The Barnett shale is known as the play at the eye of the shale gale. In the 1980s and 1990s, it was here that George Mitchell and his crews tested new technologies through trial and error to formulate drilling and completion recipes to produce natural gas from the tight Barnett shale, hundreds of feet thick. After Mitchell developed this shale play, others followed. And thus was born the North American energy revolution that is remaking global energy markets.

Even the energy-intensive manufacturing world is affected by the shale revolution. Certainly, ammonia fertilizer producers— which use natural gas as a feedstock—have taken notice. These include U.S. plants with expansions in the works to make homegrown fertilizer for the home-turf agricultural industry.

Given prevailing low natural gas prices and expectations for a long-term U.S. and Canadian supply overhang, we believe the North American chemicals sector is one of the most likely industry groups in which to prospect for new gas demand. A large domestic market coupled with affordable natural gas gives U.S. ammonia producers economic advantages on both the demand and supply side. Global fertilizer manufacturers using liquefied natural gas or oil-derived products cannot say the same.

The ammonia-based fertilizer market (aka nitrogen market) is an energy and feedstock intensive subgroup of the U.S. chemical industry. This gas-hungry manufacturing industry is experiencing a fundamental revitalization with increasing supplies of advantaged low-cost natural gas. The shale gale has blown away decades of increasing costs, offshoring and plant closures. In their place are higher production at existing North American plants and plans for investment in new capacity.

North America’s shale gas puts U.S. and Canadian ammonia producers at a material competitive advantage in terms of feedstock and fuel costs, when compared to global competitors. Nitrogen fertilizers are manufactured in more than 78 nations around the globe, are fungible and are widely traded. Aside from natural gas, the basic feedstocks for manufacturing nitrogen fertilizer can include higher-cost naphtha, fuel oil and gasified coal.

In the U.S., 30 companies produce nitrogen across 29 states, according to industry groups and business media. Producing ammonia alone, 13 companies at 25 plants in 16 states operated at 85% of their nameplate capacity. They supplied 9.47 million metric tonnes (MMmt) per year in 2012, up a percent from the 2011 production level of 9.35 MMmt per year.

Added to those supplies were net imports of 5.048 MMmt per year in 2012. The USGS shows that gas-rich Trinidad and Tobago represented 60% of U.S. imports in the 2008-2011 period, with Russia and Canada comprising another 25% of imported U.S. supplies.

But multiple operators are planning billions in investment in new North American nitrogen capacity on both sides of the U.S.-Canada border. CF Industries is proposing two new plants (in Louisiana and Iowa) and debottlenecking its asset base in a campaign worth $3.8 billion. Similarly, the North Dakota Grain Growers Association is considering a plant in the Williston Basin, as is CHS, at Spiritwood, North Dakota. Agrium is also looking to make an investment decision midyear for an ammonia plant somewhere in the Corn Belt, and Saskatchewan may see a new plant if Yara International’s deliberations conclude positively. Orascom Construction Industries is building a plant in Weaver, Iowa, and Ohio Valley Resources has hired out designs for a complex in Spencer County, Indiana.

Amid the shale bonanza, it is en vogue to ask how much domestic natural gas it would take to back out all imports and declare, in this case, an era of nitrogen independence and fertilizer self-reliance. Roughly 34 million Btu of natural gas is consumed to make a metric tonne of ammonia, or 33,000 square cubic feet per metric tonne. We thereby estimate it would take 0.46 billion cubic feet per day of shale gas to produce domestic ammonia replacing 5,048 MMmt per year of imports. That new gas demand could certainly be accommodated today.