LSB Industries Inc. said April 25, 2012, that its Pryor, Okla., UAN plant will be offline at least for another 60 days for repairs. The company said the repair period is being extended because it has determined that the damaged portion of the urea reactor, which is the reactor’s stainless steel liner, is non-repairable and the liner has to be replaced. The company will announce when UAN production resumes.
The Pryor facility shut down March 15 for unplanned maintenance at the ammonia plant. The ammonia plant resumed production March 22 and has produced approximately 600 st/d, which is being sold directly into the fertilizer market. The repair undertaken at the urea plant began Feb. 27. The urea plant is needed to produce UAN and uses ammonia as a feedstock. As a result, the Pryor facility has not produced UAN since Feb. 27, 2012.
For the month of March, LSB estimates that the downtime resulting from the attempted repair of the urea reactor will result in approximately $4 million less operating income than otherwise would have been expected. In addition, in March, the company accrued $3 million for probable losses for UAN tons that were pre-sold at firm sales prices, subject to make-whole terms, but not delivered due to the extended urea plant downtime.
Subsequent to March and until the urea plant is back in production, the company estimates the downtime will result in approximately $900,000 per week less operating income than if the urea plant was in production. The company has made a claim with its insurance carriers for repair costs and lost profits, less applicable deductible.