Company's presence on peninsula strong despite gas shortages

Agrium outlook positive

Posted: Thursday, December 19, 2002

Due to dwindling reserves of natural gas in Cook Inlet, the North Kenai Agrium plant is expected to continue operating at less than capacity for at least the next two years.

However, that does not mean North America's second largest nitrogen products facility has any plans of leaving the Kenai Peninsula.

Agrium General Manager Mike Nugent was the guest speaker at Wednesday's meeting of the Kenai Chamber of Commerce.

Nugent said although the current gas crunch is affecting plant operations, the company is optimistic new reserves will be located in Cook Inlet in the future.

"We'll probably be at a reduced capacity for the next two to three years," he said.

Nugent noted that exploration for new gas fields currently are under way. However, it will take at least two to three years before those reserves can be brought on line.

The natural gas situation in the inlet is important because Agrium relies heavily on gas as a main ingredient to produce industrial fertilizers and other nitrogen-based products.

At full capacity, the plant uses roughly 50 to 55 billion cubic feet of natural gas annually.

Although the plant most often is associated with fertilizers, Nugent said a large portion of Agrium's business comes in the form of resins and materials for making plastics.

The majority of its products are sold to Pacific Rim countries such as Japan, Korea, Australia, New Zealand and Mexico.

Nugent said the ability for Agrium -- the borough's third largest private employer -- to use natural gas to produce Alaska-made products is what makes the North Kenai plant unique among Alaska businesses.

"We are one of the few value-added, natural resource-based industries in the state of Alaska," he said.

Nugent said the fact that Agrium operates a large, global-market facility means new gas producers have a big incentive to find new reserves.

"We bring a steady demand (for natural gas) all year," he said, noting the news he's heard from exploration companies about new reserves has been positive.

"They believe there's some fairly large reserves to be discovered and produced," he said.

Nugent also said despite the current shortage, the company is doing fine and has absolutely no plans to abandon operations on the peninsula.

"We're pretty optimistic about the long-term situation," he said. "It's just going to take a while to make it happen."



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