Agrium still in feasibility phase of coal project

Blue Sky hasn’t taken off yet

Posted: Friday, April 28, 2006

Agrium USA is moving closer to an announcement on the next phase of the Blue Sky Project, but mum’s the word of the moment.

The company is 15 months into the first phase of a feasibility study for an ambitious coal gasification project dubbed Blue Sky, but spokesperson Lisa Parker told the Kenai chapter of the Support Industry Alliance on Tuesday that the company won’t announce a move to start Phase 2 until the end of summer.

Phase 1 is meant to determine if the project is workable from economic, environmental and engineering standpoints.

Phase 2 would see work begin on the project.

Blue Sky envisions mining the Beluga Coal Field across Cook Inlet, shipping the coal across the inlet, then converting it into hydrogen, nitrogen, steam and carbon dioxide. The hydrogen and nitrogen would be used to make ammonia and urea.

The project would require the building of a gasifier and air separation unit and an integrated power plant to run the gasifier.

Excess power produced would be pumped back into the Southcentral Alaska Railbelt power grid, and the carbon dioxide would be sold to Cook Inlet producers for use in excess natural gas recovery.

“This would be the largest project undertaken by the state of Alaska after the trans-Alaska pipeline,” Parker said.

Due to rising natural gas prices, Agrium has trimmed its work force and operations over the past few years. One of two ammonium and one of two urea plants are operating currently, and 150 employees work in the North Kenai facilities today.

At full capacity, the plants employ 230.

If the project goes forward, there would be enough coal to keep Agrium running at full capacity far into the future.

“This would allow us to continue operations beyond our lifetimes, into our great-grandchildren’s lifetimes,” she said.

The company is nearing completion of the engineering portion of its feasibility study, continuing work on environmental scoping and preparing documentation to secure funding for Phase 2, should the company decide to proceed. Thus far, Agrium and Usibelli Coal Mine have financed the study.

Agrium has enough natural gas contracts to keep running at half capacity through October and has sent out feelers to Cook Inlet producers for bids.

Parker said the company should know by midsummer if it can secure gas enough to continue operations past October.

Blue Sky, which would employ more than 1,000 during its construction phase, would not be completed until at least 2011.

Parker said even if all goes well with Blue Sky, Agrium would need to cease operations, although the company will continue to search for natural gas.

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