8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 14, 2005

TERRA INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

Maryland	1-8520	52-1145429
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Terra Centre

600 Fourth Street, P.O. Box 6000

Sioux City, Iowa 51102-6000

(712) 277-1340

(Address of Principal Executive Offices, including Zip Code)

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

On July 14, 2005, Terra Industries Inc. (“Terra”) announced that through its subsidiary Terra Nitrogen Company, L.P. (TNCLP), it has sold to a subsidiary of Kinder Morgan Energy Partners, L.P. (KMP) its terminal assets in Blytheville, Arkansas.

In conjunction with this sale of assets, Terra has entered into a long-term agreement to exclusively lease from Kinder Morgan all the existing anhydrous ammonia and urea ammonium nitrate terminal assets in Blytheville, Arkansas. The Registrant will request confidential treatment from the Commission for certain terms in the lease agreement in connection with the filing of the agreement as an exhibit to its third quarter 10-Q for the period ended September 30, 2005.

On July 14, 2005 Registrant issued a press release reporting the sale of terminal assets in Blytheville, Arkansas and the signing of the lease agreement. A copy of the Press Release is furnished herewith as Exhibit 99.1.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits

99.1     Press Release issued July 14, 2005.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TERRA INDUSTRIES INC.

/s/ Mark A. Kalafut

Mark A. Kalafut

Vice President, General Counsel and

Corporate Secretary

Date: July 18, 2005

EX-99.1

Exhibit 99.1

Terra Industries Inc. 600 Fourth Street P.O. Box 6000 Sioux City, IA 51102-6000 Phone: (712) 277-1340 Fax: (712) 277-7383 www.terraindustries.com

NEWS

For immediate release	Contact: Joe A. Ewing
	(712) 277-7305
	jewing@terraindustries.com

Terra Industries Inc. sells Blytheville terminal assets

to Kinder Morgan, enters leasing agreement

Sioux City, Iowa (July 14, 2005)—Terra Industries Inc. (Terra) (NYSE symbol: TRA) announced today that through its subsidiary, Terra Nitrogen Company, L.P. (TNCLP) (NYSE symbol: TNH), it has sold to a subsidiary of Kinder Morgan Energy Partners, L.P. (NYSE symbol: KMP) its terminal assets in Blytheville, Ark. Terra also entered into a long-term agreement to lease from Kinder Morgan the Blytheville anhydrous ammonia and urea ammonium nitrate solutions (UAN) storage.

Kinder Morgan paid TNCLP $5 million for the terminal assets, which consist of storage and supporting infrastructure for 40,000 tons of anhydrous ammonia, 9,500 tons of UAN and 40,000 tons of urea. Terra is exclusively leasing from Kinder Morgan all the existing anhydrous ammonia and UAN terminal assets. The agreement takes effect immediately and lasts through the end of 2010, with renewal options.

Terra will use the anhydrous ammonia and UAN terminal assets to store and distribute nitrogen products from its manufacturing facilities and import distribution assets.

Forward-looking statements

This news release may contain forward-looking statements, which involve inherent risks and uncertainties. Statements that are not historical facts, including statements about Terra Industries Inc.’s beliefs, plans or expectations, are forward-looking statements. These statements are based on current plans, estimates and expectations. Actual results may differ materially from those projected in such forward-looking statements and therefore you should not place undue reliance on them. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements is set forth in Terra Industries Inc.’s most recent report on Form 10-K and Terra Industries Inc.’s other documents on file with the Securities and Exchange Commission. Terra Industries Inc. undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

About Kinder Morgan

Kinder Morgan Energy Partners, L.P. is one of the country’s largest publicly traded pipeline limited partnerships, operating more than 25,000 miles of pipelines and over 140 terminals.

About Terra

Terra Industries Inc., with 2004 revenues of $1.9 billion pro forma the Mississippi Chemical acquisition, is a leading international producer of nitrogen products.

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Note:     Terra Industries’ news announcements are also available on its website, www.terraindustries.com.