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Agrium to Make Final Decision on Switch from Gas to Coal in '08

With its Alaska business forever tied to the possibility that natural gas supplies could be curtailed, Agrium Inc. plans to switch its Nikiski nitrogen plant in Kenai, AK, from gas to coal. A final decision on coal plant construction is scheduled for 2008, and if it moves forward, the revamped plant would be operational in late 2011, company officials said.

Agrium, Cook Inlet's largest employer, considered shuttering the fertilizer facility this year after it once again had trouble securing gas contracts with area producers (see Daily GPI, Nov. 18, 2005). However, Alaskan officials and Agrium teamed up to consider using coal gasification as a feedstock for the facility, and earlier this year, it began a feasibility review (see Daily GPI, Sept. 1).

Under the current plan, the Homer, AK, Electric Association would take the lead role in building the Kenai Blue Sky Coal Gasification Project, which would include a 190 MW coal-fired power plant. About two-thirds of the power would be dedicated to the gasifier planned by Agrium. Another 70 MW would be available for the regional grid.

Agrium is now in the front-end engineering design and permitting phase for the project, which is expected to last 18-20 months.

Agrium now uses natural gas as a chemical feedstock to manufacture ammonia and urea at its fertilizer facility. Normal operations, which shut down in the winter, will resume in the spring. Agrium's current gas contracts will expire in late 2007.

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