Marine Highway Transport of Toxic Inhalation Hazard Materials (2012)

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3 After reviewing the research recommendations set forth in NCFRP Project 17 (published as NCFRP Report 5: North American Marine Highways), the project panel determined that a follow-up study should be completed on identifying promising long-term markets for the domestic maritime sec- tor. The results of this follow-up study, defined as Phase 2 of the initial study, is described herein and expands upon rel- evant findings introduced in the first phase of the research. Specifically, the objective of the second phase of research was to develop a business case for transporting a larger share of chlorine (Cl) and anhydrous ammonia (NH3) shipments via the marine highway system than is currently shipped via water. (“Anhydrous” means “without water.”) Both of these products are classified as toxic inhalation hazard (TIH) materials. To make the business case, the following issues need to be considered: market definition; return on investment; obsta- cles; impacts on other modes and their likely reactions; labor issues; environmental concerns and benefits directly related to the transport of the two commodities; risks; regulatory, secu- rity, infrastructure, and vessel requirements; vessel availabil- ity; transportation congestion impacts; and lessons learned from international experience. It is important to define how the term “business case” will be used in this report. A business case typically captures the reasoning for initiating a project or task. It provides the infor- mation necessary to assess the benefits of a project against costs and resources. The logic of the business case is that whenever resources or efforts are consumed, they should be in support of a specific business need. There may be legiti- mate justifications for advancing domestic marine transpor- tation that will not be included in a traditional business case analysis. A compelling business case adequately captures both the quantitative and qualitative characteristics of a proposed project or a series of proposed projects. Consideration should also be given to the option of doing nothing, including the costs and risks of inactivity. From this information, the justi- fication for the project is derived. For purposes of this study, the marine highway marketplace under consideration was limited to U.S. domestic movements and shipments between the United States and Canada. In the case of export or import shipments, the researchers treated the port of entry or exit as the source or destination of the movement. This included inland waterway movements and coastwise movements. The researchers encountered a scarcity of literature that specifically dealt with the issues related to developing a busi- ness case for the transport of TIH materials. In order to obtain the latest and most accurate information, the researchers inter- viewed several executives involved in the production and/or distribution of anhydrous ammonia or chlorine. Some of these individuals were recently retired but very knowledgeable about the marketplace. Several interviewees requested that neither they nor their company be identified; therefore, names are not provided in this report. The following list includes the types of individuals the researchers interviewed: • Chlorine manufacturers (two). • Fertilizer industry executive (active). • Fertilizer industry executive (retired). • Marine highway consultant. • Potential marine highway service start-up. • Railroad executive. • Shipyard executives (two). • Towing company executives (three active). • Towing company executive (retired). Nature of the Cargo Classification of Chlorine and Anhydrous Ammonia Chlorine and anhydrous ammonia belong to a larger set of substances classified as hazardous materials. The U.S. Department of Transportation (U.S. DOT) defines a hazard- ous material as “a substance or material that the Secretary of C H A P T E R 1 Background

4Transportation has determined is capable of posing an unrea- sonable risk to health, safety, and property when transported in commerce, and has designated as hazardous under Section 5103 of federal hazardous materials transportation law (49 U.S.C. 5103: implemented in 49 CFR, Part 105.5) (1). More than 3,000 materials subject to regulation are identified by name, along with thousands of unnamed materials catego- rized as explosive, flammable, corrosive, infectious, or other- wise hazardous (2). While a large number of materials are classified as hazardous to transport, the potential implications of a release vary substantially. The U.S. DOT categorizes hazardous materials into nine haz- ard classes based on the type of danger posed in transportation. It further subcategorizes the classes into divisions. Below are the nine hazard classes and the division numbers under each class: • Class 1: Explosives (Divisions 1.1, 1.2, 1.3, 1.4, 1.5, 1.6). • Class 2: Gases (Divisions 2.1, 2.2, 2.3). • Class 3: Flammable liquids and combustible liquids. • Class 4: Flammable solids, spontaneously combustible materials, and water-reactive substances (Divisions 4.1, 4.2, 4.3). • Class 5: Oxidizing substances and organic peroxides (Divi- sions 5.1, 5.2). • Class 6: Toxic substances and infectious substances (Divi- sions 6.1, 6.2). • Class 7: Radioactive. • Class 8: Corrosive. • Class 9: Miscellaneous hazardous materials. Domestically, chlorine is shipped as Class 2.2, “Non- Flammable Gas”; for international shipments, it falls under Class 2.3, “Toxic Gases.” Anhydrous ammonia falls within Class 2.3. The Coast Guard defines these cargoes as “toxic cargoes” (46 CFR 154.7) (3). Within the broader category of hazardous materials, there is a class of substances known as TIH materials. The federal government defines them as “gases or liquids that are known or presumed on the basis of tests to be so toxic to humans as to pose a health hazard in the event of a release during trans- portation” (4). Examples of widely transported TIH materials include chlorine, ammonia, sulfur dioxide, hydrogen fluo- ride, fuming nitric acid, fuming sulfuric acid, hydrogen chlo- ride, and ethylene oxide. The first six of these receive the most attention in the discussion of risk and safety in the literature, primarily because of the volumes shipped. Three of the materials listed above account for 90 percent of TIH shipments across all modes (5). Anhydrous ammonia and chlorine alone account for 80 percent. • Anhydrous ammonia (45 percent). • Chlorine (35 percent). • Ethylene oxide (10 percent). Physical Properties and Health Effects Chlorine and anhydrous ammonia are extremely toxic upon release and have unique properties that must be accounted for in the design and operation of transportation and storage equipment. Ammonia (UN1005) It is important to distinguish between nitrogen fertilizer solu- tions and anhydrous ammonia. Aqueous solutions containing ammonia are not nearly as toxic as anhydrous ammonia; thus, nitrogen fertilizer solutions are considered non-hazardous, and barges that transport these solutions are not legally required to carry a United States Coast Guard (USCG) Certificate of Inspection (COI). Ammonia is a colorless, toxic, and corrosive gas with an extremely pungent odor. Under pressure, it changes its state into a water-white liquid (liquefied ammonia gas), and it is soluble in water (ammonium hydroxide solution). Ammonia is a compound of nitrogen and hydrogen and is lighter than air (specific gravity of 0.59). Ammonia acts as a choking agent on the lungs, causing breathing difficulty and potentially permanent lung damage. It is severely irritating to the eyes and can cause permanent damage and blindness. Other eye-related symptoms include pain, tears, swelling, redness, and blurred vision. Ammonia gas is also very irritating to skin. It can cause permanent skin injury (including scarring). Extensive and prolonged contact can cause significant injury to underlying tissue and possibly death. Symptoms include feelings of pain or heat, discolor- ation, swelling, and blistering. Ingestion may cause severe irritation/ulceration of the digestive tract, which may in turn result in nausea, vomiting, diarrhea, and in severe cases, col- lapse, shock, and death. Even though this substance is a flam- mability hazard, it only exhibits such hazard under extreme fire conditions in a confined area. Although it is flammable in concentrations between 15 and 28 percent, the ignition tem- perature is relatively high (1100°K, 1520°F) (6). Anhydrous ammonia exists naturally in a gaseous state under atmospheric pressure and temperature. Under mod- erate pressure, it readily changes to a liquid, becoming a gas again when the pressure is reduced. Industries take advan- tage of this characteristic by shipping and storing liquefied ammonia in pressurized railway cars, tank trucks, cylin- ders of various sizes, and either fully pressurized or semi- pressurized ships and barges (7). At 60°F and atmospheric pressure, 1 lb of liquefied ammonia will expand into 850 cu ft of ammonia gas. It is typically carried as a liquid at reduced temperature and at atmospheric pressure. It can also be kept liquid at normal temperature but at increased pressure (as is done with rail cars). Anhydrous ammonia is 82-percent

5 nitrogen and weighs 5 lb/gal when carried at 114 psi; anhy- drous ammonia transported in barges typically weighs 6.83 lb/gal when maintained at -33.3°C (-27.4°F). Aqueous ammo nia, which is highly diluted, is 32-percent nitrogen and weighs 11.04 lb/gal. Therefore, transporting ammonia in liquefied form allows the shipper to transport, handle, and store significantly less volume of product for the same amount of nitrogen. Dissolution of liquefied ammonia in water is accompa- nied by an exothermic process and a concomitant increase in pH. The ammonium hydroxide solutions are destructive to flora and fauna, and the water is also unsafe for human consumption (6). Chlorine (UN1017) Chlorine is a non-flammable, greenish-yellow gas, with a pungent odor. The gas is much heavier than air (specific grav- ity of 2.486) and is miscible in water. (“Miscibility” refers to the ability of a liquid or gas to dissolve uniformly in another liquid or gas.) It is corrosive to glass and most metals because it forms hypochlorous acid and/or hydrochloric acid when combined with water. Chlorine is a powerful oxidant that may cause fire. Chlorine is highly irritating to skin, eyes, and mucous mem- branes. It acts as a choking agent on the lungs, causing breathing difficulty and potentially permanent lung damage. It creates a burning sensation, cough, headache, labored breathing, nau- sea, and sore throat. More seriously, it can be very painful; it can cause skin burns, eye pain, blurred vision, and severe deep burns. When evaluating the potential effects of spills from marine transportation, it is important to note that chlorine is highly toxic to all forms of aquatic life; there is no potential for bio- accumulation or bioconcentration (8). Chlorine gas injected into the water during water chlorina- tion quickly dissolves and forms chloride and hypochlorous acid within seconds (8). Liquefied chlorine in a ruptured tank or spilled onto the ground or into water during an accident is expected to volatilize rapidly, forming a greenish-yellow cloud of chlorine gas. This gas cloud, which is heavier than air and moves at ground level, can be carried several miles away from the source of release while maintaining danger- ous levels of chlorine gas concentrations. Since chlorine gas is so reactive, it disperses quickly and does not remain in the environment very long after it is released. Chlorine imme- diately reacts with both organic and inorganic materials with which it comes into contact and is converted within seconds once it dissolves in water. Chlorine undergoes direct photolysis in the air, and its half-life in the troposphere is on the order of several minutes (9). (“Half-life” is the time when the expected value of the number of entities that have decayed is equal to half the original number. “Troposphere” is the lowest atmospheric layer—the layer “resting” on the earth’s surface.) Chlorine has a liquid volume to gas volume expansion fac- tor of 521 at a temperature of 59°F and one atmosphere. This indicates that liquid chlorine volume to weight is at least 500 times more efficient than its gaseous state for purposes of transportation (10). Uses Ammonia and chlorine are pervasive in everyday life. They are found in many ordinary household products, despite their toxicity in their elemental form. Ammonia Agricultural industries are the major users of ammonia, accounting for over 85 percent of all ammonia produced in the United States. Within this category of usage, the produc- tion of fertilizers consumes a high percentage (particularly for corn and wheat). The largest use of commercial nitro- gen fertilizer is on corn, which makes up 43 percent of nitro- gen fertilizer consumption (11). Ammonia (nitrogen) is the nation’s dominant commercial fertilizer and is used either directly in anhydrous form or indirectly in manufactured fertilizers. It is applied extensively throughout the country’s main agricultural regions, particularly the Midwest farm states. As The Fertilizer Institute (TFI) testified to the Surface Transportation Board (STB) in the spring of 2009, there is no viable alternative for ammonia: “We always hear talk about how ammonia is on its way out, but we continue to use as much as we did 30 years ago” (12). Average anhydrous ammonia prices have long been closely correlated with the price of natural gas because natural gas is the major variable cost item in the production of anhydrous ammonia. In recent years, however, the price of anhydrous ammonia has been increasing even as the price of natural gas has held steady. Significant global demand for anhydrous ammonia has continuously pushed prices higher, exceeding $850/ton in October 2011. Figure 1 shows the correlation of anhydrous ammonia prices with the price of natural gas. As can be seen, the relative price ratio increased from a stable average of 49:1 until December 2006 to an average of over 130:1 for the first half of 2011 (13). Urea, ammonium nitrate, ammonium phosphates, nitric acid, and ammonium sulfate are the major derivatives of ammonia in the United States, in descending order of pro- duction volume. In 2010, approximately 87 percent of appar- ent domestic ammonia consumption went toward fertilizer use, including anhydrous ammonia for direct application, and production of urea, ammonium nitrates, ammonium phosphates, and other nitrogen compounds.

6There has been some discussion in the marketplace and regulatory arena about replacing anhydrous ammonia with another product to reduce the handling risk; however, there are numerous economic and logistical challenges to replacing anhydrous ammonia. Anhydrous ammonia is the least costly and most effective source of nitrogen fertilizer for Ameri- can farmers. Ammonia is also an input for other nitrogen- based fertilizers, such as nitrogen solutions or urea, as well as phosphate fertilizers. In many Corn Belt states, anhydrous ammonia is typically the only nitrogen source recommended by universities for fall application to spring-planted crops (14). Thus, it is argued, any fertilizer substitutes for anhy- drous ammonia would be required in greater volumes, at greater cost, and with a high impact to farmers. Substitution of ammonia in industrial processes would likely be even more complicated. While a high percentage of ammonia is sent directly to the fields for fertilizer application, a significant amount of ammo- nia is used to produce granular fertilizers known as diam- monium phosphate (DAP) and monoammonium phosphate (MAP). DAP is typically 46-percent phosphate and 18-percent nitrogen and can be applied by itself or easily mixed with nitro- gen and/or potash fertilizers, often as part of a total nitrogen, phosphate, and potash (N-P-K) plant food mix. Since it is a granular product, DAP can be applied directly to the soil using conventional spreading equipment. MAP is 52-percent phos- phate and 11-percent nitrogen and—as with DAP—can be applied by itself or easily mixed with nitrogen and/or potash fertilizers, often as part of a total N-P-K plant food mix. MAP is often used on crops such as soybeans. As is the case with DAP, MAP can be applied directly to the soil using conventional spreading equipment. Figure 2 illustrates the industrial uses of ammonia. Other uses of ammonia include the following: • Protein in livestock feeds. • Pre-harvest cotton defoliant. • Anti-fungal agent for certain fruits. • Preservative for storage of high-moisture corn. • Manufacture of – Nitric acid. – Alkalis (e.g., soda ash). – Dyes. – Pharmaceuticals. – Synthetic textile fibers. – Certain plastics. – Explosives. • Metal treating operations. • Neutralization of acid constituents of crude oil. • Protection of petroleum equipment from corrosion. • Extraction of metals such as copper, nickel, and molyb- denum from their ores in mining industry. • Water and wastewater treatment. • Stack emission control systems. • Developing agent in photochemical processes. • Industrial refrigeration systems (R717). • Stabilization of natural and synthetic latex to prevent pre- mature coagulation (rubber industry). Figure 1. Wholesale anhydrous ammonia price divided by industrial natural gas price, 2001 to 2011.

7 • Pulping wood and as a casein dispersant in the coating of paper. • Nitrogen needed for yeast and microorganisms for the food and beverage industry. • Hydrogen for some fuel cells. • Curing agent, as a slime and mold preventative in tanning liquors, and as a protective agent for leathers and furs in storage. • Commercial household cleaners and detergents (typically 5 to 10 percent ammonia by weight (16). Figure 3 illustrates the downstream products of ammonia. Chlorine Chlorine gas is used for purifying potable water and waste- water at treatment plants. It is used in swimming pools through- out the country and as a chemical intermediary in various manufacturing processes for products ranging from PVC pipes to shampoo. In fact, chlorine is an essential component in 45 percent of all commercial products (17). The major uses of chlorine (in descending order of quan- tities used) are for the manufacturing of other organic com- pounds, the manufacturing of vinyl chloride to make PVC plastics, the manufacturing of inorganic chemicals, water treatment, and pulp and paper bleaching. Nearly one-third Figure 2. Industrial uses of ammonia (15). Figure 3. Downstream products of ammonia.

8of all chlorine is used to produce vinyl for products such as wire and cable, pipe, flooring, siding, windows, and doors. Chlorine plays a role in the production stream of some important end products including refrigerants, aerosols, sili- cones, silicone rubber, plastics, solvents, polyethers, varnishes, foams, chlorinated rubber, polyurethane, detergents, dyes, insecticides, pesticides, disinfectants, bleaches, and white pigment enamel. The food industry has used chlorine as a bleaching agent for flour. Chlorine is also used to manufac- ture phosgene. Caustic soda (NaOH) is a co-product of the chlorine pro- duction process. It is also a fundamental chemical product with myriad uses, and its availability is directly dependent on chlorine production. Volumes Produced and Shipped Over 2.2 billion tons of hazardous materials valued at $1.4 trillion were transported in the United States in 2007, the latest year for which comprehensive data are available, with each shipment moving an average of 96 mi (18). The average shipment distance decreased from 136 mi in 2002. The litera- ture indicates that the distance hauled has decreased due to greater co-location of suppliers and consumers (19). In 2007, 26.9 million tons of TIH (1.2 percent of the total) was moved by all modes (20). Table 1 summarizes the volume of domestic ammonia and chlorine shipments in 2007 (latest data available) by mode. The statistics reported for inland barge include both anhy- drous ammonia and aqueous solution. It is not possible to determine the tonnage for anhydrous ammonia alone. Ammonia In 2010, the U.S. Census Bureau reported ammonia produc- tion of 11.1 million short tons and imports of 7.4 million short tons. In 2010, U.S. producers operated at about 85 percent of their rated capacity (22). The figures for 2009 were 10.3 mil- lion short tons and 6.1 million short tons, respectively. Exports were negligible in both years (23). Table 2 summarizes the Census statistics. An average scale ammonia plant in the United States pro- duces 500 to 1,000 tons of ammonia per day. The United States has cut back on its domestic ammonia production over the past decade and has recently imported as much as 40 per- cent of the 15–20 million tons of ammonia that it consumes annually. This is primarily due to the historically more abun- dant supplies of natural gas (hence, lower production costs) in other countries. However, this trend may reverse itself with greater domestic shale gas production. Greater reliance on imports might open the potential for new supply chains and routes that have not historically handled significant supplies of anhydrous ammonia in transit, but this does not appear likely. Chlorine According to statistics from the Chlorine Institute, in 2008, the U.S. chlor-alkali industry produced 11.5 million short tons of chlorine and 12.1 million short tons of caustic soda (sodium hydroxide) (24). Table 3 lists the production capacity of the major chlorine-producing companies in 2009. Olin Chlor Alkali Products, a division of Olin Corpora- tion (Olin), is the largest merchant producer (one who sells to another party outside the corporate umbrella) of chlorine in North America. Industry estimates pegged Olin’s total North American chlor-alkali capacity at 1.96 million tons/year as of 2009, following Dow Chemical’s 3.9 million and Occidental Chemical’s (OxyChem’s) 3.4 million tons/year of capacities. PPG Industries follows Olin with 1.85 million tons/year of capacity (25). Dow’s production is directed to captive use (primarily the vinyl chloride supply chain); very little is sold to other entities. Geography of Commodity Flows The producers of both anhydrous ammonia and chlorine tend to locate near their principal feedstock and low-cost energy supply; hence, they tend to cluster within a region. Choice of transportation mode depends primarily on loca- tions of supply and consumption. It is also influenced by the Mode Ammonia (000 tons) Chlorine (000 tons) Truck 9257 N/A* Rail 1141 3241 Inland Barge 1536 109 Pipeline 2896 N/A* * Data Not Available Table 1. Volume of ammonia and chlorine shipments in 2007 (20, 21). Ammonia Source (million short tons) 2009 2010 Domestic Production 10.3 11.1 Imports 6.1 7.4 Total 16.4 18.5 Table 2. Ammonia production and imports. Company Capacity (million tons/year) Dow Chemical 3.9 Occidental Chemical (OxyChem) 3.4 Olin Chlor Alkali 1.96 PPG Industries 1.85 Table 3. Chlorine production capacity—2009.

9 parcel size of individual shipments. Where possible, eco- nomics generally favor bulk transportation of basic materials such as ammonia and chlorine, which inherently favors high- volume modes such as marine or rail. Ammonia Ammonia is widely used throughout U.S. agricultural areas and thus, like chlorine, must be transported from a lim- ited number of production and import locations to the broad geography of U.S. agricultural production areas. Twelve com- panies produced ammonia at 24 plants in 16 states in the United States during 2010. Sixty percent of total U.S. ammo- nia production capacity was located in Louisiana, Oklahoma, and Texas because of their large reserves of natural gas, the dominant domestic feedstock (26). Peak anhydrous ammonia production in the United States occurred in 1998 at 16.8 million tons sold, excluding quanti- ties used to make nitrogen-based fertilizers at production facili- ties. The total, including nitrogen-based fertilizers, was roughly 23 to 24 million tons. Since 1998, the United States has been importing greater amounts of anhydrous ammonia (includ- ing nitrogen-based fertilizers) and producing less domestically because the price of natural gas has been lower in other produc- ing countries (16). However, this situation may change with the projected increase in domestic shale gas production. Figure 4 shows recent major ammonia flows on a global basis. Ammonia production and industrial usage are concen- trated in just a few companies. One of these companies, CF Industries, owns a DAP/MAP production facility in Plant City, Florida. This is one of the largest integrated ammonium phosphate fertilizer production complexes in the United States. CF Industries imports 450,000 tons per year of ammo- nia through the Port of Tampa to feed this complex. Interestingly, ammonia from the Port of Tampa also feeds a PCS fertilizer complex in Raleigh, North Carolina, by truck. PCS attempted to arrange an alternative route but has not been able to secure an ocean import facility on the East Coast. The PCS Raleigh DAP/MAP plant consumes approximately 100,000 short tons per year of ammonia, all supplied by truck. Other Gulf Coast import facilities exist at Pascagoula, Missis- sippi; Beaumont, Texas; Houston, Texas; Pasadena, Texas; Free- port, Texas; and Point Comfort, Texas. Final delivery is typically made by pipe or truck to local industrial customers or by rail to landlocked destinations, such as from Houston to North Texas. Figure 5 shows the locations of these major import facilities. PCS operates additional ammonia plants in Augusta, Georgia (0.71 million tons) and Lima, Ohio (0.59 million tons). These two plants do not have water access. PCS will produce an additional 0.54 million tons with the scheduled restart of its Geismar, Louisiana, ammonia facility in 2012. Ammonia production at Geismar was idled in 2003 due to high natural Figure 4. Worldwide ammonia flows in million metric tons for 2007 and 2006 (15). Ammonia Import Facilities Figure 5. Major ammonia import facilities.

10 gas feedstock prices, but large-scale production of downstream nitrogen products (UAN, urea, nitric acid) continued at Geis- mar using ammonia feedstock imported from Trinidad. With the projected increases in domestic shale gas production, the Geismar ammonia production facility is once again feasible. Geismar is one of three major import locations for offshore ammonia located on the Mississippi River system. Mississippi Phosphates is a major U.S. producer and mar- keter of DAP (the most widely used phosphate fertilizer). The production facilities are strategically located on a deep- water channel in Pascagoula, Mississippi, with direct access to the Gulf of Mexico. This site, as opposed to the sites pre- viously mentioned, is one where the required ammonia is produced on site rather than imported. The manufacturing facilities consist of two sulfuric acid plants, a phosphoric acid plant, and a DAP granulation plant. The DAP granulation plant has a maximum annual DAP production capacity of approximately 870,000 tons. The existing sulfuric acid plants currently produce sulfuric acid sufficient for annual DAP production of approximately 750,000 tons (27). There is not enough farmland along the East or West Coasts to justify major import facilities, with the exception of the areas around Stockton, California, and Portland, Oregon. J.R. Simplot Company produces various fertilizer products that use ammonia as input at its Lathrop and Helm, California, facilities. It imports through the Port of Stockton for its Cali- fornia facilities and the Port of Portland for distribution by truck and rail. There is no domestic coastwise movement of anhydrous ammonia at present. (“Coastwise” includes the Great Lakes.) Previously, there was a cross-Gulf movement from Taft, Loui- siana, to Tampa, Florida. Just a few water ammonia shippers exist. They are CF Industries, which acquired Terra Nitrogen in 2010, Koch Fertilizer, PCS Nitrogen Fertilizer, and trading companies such as Transammonia. Most ammonia barge activity originates at three termi- nals on the Lower Mississippi River. Cargo is predominantly imported material. Imports are always routed through a shore terminal—never lightered (transferred) directly from ship to barge. The three major barge terminals are the following: • Geismar, Louisiana—PCS Nitrogen Fertilizer (river mile 186 above head of passes [AHP]). • Donaldsonville, Louisiana—CF Industries (river mile 174 AHP). • Taft, Louisiana—Koch Fertilizer (river mile 129 AHP). Wood River, Illinois, might also be considered an ammo- nia barge origin. It connects to the Kaneb (NuStar) pipe- line from the Gulf, and from there, it distributes ammonia throughout the region via the waterways. Illinois is one of the larger ammonia user states because most of its soils are heavy and organic, which helps the injected nitrogen cling to them (12). Figure 6 shows the location of major ammonia production facilities, industrial users, and distribution facilities. Figure 6. Major ammonia production facilities, distribution terminals, and industrial users.

11 New shale gas plays have been discovered in recent years, and oil and gas production activities are underway. Since the cost of ammonia is primarily determined by the cost of natu- ral gas, this could potentially affect the location of produc- tion facilities. Currently identified shale oil and gas plays are shown in Figure 7. No plans have been announced by any ammonia producers to build new facilities near existing natural gas sources. The newer shale gas plays might induce producers to build new facilities near these new sources. These plays include the following: • Eagle Ford (South Texas). This was discovered in 2008. The play’s southernmost window contains mostly gas, but depressed natural gas prices have ensured that much of the drilling activity to date has occurred in the oil and wet-gas windows, a bias that is expected to persist for the foresee- able future. Production facilities already exist along the Texas Gulf Coast with marine transportation access that could economically tap into this new source. • Niobrara Shale (eastern Colorado as well as parts of south- ern Wyoming and western Kansas and Nebraska). This play was announced in 2010. Given its location, it will not have any effect on waterborne transportation opportunities. • Brown Dense (north Louisiana, south Arkansas). This play is still being evaluated. If developed, it could poten- tially result in a new production site with access to the Red River for shipments. Because the ammonia market is a mature market with little growth potential, it is doubtful that these plays will result in the construction of new ammonia production facili- ties. However, should any new construction occur, it might induce a small shift from rail or pipeline to waterborne transportation. Chlorine Most TIH chemicals are shipped from production locations directly to consumption sites (although some are produced, stored, and used at a single site). Chlorine, for example, is pro- duced at chemical plants mostly concentrated in the southern part of the country (see Figure 8), from which it is shipped to customer sites, such as water purification plants and other chemical plants. The only major chlorine-receiving termi- nal using inland waterway transportation is a DuPont tita- nium dioxide plant located in New Johnsonville, Tennessee. Figure 7. Shale plays in the lower 48 states.

12 Economic factors favor rail transportation of chlorine, and indeed the vast majority of chlorine shipments in the United States are shipped by rail. The other safe and practical mode for long-distance transportation of chlorine is barge, which is considered safer than rail but is less available and more restricted in its ability to reach many origins and destinations. Trucking companies are reluctant to offer long-haul chlorine transportation services (18). Chlorine producers also ship to chlorine packaging loca- tions and sodium hypochlorite bleach production facili- ties. Additional destinations include PVC plastics producers, some paper mills, and chemical manufacturers. Roughly two- thirds of chlorine is never shipped but rather is used on site in chemical manufacturing or is moved by pipeline to nearby facilities. Users tend to be widely dispersed and large amounts of chlorine are not typically consumed at any given site. One leading railroad indicated that origin-destination pairs with annual volumes of 100 rail cars were notable exceptions to the widespread dispersion of chemical shipments. The three largest producers of chlorine are Dow Chemical, OxyChem, and PPG, in that order. The largest producer (Dow) produces chlorine for captive use (primarily the vinyl chloride supply chain) and is not considered a merchant producer (one who sells to another party outside the corporate umbrella). There are three merchant producers of chlorine: Olin, Oxy- Chem, and PPG. Only two of them (Olin and PPG) deliver liquefied chlorine by tank barge. In both cases, the producers themselves own the barges—no commercial transportation company currently offers chlorine barges for hire. PPG operates water-served chlorine plants in Lake Charles, Louisiana (Gulf Intracoastal Waterway), and Natrium, West Virginia (Ohio River). Currently, PPG ships 70 to 75 per- cent of its chlorine by pipeline, 20 to 25 percent by rail, and approximately 1 percent by barge. PPG does not ship chlorine by truck or by either ocean or coastwise vessel. Olin produces chlorine at three water-served facilities (Charleston, Tennessee; McIntosh, Alabama; and St. Gabriel, Louisiana). However, chlorine is loaded in barges at only one facility: Charleston, Tennessee. The 402-mile, Charleston- to-New-Johnsonville chlorine barge movement lies entirely within the Tennessee River system. A single towing company tows Olin’s barges under an evergreen contract. There is presently no identifiable coastwise shipment of bulk liquefied chlorine by water. (Pennwalt, subsequently acquired by Elf Aquitaine, formerly operated an ocean chlor-alkali barge with bulk chlorine tanks installed on deck, but that service is defunct.) On July 21, 2011, OxyChem, a competitor of Olin, announced plans to construct a chlor-alkali plant at New Johnsonville, adja- cent to DuPont’s titanium dioxide facility, at a cost of $250 to $290 million. If completed, this new chlorine production plant located next to the customer’s site is expected to permanently end barge deliveries of chlorine to New Johnsonville. With the addition of this chlor-alkali plant, shipments of chlorine by barge will be significantly reduced, if not eliminated. Figure 8. Major chlorine production sites.