Natural gas is the primary raw material in nitrogen fertilizer production, serving as both the source of hydrogen and the fuel that powers the manufacturing process. It typically accounts for 60 to 70 percent of total production costs at current prices, making fertilizer prices closely tied to natural gas markets. The process involves extracting hydrogen from methane (the main component of natural gas), combining that hydrogen with nitrogen from the air to create ammonia, and then converting ammonia into the commercial fertilizers that farmers spread on fields.
Extracting Hydrogen From Methane
The first major step is called steam methane reforming. Methane reacts with steam at high temperatures and pressures (roughly 3 to 25 bar) in the presence of a catalyst. This reaction breaks apart the methane molecule and produces hydrogen gas along with carbon monoxide. In chemical shorthand: CH₄ + H₂O → CO + 3H₂.
That carbon monoxide is then put through a second reaction called the water-gas shift, where it reacts with more steam to produce additional hydrogen and carbon dioxide: CO + H₂O → CO₂ + H₂. The result is a gas mixture rich in hydrogen. A final purification step called pressure-swing adsorption strips out the carbon dioxide and other impurities, leaving essentially pure hydrogen ready for the next stage.
Some plants use an alternative method called partial oxidation, where methane reacts with a limited amount of oxygen instead of steam. This also yields hydrogen and carbon monoxide, followed by the same water-gas shift step. Steam methane reforming is far more common for fertilizer production because it produces more hydrogen per unit of natural gas.
Turning Hydrogen Into Ammonia
Once you have pure hydrogen, the next step is the Haber-Bosch process, one of the most important industrial chemical reactions ever developed. It combines hydrogen with nitrogen pulled directly from the atmosphere (air is about 78 percent nitrogen) under very high temperatures and pressures, typically around 400 to 500°C and 150 to 300 bar. An iron-based catalyst helps the reaction along.
The output is ammonia (NH₃), a pungent gas that serves as the building block for virtually all nitrogen fertilizers. The Haber-Bosch process is energy intensive, which is another reason natural gas costs dominate the economics of fertilizer manufacturing. The gas doesn’t just supply the hydrogen atoms that end up in the ammonia molecule; it’s also burned to generate the extreme heat the reactions require.
From Ammonia to Commercial Fertilizers
Ammonia itself can be applied directly to soil as a fertilizer, but most of it gets converted into other products that are easier and safer to handle.
- Urea: The most widely used nitrogen fertilizer in the world. It’s made by reacting ammonia with carbon dioxide (conveniently produced as a byproduct of the steam reforming step) under high pressure. Urea is a solid granule containing about 46 percent nitrogen by weight, making it efficient to transport and store.
- Ammonium nitrate (AN): Produced by first converting some ammonia into nitric acid, then mixing that nitric acid back with more ammonia. It contains about 34 percent nitrogen and dissolves readily in water, making it popular for both solid application and liquid fertilizer blends.
- UAN solution: A liquid fertilizer made by dissolving both urea and ammonium nitrate in water. It’s widely used in large-scale agriculture because it can be sprayed directly onto fields or injected into irrigation systems.
Each of these products traces its nitrogen content back to the ammonia produced from natural gas. The carbon dioxide captured during urea production is one reason urea plants are sometimes located alongside ammonia plants, since the CO₂ waste from one process becomes a raw input for the other.
Why Natural Gas Dominates the Cost
Fertilizer manufacturers need enormous quantities of natural gas. A single large ammonia plant can consume hundreds of millions of cubic feet per year. Because natural gas serves as both feedstock (the hydrogen source) and fuel (the heat source), swings in natural gas prices have an outsized effect on fertilizer prices. When natural gas prices spike, fertilizer costs follow within weeks, and those increases eventually reach farmers and food prices.
This cost sensitivity varies by region. Countries with cheap domestic natural gas, like the United States and several Middle Eastern producers, have a significant competitive advantage in fertilizer manufacturing. Countries that import natural gas or rely on more expensive energy sources face higher production costs and often import fertilizer instead.
Carbon Emissions and Alternatives
Conventional natural gas-based ammonia production, sometimes called “gray” ammonia, emits roughly 2.9 tonnes of CO₂ for every tonne of ammonia produced. That comes from both the chemical reactions (the carbon in methane has to go somewhere) and the fossil fuel burned to power the process. Globally, ammonia production accounts for roughly 1 to 2 percent of all CO₂ emissions.
Two emerging alternatives aim to reduce that footprint. “Blue” ammonia uses the same natural gas process but captures and stores the CO₂ before it reaches the atmosphere, cutting emissions by about 80 percent. “Green” ammonia skips natural gas entirely, using water electrolysis powered by renewable electricity to produce hydrogen, which reduces emissions by up to 90 percent. Both approaches remain significantly more expensive than conventional production, so nearly all commercial fertilizer today still relies on the natural gas pathway.