Fertilizer maker Agrium warns to expect further tightening in world nitrogen markets in 2008 as it closes its nitrogen fertilizer plant at Kenai, Alaska by the end of this month, for want of a natural gas supply.
The Calgary company, one of the world’s biggest wholesalers of fertilizers, said in a release today that it’s unable to secure a supply of natural gas in Alaska’s Cook Inlet, despite offering what it felt were “competitive prices and incentives.”
The company said it “has diligently attempted to encourage development of natural gas supply and to negotiate contracts for 2008 and beyond” but has opted instead to shut the plant, laying off 100 workers.
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Agrium said it had bought 53 billion cubic feet of natural gas to supply the plant in 2001, but that supply has shrunk to just 10 billion in 2007, allowing it to produce 325,000 tonnes of urea and ammonia over the five months of this year in which the plant was running.
The Kenai plant had been “a major supplier to international markets in the Pacific region and was Alaska’s third largest exporter in 2006, despite running at 50 per cent capacity,” said CEO Mike Wilson in a release.
The company said it will continue a feasibility study for a gasification project that would use coal instead of scarce natural gas as a feedstock for the Kenai plant. It expects to decide later this year whether to proceed to the next stage of that project.
However, such a facility, if built as proposed, wouldn’t be up and running until 2012 at the earliest, Agrium said in a release.
