Agrium Inc. said today it is closing its Kenai nitrogen fertilizer operations by the end of September due to a shortage of natural gas supply in Alaska’s Cook Inlet basin. Closing the facility will result in the lay-off of more than 100 employees.
Agrium said it’s continuing to work on the “feasibility of a coal gasification project to use coal as a feedstock” instead of natural gas for the Kenai facility. A decision on whether to proceed with the next stage of the project is anticipated later this year. The earliest a gasification facility could be operational is 2012, Agrium said.
The company said it has “diligently attempted to encourage development of natural gas supply and to negotiate contracts for 2008 and beyond,” but “despite these efforts, and after offering what it believed to be competitive prices and incentives, Agrium was unable to secure gas supply.”
Incremental costs associated with the shutdown are expected to be less than five cents per share, Agrium said.
“It is a sad day for us to have to close this facility which has added much value to the Alaskan economy for the past 40 years. It has been a major supplier to international markets in the Pacific region and was Alaska’s third largest exporter in 2006, despite running at 50 percent of capacity,” said Mike Wilson, President and CEO of Agrium. “Our employees at Kenai have been the key to the success of the operation. Had it not been for the natural gas supply situation in the Cook Inlet, we would not have had to make this difficult decision which will impact our employees, customers and the community.”
Note: See full story in the Sept. 30 issue of Petroleum News, which will be available online at www.PetroleumNews.com this coming Friday, at noon Alaska-time.