Oil Patch Insider

Agrium on Nikiski plant

The Feb. 18 issue of Petroleum News carried an Oil Patch Insider story about Agrium CEO Mike Wilson’s remarks at a Feb. 13 Goldman Sachs forum concerning the firm’s Nikiski, Alaska nitrogen facility.

Agrium’s Alaska spokeswoman Lisa Parker was concerned about Petroleum News’ headline, which was, “Agrium ‘in essence’ writes off Nikiski facility, but hope lies in gas exploration and coal gasification.” The headline came in part from Wilson’s statement, “We’ve in essence written it off. We’ve told you to be very conservative and don’t count a lot on it. We’re keeping it alive for option value.”

“The headline … gives the reader the impression that Agrium does not support keeping the complex open,” Parker said. “Agrium continues to seek additional gas to operate the plant while also exploring the opportunity to utilize coal gasification to provide the necessary feedstock for the facility on a long-term basis. … Technically speaking Agrium has taken a write-down on the facility. However the way the sentence is written it gives one the impression that Agrium no longer supports keeping this facility open which is an inaccurate assumption.”

Wilson’s comments were in response to an analyst asking him to put a gross value on the Nikiski operation.

“One of the impacts of the lack of natural gas has been the company taking a write-down of the Kenai assets in late 2003 for a total of $235 million — $140 million net of tax. This is the only impairment write-down relating to Kenai — it took care of the whole asset,” Parker said.

This sentence also concerned her: “The already scaled-back facility will reopen in March, as planned, he said, but only stay open for ‘roughly’ eight months.”

Agrium, Parker said, is “continuing our discussions with Cook Inlet producers to secure gas past this date (Oct. 31). Agrium’s efforts over the past few years have been to attempt to negotiate long term contracts however the producers have been unwilling to enter into anything other than year-to-year.”

To read the entire Feb. 18 Insider piece on Agrium go to http://www.petroleumnews.com/pnads/44357056.shtml.

—Kay Cashman