Agrium looking for improved global economy

Declining prices in the international fertilizer industry have left the Agrium U.S. Inc. Kenai Nitrogen Operation facility in Nikiski wary of the coming year.

"We are anxious to see when the world economy recovers," said Mike Nugent, Kenai nitrogen operations manager. "The fertilizer business as a whole, not just Kenai, but North America and South America, was impacted."

All product made at the plant in Nikiski is sold internationally to Pacific Rim countries such as Korea, Thailand, Taiwan and China. According to Nugent, prices were slowing prior to the events of Sept. 11, but since that day the market has been increasingly aggravated. In addition, a drought in the Pacific Northwest and western Canada has further decreased the need for fertilizer. Agrium on the Kenai Peninsula has not seen a drastic impact yet, but current trends might mean an uncertain future.

"Conditions in that market do affect (us) worldwide," he said. "We are still running at capacity and are able to sell all of our volumes. There is an oversupply situation, and that is causing pressure on prices."

While the company's market was declining, the plant on the home front was still in the process of changing hands as 2001 rolled in. The $321 million deal between Unocal Alaska and Agrium was completed in the fourth quarter of 2000 and also included Unocal agricultural products facilities in Washington, Oregon and California.

Agrium's Nikiski nitrogen plant Company headquarters: Calgary, Alberta

Alaska manager: Mike Nugent

Number of employees: 300 full-time and 30 contract

Production for 2001: 670,000 metric tons of ammonia and 960,000 metric tons of urea.

Local contact: 776-8121

Web site: www.agrium.com

Company outlook: Agrium Inc. production remained at capacity in 2001 despite downturns in the international fertilizer market.

The company plans to wait out economic fluctuations, according to plant Alaska Manager, Mike Nugent.

Getting used to a new company and new people has been a smooth transition, said Nugent, who pointed out that when the plant was under the management of Unocal it was the only fertilizer plant in a company focused on oil.

"The strategy for the company is now aligned with the business we're in. As employees, we are more part of a team than we were before," he said.

As part of a corporation familiar with the issues of a fertilizer plant, Agrium has been able to focus on improving and maximizing its capabilities.

In the second quarter of 2001, in conjunction with Homer Electric Association, Agrium completed construction of an electrical generating plant located at its base in Nikiski. It is helping both companies function more efficiently, Nugent said.

The waste heat boiler was started up the second quarter, went through a debugging period that was complete by the third quarter and is now in full operation. The Agrium fertilizer facility produces ammonia from Cook Inlet natural gas as well as nitrogen taken from the air. The plant also produces urea from a process that combines some of the ammonia with carbon dioxide.

Regarding Agrium's potential loss of Cook Inlet natural gas supplies once its contract with Unocal has expired in 2009, Nugent said, "It is far enough in the future that it doesn't cause a lot of concern but soon enough that we are spending some effort with both Unocal and other suppliers."

Agrium employs 300 full-time workers and on average 30 contract personnel. According to Nugent, 2001 was basically a normal year. The plant sold 670,000 metric tons of ammonia and 960,000 metric tons of urea, up from the 740,000 metric tons of urea sold the previous year.

"The biggest thing we are looking for is a recovery in the worldwide economy," he said.