wind up producing more ammonia and less UAN, depending on market conditions.
Jack Golsen said the company continues to ramp up UAN production at Pryor and is producing a significant amount of UAN each month at that location. He said the plant averaged 500 st/d of production from November 2010-January 2011. “So we don’t have any fundamental issues. We’re continuing to ramp up, it’s increasing daily and we’re averaging for the last three months 500 st/d, which is below target, but we’re moving in that direction.” He thinks the plant will be at the target rate of 325,000 st/y shortly. The plant is currently satisfying all orders.
LSB is eyeing tentative turnarounds at Pryor in July and Cherokee, Ala., in August.
LSB is expecting robust demand for fertilizer this spring. LSB said it is not doing a lot of forward selling right now because it believes prices are going to continue going up. Tony Shelby, LSB CFO and head of investor relations, said at the end of February in the three different plants it had about $20 million committed to forward selling. However, he said the company is not actively pushing forward sales right now because the demand is strong and it believes prices will be higher going forward.
As for the diesel exhaust fluid (DEF) market, Jack Golsen said the company has been conservative and remains so, but that there is a lot of potential going forward. He noted that eventually, as it is phased into the trucking industry, over a billion gallons of DEF will be sold.
LSB began producing DEF at its Cherokee, Ala., plant in January 2010 and sells it under the trade name EarthPure DEFâ„¢. It says its DEF production is currently relatively small, as the market is still in the early stage of development.