The plant now relies on natural gas as a feedstock but would be able to diversify to coal with a gasification process.
The detailed study is expected to take 18 months, which would allow a go/no-go decision on the project in mid-2008, Agrium spokeswoman Lisa Parker said. If the Agrium project proceeds to construction, it could be in operation by 2011, according to the press release. The state of Alaska is contributing $5 million and the federal government is contributing $2 million to the cost of the study, according to Agrium.
Parker said the plan includes development of a 200-megawatt power plant to supply electricity to the regional power grid. The power plant would be fueled by coal.
Agrium's fertilizer plant has been experiencing shortfalls in natural gas supply for several years and is now operating at about half the capacity of previous years. Reserves in Cook Inlet's producing fields are declining and increased demand from local utilities have put upward pressure on regional gas prices, which have increased from approximately $1.50 per thousand cubic feet to about $5 per thousand cubic feet this year.
Agrium managers have told state legislators in the past that the plant cannot afford to pay higher prices for gas and keep its products competitive in export markets. Much of the ammonia produced in the Kenai plant is sold in Korea, while urea fertilizer is sold worldwide.
Switching to a synthesis gas produced through coal gasification would allow the plant to continue in operation with a feedstock priced lower than natural gas, Agrium managers have said in past briefings on the project.
Coal for the project could initially be supplied from the Usibelli Coal Mine near Healy, in Interior Alaska. On a long-term basis, coal could come from a large mine planned for development in the Beluga coal fields across Cook Inlet from the plant site. Coal would be barged to the site from the mine, under the plan.
Tim Bradner is a reporter for the Alaska Journal of Commerce in Anchorage. He can be reached at tim.bradner@alaskajournal.com.
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