Agrium Inc. has not totally given up on its Kenai nitrogen complex, citing the possibility that new gas pipelines could bring gas to the facility. However, those would be more long-term, rather than short-term, solutions. An Agrium representative, Lisa Parker, recently testified before a legislative hearing on the Alaska Gasline Inducement Act, noting the loss of the plant, which employed 300 and was one of the largest nitrogen plants in North America. Under the Act, the state can give up to $500 million in inducements to assist a new gas pipeline.
Currently, the Legislature is weighing a proposal by TransCanada Corp. to build a pipeline from Alaska through Canada to the Lower 48 states. Other pipeline proposals include the Denali – The Alaska Gas Pipeline LLC, owned by BP and ConocoPhillips, which would also take gas to the Lower 48, as well as two projects that would take gas to southcentral Alaska – a 370-mile spur line by Alaska Natural Gas Development Authority (ANGDA), and a 690-mile bullet line by Enstar Natural Gas Co. Agrium could benefit from any of these pipelines as long as there is a spur to the Kenai area.
Enstar, in particular, has noted the benefits to Agrium should its bullet project proceed. It would want to sign Agrium up as a customer early on should it decide to proceed. Likewise, Agrium told Green Markets that it would have to have a long-term source of gas in order to again ratchet up production after having let go 300 people and mothballing its facility.
The U.S. Department of Energy announced last month that it once again had approved LNG exports from Kenai to Japan. The permit by the Kenai LNG plant, owned by ConocoPhillips Alaska Natural Gas Corp. and Marathon Oil Co., was to expire in January 2007. The two companies sought and obtained a two-year extension through March 31, 2011. The companies were given permission to export an equivalent of 98.1 billion cubic feet of natural gas.
Parker told Green Markets that this gas could have kept Agrium’s Kenai nitrogen plant in operation. Agrium was opposed to the extension of the permit. Earlier this year Alaska Governor Sarah Palin (R) (GM Jan. 7, p. 13) gave support to the LNG extension, citing company promises to assure that local utilities would receive adequate supplies. In addition, the plant owners agreed to develop additional natural gas reserves in Cook Inlet and allow third parties the opportunity to monetize their gas production though the LNG plant.
In the meantime, Agrium has opted out of any plans to do a coal gasification project for Kenai.