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.

One comment

  1. Craig Hauger says:

    …’lil Aggie is hiring….one person…to shovel snow away from the door and keep the office area heat at about 45 degrees…a job lonelier than the Maytag Repair man for sure, but hey, it’s a start!

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