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Vol. 12, No. 50 Week of December 16, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Agrium advancing Blue Sky project

Phase two results for coal gasification plant to feed company’s Nikiski, Alaska fertilizer plant expected in first quarter 2008

Alan Bailey

Petroleum News

Agrium is continuing to progress its Blue Sky project for a coal gasification plant to feed the company’s fertilizer plant on Alaska’s Kenai Peninsula. Agrium closed the Nikiski fertilizer plant in December because of a lack of natural gas feedstock.

As part of phase two of Blue Sky a preliminary engineering design for the coal gasification plant has been completed, Agrium spokeswoman Lisa Parker told Petroleum News Dec. 12. Agrium has also found partners for the project, although company officials cannot yet disclose who those partners are, Parker said.

The company completed a feasibility study that constituted phase one of the project in August 2006. That study concluded that the coal gasification idea had sufficient merit to justify proceeding to the second project phase. Phase two would involve working on the commercial arrangements for the project, finding strategic partners and initiating the permitting, as well as doing the preliminary engineering design.

Agrium expects to make an announcement about the results of phase two at some time in the new year.

“We hope to be able to make an announcement in the first quarter of 2008,” Parker said.

Construction of the coal gasification plant could start in 2010 or the latter part of 2009, Parker said.

“The earliest we can look at bringing the project on line would be the second quarter of 2012,” she said.

Announced 2004

Agrium announced the Blue Sky project in November 2004 as a solution to the problem of natural gas supply shortages from the Cook Inlet basin. Until it closed down the fertilizer plant generated ammonia and urea by reacting natural gas with nitrogen from the air — essentially the natural gas provided a source of hydrogen for the fertilizer chemicals.

If the Blue Sky project proceeds to completion, coal gasification would entirely replace natural gas as a source of hydrogen, with the gasification plant likely forming a front-end to the existing fertilizer facility.

The gasification process involves combining coal at very high temperatures with pure oxygen, separated from air, to produce hydrogen and carbon dioxide. The process of removing oxygen from air leaves nitrogen, another feedstock for generating ammonia and urea in the fertilizer plant. Urea production would also use some of the carbon dioxide generated in the gasification process.

A coal-fired electricity power plant needed as part of the new plant design could also supply electricity into the Alaska Railbelt electricity grid. As envisaged at the end of phase one of Blue Sky, the power plant might inject 70 megawatts of electricity into the grid.

Coal for the facility might come from the undeveloped Beluga coal field on the west side of the Cook Inlet or from the operational Usibelli coal mine at Healy.

In addition to nitrogen and hydrogen, coal gasification would generate carbon dioxide and an inert slag. The carbon dioxide might be used to enhance oil production from Cook Inlet oil fields, while the slag might be used for applications such as road construction.



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