Agrium Inc. has received $7 million in state grants that could lead to an additional 300 to 350 jobs in North Kenai.
A $2 million Denali Commission grant and a $5 million state grant are enabling the company to proceed with its $22 million detailed feasibility review of a coal gasification project called “Kenai Blue Sky.”
Kenai Agrium plant spokesperson Lisa Parker said the company is “looking at potential federal funds and funding from private sources,” for added help in the study.
Kenai Blue Sky would bring low-sulfur coal from Healy to North Kenai where a gasification plant and electricity generator would be built on 75 acres adjacent to Agrium’s existing urea and ammonia plant.
Gas from coal would provide Agrium with an alternative feedstock to natural gas, which is in tight supply in Southcentral Alaska.
Parker said that would mean Agrium would not have to operate on a year-to-year basis, dependent on the availability of natural gas, to make its fertilizer products.
She said it also would enable Agrium to operate both of its urea plants and both ammonia plants. Currently only one of each is in production.
A company press release said the project, if built, “is to develop a world-class, low-emission coal gasification facility that would create a long-term off-take gas opportunity for Agrium’s Kenai nitrogen facility and that would generate competitively priced electricity for the regional power grid.”
When asked if Agrium would sell surplus electricity to Homer Electric Association, Parker said, “We’ve been talking with a number of power producers.”
She said to run the coal gasification plant, the company would need about 120 megawatts of electricity a year.
The company is looking at building a 200 megawatt power plant, she said.
The power plant also would be fired with pulverized coal, brought to the Kenai plant by rail from Healy.
The press release said the gas plant “would also provide excess carbon dioxide that could be used for enhanced oil recovery.”
According to Bill Popp, Kenai Peninsula Borough oil, gas and mining liaison, the Department of Energy is days away from releasing a report showing 13 Cook Inlet oil fields would be candidates for using CO2 in oil recovery.
Popp said the DOE report shows a potential of 300 million barrels of Cook Inlet oil that could be produced using that method.
To date, no CO2 enhanced recovery has been done in the inlet, according to industry experts.
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