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Agrium looks at Nikiski upgrade
Kay Cashman, PNA publisher
Agrium Inc. is studying the feasibility of upgrading one of its Nikiski urea units to produce a higher grade product that would result in more income for the company. It is also continuing to look for joint venture partners to drill for natural gas in order to feed — and possibly expand — its Nikiski ammonia and urea operation.
Jim Pendergast, Agrium’s director of investor relations, told PNA Dec. 9 that the company was looking at “the possibility of moving some granulation equipment” from an overseas location to its Nikiski facility.
“We’d pretty much be replacing prill production with granular” at one of the two urea units, he said. Currently, one of the units produces approximately 650,000 metric tons of granulated product annually and the other churns out 450,000 metric tons of prilled product.
The granulated product is sold at a premium of approximately $10 per metric ton, Pendergast said. The Nov. 28 Arab Gulf price of bulk prill was $115-119 per metric ton; bulk granular sold at $125-127. He said Arab Gulf prices are comparable to Pacific Rim prices for the products.
“It’s not a done deal yet. … (The equipment) would allow us to ship more product to premium markets such as New Zealand and Australia. They, like Americans, demand a higher grade product,” he said. Currently, Agrium is shipping the lower cost prill to Asian markets, such as Thailand and Vietnam.
Looking for a partner Thirteen months ago John M. Van Brunt, Agrium’s president and CEO, said the company was talking to Cook Inlet producers about a joint exploration venture in hopes of finding a secure supply of low cost gas. The Nikiski facility, which contains two ammonia and two urea units, is operating at 75-80 percent capacity because it can’t get the low cost ($1-$1.20) gas it needs to economically operate.
Indonesia, Alaska’s main competitor in the fertilizer market is getting gas at “around a buck,” Pendergast said.
The Nikiski facility has a 30 day gas supply contract with a Cook Inlet producer, which Pendergast was not willing to identify. Agrium expects to renew that contract, but what it really needs is 10-15 year contracts, he said.
“It would be an ideal contract for a Cook Inlet producer because we’d be a steady, long-term purchaser of gas.”
In some of its other locations, Agrium has been willing to put some cash on the table to help with exploration, especially for independents, Chris Tworek, vice president of supply management for Agrium, told the Legislature’s Joint Committee on Natural Gas Pipelines last year. He said the company has bought gas production, invested in pipelines and done exploration and drilling partnerships to reduce its supplier’s risk.
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