Agrium's Alaska Facility Considers Building Coal Gasification Plant
Agrium examining option to keep Nikiski plant open
COAL GASIFICATION? Fertilizer factory is currently slated to close October 2006.
By TOM KIZZIA
Anchorage Daily News
Published: November 17, 2005
Last Modified: November 17, 2005 at 07:16 AM
adn.com
HOMER -- Agrium Inc. announced Wednesday it is taking a close look at coal gasification as a way to supply its big Nikiski fertilizer plant, which is slated to close next year when low-cost natural gas runs out.
The Canadian company said it is studying construction of a gasification plant next to its Nikiski facility, using coal delivered by barge. Under the plan, the plant would probably shut down as scheduled next October, then reopen in five years when the new project is complete, company officials said.
The new facility would include a coal-fired power plant generating 100 megawatts of power for converting coal to gas and as much as 250 megawatts for sale to the Railbelt power grid. This could be the state's second-largest power plant, behind Chugach Electric Association's Beluga plant across Cook Inlet from Anchorage.
The idea has been under study since January, and a key decision to move ahead with engineering has to be made by next April, said Agrium plant general manager Bill Boycott. If Agrium goes ahead, the new facility could be running as soon as 2011, he said.
Agrium has dubbed the project "Blue Sky." The company said the name refers to new, environmentally friendly coal gasification technology.
Speaking at an Anchorage press conference Wednesday, Boycott said the company is pessimistic about finding new supplies of low-cost gas barring a major discovery of gas in Cook Inlet. The Nikiski fertilizer plant, Alaska's largest value-added manufacturer, would likely shut down permanently next October if the gasification plan doesn't pan out, he said.
If Agrium decides to convert the plant, he said, employees could find work in the substantial construction that would be necessary. The plant now operates at half capacity and employs 180 people.
Converting the plant to make urea and ammonia from gasified coal instead of natural gas would be an irreversible move, Boycott said. The coal would come from new Beluga coalfields on the west side of Cook Inlet or from the Usibelli Coal Mine at Healy.
Boycott declined to share cost projections for the project.
Agrium's Nikiski plant has been on the verge of closing for a year because rising gas prices in Cook Inlet made its nitrogen products too expensive. Agrium bought the plant in 2000 from Unocal. Disputes over gas-supply contracts related to the sale ended in a settlement that left Agrium without the cheap gas that was the original reason for building the plant.
In July, Agrium announced it had found enough gas to keep running the plant through October 2006.
Kenai Peninsula Borough Mayor John Williams was elated at Agrium's announcement Wednesday. He said it could be a way of keeping the Agrium plant open, adding new industrial investment in Nikiski and developing the Beluga coalfields, which also lie inside the borough.
"I see this as the beginning of a very positive future for the Kenai Peninsula," said Williams, who first came to the Kenai Peninsula as a steamfitter in 1968 to build the original fertilizer plant.
Gov. Frank Murkowski said he was happy to see an idea that could keep Agrium open and also develop new resources at Beluga. "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," he said.
He said the state helped find gas to extend Agrium's operation this year and may have a role to play in helping find more gas to keep the plant running until its gasification project is done.
Agrium officials called the gasification technology "mature" but also improving. They said two gasification plants in Europe generate power and 11 are being designed or built in China, including seven to supply ammonia and urea plants like the one in Nikiski. Gasification units using older technology supply fertilizer plants in North Dakota and Kansas, they said.
Boycott said officials had just returned from touring a Netherlands plant that operated under "extremely stringent environmental regulations." Agrium is talking with oil giant Shell about using its gasification technology.
He said the idea for looking at coal gasification for Agrium's woes first came from U.S. Sen. Ted Stevens. The energy bill Congress passed recently includes "significant incentives" for use of gasification technology, he said.
He said the company may also want to talk to the state about providing infrastructure necessary to make the project work.
Agrium is looking for major investors in the project, officials said. Joining in the study so far has been Usibelli. The project is also looking at the untapped Beluga fields of low-sulphur coal. The project would need 4 million tons of coal a year, the company said.
Williams said a key to the project may be selling extra coal-fired power generated at the new power plant. He noted that owners of the Pebble gold and copper prospect across Cook Inlet have said they need about 275 megawatts of power, which is close to what Agrium says it could generate.
"I think it's all part of the economics. It's all working together," Williams said.
In addition, the gasification process could create 6,000 tons of carbon dioxide a year, which oil companies could buy to enhance Cook Inlet oil field recovery, officials said.
Reporter Tom Kizzia can be reached at tkizzia@adn.com or in Homer at 1-907-235-4244. |
