March 13, 2008 --- Vol. 14, No. 32March 2008

Agrium abandons plan for coal gasification at Nikiski

Agrium announced today that it has determined that its proposed coal gasification facility to supply syngas for the company’s fertilizer plant at Nikiski on Alaska’s Kenai Peninsula is not economic.

“The mothball of the facility will be completed shortly,” the company said.

Agrium closed its Nikiski fertilizer plant in December because of insufficient supplies of natural gas feedstock for the plant. But in 2004 the company had initiated its Blue Sky project, to investigate the feasibility of converting the plant to use hydrogen generated from the gasification of coal. That project is now defunct.

Escalating equipment and construction costs combined with the economic downturn in North America and worldwide killed the project economics, Agrium spokeswoman Lisa Parker told Petroleum News today.

“After three years of working on it and seeing if it was doable, unfortunately we’ve found we can’t advance it any further,” Parker said. “… We haven’t made a decision as to what we will ultimately be doing with the facility at this point. That decision will be made in the months ahead.”

Parker also expressed Agrium’s disappointed that several years of effort in trying to keep the Nikiski fertilizer plant open had come to naught.

“We’re very disappointed,” Parker said. “We have made a very strong effort over the last six-plus years to do everything we can to try to keep this facility operating and providing value back to Alaska. We are disappointed that our efforts were not successful.”

Senators tie ANWR to oil price

Tying domestic oil production to rising energy prices, Sens. Lisa Murkowski and Ted Stevens, both R-Alaska, introduced legislation on March 13 to allow drilling in the Arctic National Wildlife Refuge if oil prices hit $125 per barrel.

The American Energy Independence and Security Act of 2008 would open the 1.5 million acre Coastal Plain of ANWR if global oil prices hit $125 per barrel for a period of five days.

Oil has been at record prices recently, approaching $110 per barrel over the past week.

Under the legislation, half of the first $3.5 billion of lease royalties from the exploration in the coastal plain would go to fund alternative energy projects designed to reduce greenhouse gas emissions. The other half would help fund the Low-Income Home Energy Assistance Program, the federal weatherization program and the Women Infants and Children Nutrition Program.

The bill would need to get 60 votes in the Senate to pass.

The three major presidential candidates have all expressed plans to keep ANWR closed to oil and gas drilling.

Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] ---