Agrium interested in Cook Inlet JV

Steve Sutherlin

Agrium Inc. will consider entering into joint ventures to drill for natural gas in order to feed — and expand — its Kenai Peninsula nitrogen fertilizer plant, John M. Van Brunt, Agrium president and CEO, told Resource Development Council members at the organization’s annual conference in Anchorage Nov. 30.

Agrium wants to secure a supply of low cost gas to accomplish its strategic goals in Alaska, Van Brunt said.

The company’s current long-term contracts extend to 2009. Prices are now at $1.20 per million Btu, but could rise to $1.50-$1.60 MMBtu, he said.

Alaska is a major player in the nitrogen business and will continue to be, Van Brunt said, but the price of feedstock is the primary factor in world nitrogen market competitiveness. The price Agrium’s Nikiski plant is currently paying for gas allows it to compete in the Pacific region. But without low-cost gas, the plant would shut down, he said.

Van Brunt said that Russia, the world’s major nitrogen producer, along with a few other producers in Asia, sets the price for nitrogen in much the same way that OPEC controls the price of oil.

“Four to five-dollar gas can’t compete with one dollar gas,” he told RDC.