Agrium U.S. Inc. is teaming up with Alaskan officials to evaluate the potential use of coal gasification as a feedstock for its Nikiski fertilizer plant in Kenai, AK, which is slated to close in 2006 when natural gas supplies run out. If a feasibility study proves coal gasification would work, Agrium said the gasification facility could be in operation as early as 2011.
Agrium is one of the largest manufacturers in Alaska, but its Kenai plant is facing a gas supply crunch. The Kenai plant is located on the east side of the Cook Inlet on the Kenai Peninsula, and its operations consist of two ammonia plants and two urea plants. Agrium negotiated a contract with Cook Inlet producers in July that would allow it to operate at half capacity through October 2006, but finding gas after that date remains a concern (see Daily GPI, July 18). Over the long term, there also is the possibility the Agrium facility could be supplied by a gas line spur from the proposed Alaska pipeline (see NGI, April 4).
According to Agrium, the proposed plant, dubbed "Blue Sky," has been under study since January. It would use low-sulphur coal mined locally in Alaska and delivered by barge to produce the feedstock needed for the production plant. The new facility also would produce a significant amount of energy that could be sold into the Alaska power grid, generating 100 MW of power for converting coal to gas and as much as 250 MW for sale to the Railbelt power grid. If built, the facility would be Alaska's second largest power plant, second only to Chugach Electric Association's Beluga plant.
"We believe this proposal contains a lot of merit," said Bill Boycott, general manager, Agrium Kenai Nitrogen Operations. "We plan on working with a number of partners to evaluate the potential to commercialize one of Alaska's largest natural resources in an environmentally responsible manner. This project would create an off-take gas agreement opportunity for Agrium and generate another source of competitively priced electricity into the power grid if it were to proceed to completion. It would also provide excess CO2 for use in the exploration of oil and gas and keep Alaska's largest value-added industry in business for decades to come."
Coal for the facility would be sourced from the Beluga coal field, located about 40 miles across Cook Inlet from the Agrium plant. The field contains more than two billion tons of proven reserves, making it one of the world's largest low-sulfur coalfields. The proposed facility could produce more than 1.5 million metric tons of product if it were to operate at full capacity.
Boycott said Agrium, based in Calgary, has been working with the U.S. Department of Energy and Alaska's congressional delegation, and said Alaska Sens. Ted Stevens and Lisa Murkowski have been "very supportive." Other partners in the study include Usibelli Coal Mine and the engineering firms Black & Veatch and Uhde. Agrium also is talking with Shell Oil about its proprietary coal gasification technology. A final decision on the plant is expected to be made by April 2006, Boycott said.
Alaska Gov. Frank Murkowski congratulated the management and staff at Agrium "for their perseverance and diligence over the last year in the face of uncertainty. This announcement is a positive step toward a long-term, sustainable future for the Agrium nitrogen facility, which is such a critical part of the economy of the Central Kenai Peninsula." Murkowski noted he had promoted the "tremendous potential of the Beluga coal reserves for many years -- and it is gratifying to see a proposal that could commercialize that vast reserve, saving many existing Alaska jobs and creating more jobs in the long term."
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