Alaska bill adds Agrium plant restart incentives

OREANDA-NEWS. April 15, 2016. Alaskan lawmakers could encourage fertilizer producer Agrium to restart its Kenai nitrogen plant in Nikiski, Alaska, after it shut down in 2007.

Alaska House Bill 100 would provide Agrium tax abatements if the company is able to generate royalty revenues for the state from natural gas usage. If approved by the Alaska senate, the bill may be enough to convince Agrium to restart the mothballed facility.

The bill passed the Alaska House of Representatives in April 2015, and recently went through a round of committee hearings in the state's senate. HB 100 could be passed and signed by Alaska governor Bill Walker as early as May.

The fertilizer producer is not in a a rush to restart the Kenai plant, but "if the conditions are right, there would be the possibility of restarting it," Agrium government relations manager Adam Diamond said.

Diamond said the plant's potential restart hinges on the availability of natural gas in the Cook Inlet. Agrium shutdown the Kenai plant in 2007 because it could not secure long-term feedstock natural gas supply. After experiencing a steady decline, natural gas production in the Cook Inlet has the potential to rebound with 75 new oil and gas wells drilled since 2010, according to the Alaska Oil and Gas Association.

"We don't want to be in a situation where there is a gas shortage down the road," Diamond said. "We're evaluating whether there is enough gas to meet all of the demand."

When in operation, the Kenai facility had a total capacity of 4,200st/day ammonia and 3,600 st/day urea. If the plant were to resume production, Diamond said Agrium would only restart half of the plant. Kenai's production would would primarily be exported to Asian markets.

Bill author and Alaska House speaker Mike Chenault said a plant restart would also reduce the price of fertilizer for Alaskan farmers.

"When the facility shut down, the only other source of urea fertilizer was in Canada," Chenault said. "I don't know if [HB 100] tips the scale for bringing back it online, but I hope it does."