Agrium and Southcentral communities to benefit from Kenai Blue Sky project: new coal-gasification facility to provide long-term alternative to natural gas.

For almost 40 years, Agrium has been making and exporting fertilizer from its nitrogen facility located on the Kenai Peninsula. As natural gas supplies have begun to diminish, however, the company has had to consider alternative ways to provide the factory with the feedstock it needs to keep the plant running and to keep its 230 employees on the job.

One option now under serious consideration is the establishment of the Kenai Blue Sky project, which would result in a world-class gasifier and power-generation plant being constructed adjacent to the Kenai Nitrogen Operations (KNO) facility. The gasifier, which would utilize coal from nearby reserves as its carbon source, would produce the hydrogen, nitrogen, steam and carbon dioxide that the nitrogen facility needs, while also providing a number of value-added benefits to Southcentral communities.

"The end result of the Kenai Blue Sky project is that Agrium would be able to get the feedstock we need to run our fertilizer plant, and to continue to make ammonia and urea," explained Lisa Parker, Agrium's government relations manager. "The power plant would allow us to generate the power we need to run our equipment, as well as enable us to make excess power that we could then sell into the Railbelt power grid."

The Blue Sky project also is expected to provide excess carbon dioxide, which could then be used to recover up to 300 million barrels of oil through enhanced oil recovery in Cook Inlet, according to Agrium's Phase 2 Project Summary. When the project is fully operational in 2011, more than 500 year-round jobs will be created in the coal industry, and at the gasification facility and power plant.

FROM START TO FINISH

The idea to create a coal-gasification facility is not new; there are already operating facilities in North Dakota, Kansas and Tennessee, and the Energy Policy Act of 2005 included legislation to encourage the use of coal gasification for power generation and industrial use. Still, the process has been slow to catch on, especially in the 49th state.

"We started discussing the idea about two years ago, after reading an article in Green Markets about a company that was considering building a coal-gasification project," said Parker. "We'd been struggling for the last five years to get sufficient feedstock to keep the plant running, and this looked like it might be an option since there's a lot of coal available in Alaska."