Monday, December 22, 2014

US Nitrogen Got Early Fast-Track Approval for Confidential Gas Deal

By Walter F. Roche Jr.

US Nitrogen and Atmos Energy got swift state approval in late 2011 for a confidential gas transportation contract that is key to the operation of a multimillion dollar Greene County manufacturing plant.
Records at the Tennessee Regulatory Authority show the agreement was approved on Dec. 19, 2011 less than five months after its submission on Aug. 2, 2011. The state board also allowed the companies to keep secret the actual payment rate for the 10 year deal which can be extended for up to 20 years more in five year increments.
The docket for the case shows not only the original application but subsequent responses to authority questions were either filed under seal or had key sections redacted. The 12-page agreement was signed by Shawn Rana for US Nitrogen and William Greer for Atmos.
"Details of the contract, including rate structure, are confidential business information," Amanda Jennings, a US Nitrogen spokeswoman wrote in an email Monday.
In a statement issued in early 2012, state regulatory authority chairman Kenneth C. Hill said the approval had been fast-tracked because the panel "recognized the significant economic impact this would have for the area."
Hill and other authority members also attended a January 2012 groundbreaking ceremony for the new plant
The state files on the project also detail the timeline leading to the agreement which show the groundwork for the project was being set long before any public notice, which came in February of 2011.
In fact talks between Atmos and US Nitrogen, the application states, began in October of 2010. At that time US Nitrogen was considering Tennessee along with unspecified sites in other states. US Nitrogen filed incorporation papers in Tennessee on Dec. 1, 2010.
The agreement between Atmos and US Nitrogen came on June 23, 2011.
Though an exact date was not provided, the filings also show that the first contact to Atmos was made by the Greene County Partnership "and other area industrial development interests."
In January of 2011, the filings state, US Nitrogen informed Atmos of the location choice on Pottertown Road in Greene County. That same month, records show US Nitrogen made its first land purchase, a 1.38 acre property in Greene County.
An Atmos Energy official said that the contract approved by the state was only for the transportation of natural gas, but declined to respond to other questions.
"The contract between Atmos Energy and US Nitrogen is a transportation-only contract," Mike Ellis of Atmos wrote in an email.
Jason Freeeark of US Nitrogen, however, indicated in response to questions that Atmos might also be supplying gas.
"When fully operational , US Nitrogen will be one of Greene County's largest natural gas consumers, purchasing approximately $18 million annually. US Nitrogen considered several other options and proposals before selecting Atmos Energy as its natural gas supplier," Freeark said in a written response to questions.
He noted that part of the contract calls for US Nitrogen to pay Atmos $600,000 for the construction of "necessary facilities" to supply the plant.
The natural gas will be used in the manufacture of ammonium nitrate, which will then be shipped to Austin Powder facilities in other states. US Nitrogen is a subsidiary of Ohio based Austin Powder.
According to the state application the state authority approval was necessary because the proposal called for US Nitrogen to pay for gas transit services below an established tariff.
The filing states that a counterproposal to the Atmos proposal was offered by Spectra Energy but provides no further details.
Though the filing indicated the contract would go into effect with the then anticipated plant start-up date of October of 2012, Freeark said that the effective date will be set when the plant actually opens. That has been projected for March of next year.
US Nitrogen has faced delays in obtaining some necessary approvals and now faces four lawsuits challenging state and local approvals for the project.

Note to view TN Regulatory docket on petition:

No comments:

Post a Comment