On track

Palin to sign bill crucial to Agrium plan

Posted: Thursday, August 23, 2007

Gov. Sarah Palin is expected to sign a bill in Kenai on Saturday authorizing the Alaska Railroad Corp. to participate in Agrium's future coal gasification plant project at Nikiski.

According to Palin's press office, the governor will mark Saturday's Industry Appreciation Day ceremonies in Kenai by putting pen to paper on House Bill 229, a measure sponsored by Rep. Mike Chenault, R-Nikiski.

That bill permits the railroad corporation to participate in acquiring, building, improving, maintaining, equipping and operating facilities necessary to transport coal from Healy to the northern Kenai Peninsula, as well as to back facilities and equipment for the proposed coal gasification and power plant itself.

It also authorizes the railroad to build a new rail link between Healy and Port MacKenzie, and to transport coal from there to the peninsula by barge.

In recent years, Agrium USA has struggled to secure sufficient natural gas to keep its urea and ammonia plants operating profitably, and has had to shut down operations partially or completely during winter months, necessitating the layoff of workers.

As an alternative to buying gas from Cook Inlet producers, Agrium officials have been exploring the viability of building a coal gasification plant to supply feedstock gas to the plant and to provide power.

If built as envisioned, the power plant would also supply energy to the Railbelt energy grid, and supply excess carbon dioxide to Cook Inlet oil producers to enhance oil recovery from wells.

The gasification project would create a new market for Healy coal, create revenue for the railroad, and provide new employment.

Under House Bill 229, the railroad would be authorized to finance all or part of the project by issuing up to $2.9 billion in bonds. The general credit of the state of Alaska would not be pledged for repayment of the bonds. The bill does not require the railroad to participate.

"All we did was give them the authority, if they choose as a corporation, to use their bonding capacity to fund the project in part or in full," Chenault said Wednesday.

That authorization may open doors for both Agrium and the railroad, he said.

"At this point, its is an option, a viable option, that's out there if Agrium and those involved in the gasification project decide to move forward, it gives them a funding mechanism," he said. "It also gives the railroad the contracts and ability to be able to haul coal from Healy to the peninsula."

Hal Spence can be reached at hspence@ptialaska.net.

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