Agrium’s Kenai restart – at least three years away

Over the last few years, Agrium has said very little about the potential restart of its idle export-oriented ammonia-urea plant in Kenai, AK, except that we shouldn’t expect any “imminent” announcements.

However, this week’s hearings on a tax incentive bill by the Alaska Senate Finance Committee are accompanied by a raft of new documents, showing the project is very much still on the table – it just needs gas (financial incentives would be nice, too).

[Update 03/18/2016: Alaska passed Agrium’s tax incentive bill yesterday.]

Agrium is proposing a schedule in which it takes a year to inspect and assess the site, during which it hopes to secure a feedstock supply, and then – “Assuming plant rehabilitation is economical, and assuming an adequate supply of natural gas can be secured” – a 26-month plant renovation phase.

Kenai AK SFC hearing

I was interested to note the extent to which Agrium demonstrated the benefits of starting up not only one ammonia-urea line, which is all that it has discussed until now, but also the second ammonia-urea line. This would potentially double the size of the capacity expansion, more or less.

Agrium’s current plan is to restart just the newer train … The second train could start up at a later date, determined largely by the availability of natural gas. A two-train operation would employ 240 workers on a permanent, full-time basis. Annual labor income would increase to $24 million … Including direct, indirect and induced effects, at full production (two trains), Agrium’s Kenai operations could account for approximately 600 jobs and $50 million in annual labor income in Alaska.

Though I’m always eager to add more capacity expansions to the database, I assume that any mention of starting up the second line is little more than Agrium’s carrot on a stick for the Alaska legislators, who will need all the encouragement they can get. Alaska isn’t in the best position to hand out more tax incentives given the large, oil-size hole in their budget.

Last month, the Kenai plant manager told the local press that “At this point we’re not putting it forward to the board,” and I expect the restart will remain undecided at least until the natural gas supply is assured.

More details are in my Research Note for Kenai, AK.

Leave a Reply

Your email address will not be published. Required fields are marked *