Both houses of the Alaska Legislature have overwhelmingly passed a bill to allow the Alaska Railroad Corp., a state-owned entity, to issue $2.9 billion in tax-free industrial development revenue bonds to finance Agrium Inc.’s planned coal gasification project at its Kenai nitrogen plant. The bill still awaits Gov. Sarah Palin’s signature.
Should Gov. Palin sign the bill – and the odds are she will – the next hurdle is to seek a ruling by the U.S. Internal Revenue Service as to whether the bonds qualify as tax-exempt.
The coal gas project is necessary to assure that the Kenai plant can remain operational. Due to gas shortages in the area it is now a seasonal plant, with an expected operation schedule this year of May through October.
Under the coal gas plan, coal would be shipped from Usibelli Mine Inc.’s mine in Healy, in inland Alaska, via Alaska Railroad to the Port of Anchorage, where it would be barged to Kenai.
Currently, Agrium is still studying the feasibility of the coal gas option. It is expected to make a firm decision by the fall of 2008, according to Lisa Parker, Agrium spokesperson. Once a decision is made and construction begins, the project could be completed by 2011-2012.