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Agrium avoids more staff cuts

Posted: Wednesday, September 03, 2003

In spite of a second natural gas supply cutback from the Unocal Corp., the Agrium Kenai Nitrogen Operation has been able to avoid further staff reductions.

In fact, Agrium officials said a two-week shutdown early last month of one of the four plants at the facility was more of a help than a hindrance.

"Instead of having to lay off workers, we were able to use that time to do maintenance on the plant," said Agrium spokesperson Lisa Parker.

Parker said the ammonia plant's synthetic gas compressor liquid propane turbine, a component that pressurizes the gas introduced into the ammonia-producing process, underwent a complete overhaul.

"If you don't do that (periodically), it could result in equipment failure," she said.

This kept the facility from having to shed any more of the nearly 230 workers it employs, after losing 65 in May to a facilitywide company reorganization.

"It didn't result in any temporary layoffs," Parker said.

The four fertilizer plants two ammonia plants and two urea plants currently are operating at an average of about 65 percent of total production capability.That's down 10 percent from what the facility was producing in the first half of the year, before the June announcement that Unocal would curtail more gas.

At full capacity, the facility was using about 130 million cubic feet of gas per day to produce about 700,000 tons of anhydrous ammonia and 1.1 million tons of urea per year.

Agrium currently is in litigation with Unocal over the 10-year contract between the two over natural gas supplies the petroleum company was to provide to the Nikiski fertilizer operation, sparked by an initial gas cutback announced late last year.

Facility general manager Bill Boycott said as a result of the recent gas supply cutbacks, Agrium has had to undergo changes.

"Our fixed cost to manufacture is higher than it would be at 100 percent," he said. "Gas supply is still variable. We're selling November product, and we're trying to get a picture of where the November gas is coming from. It's a balancing act."

Parker said the company expects to begin purchasing additional gas from other Cook Inlet natural gas sources later this year, but exactly when and where those supplies will come from is still uncertain.

"Every day the quantities of gas changes," she said.

She said the greatest determining factor of how much gas will be needed, however, will be how much ammonia or urea the facility has been contracted to produce going forward.

"We have to make sure that we are able to meet those commitments," she said.

"What we hope is if there is going to be (another) gas curtailment, that we know far enough in advance that we can fill that void and take care of contracts that we need to."



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