Walker signs Agrium tax credit bill

According to a report in the Peninsula Clarion, on Sept. 12 Gov. Bill Walker signed into law House Bill 100, a bill that grants credits against corporate income tax for an in-state facility that manufactures ammonia or urea from natural gas produced from state oil and gas leases. The state Legislature passed the bill in April.

The bill clearly targets the potential re-opening of Agrium Inc.’s mothballed fertilizer plant at Nikiski on the Kenai Peninsula - the tax provisions in the bill would presumably render the re-opening more viable. With gas producers operating in the Cook Inlet basin looking for markets for their gas, a revitalized fertilizer plant could provide a significant economic boost for the region.

The fertilizer plant was initially built in the heyday of Cook Inlet gas production, to provide a means of monetizing excess gas. But in 2007 Agrium closed the plant down, because of a shortage of gas supplies, with the Cook Inlet gas fields being in a state of significant decline. A resurgence of the Cook Inlet oil and gas industry in recent years has resulted in a surplus of gas production capabilities over gas demand. Consequently, Agrium has been expressing an interest in re-starting its Nikiski plant, although the company has yet to make a decision on this possibility.

Agrium has said that rehabilitating the plant for a restart would cost about $275 million; that the project would need to compete for capital with other Agrium projects; and that decision to restart would depend on the long-term availability of Cook Inlet gas, as well as on commodity pricing.

- ALAN BAILEY