Alaska House members last week voted unanimous approval of a bill authorizing the Alaska Railroad Corporation to issue up to $2.6 billion in tax-free bonds to finance parts of Agrium's proposed coal gasification project, as well as a rail link to Port MacKenzie.

Rep. Mike Chenault, House Bill 229's prime sponsor, said the measure, if it becomes law, would help protect a valuable economic asset of the Kenai Peninsula Borough.

"The Agrium plant is in danger of being permanently shut down due to a lack of natural gas feedstock, and that would be catastrophic for the Kenai Peninsula," he said in a press release.

"My community relies on the plant as a major taxpayer and provider, and the project that is on the table calls for gasification that will help the plant operate at optimal capacity. Allowing the railroad to bond out the project helps its feasibility and enhances the project's economics, which enables the project to move forward."

The bill would provide financing for facilities and equipment for transporting coal from Healy to Kenai and financing for facilities and equipment for coal gasification and electrical power generation adjacent to Agrium's fertilizer plant.

Chenault said any actual bond issue and use of its proceeds still is a long way off, and could occur only after a project is seen to be a profitable venture.