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Agrium Corporation’s Kenai Blue Sky Project, AK

STATUS: Canceled

TYPE: Coal

OPPOSITION: Sierra Club

PROSPECTS: Dead

BACKGROUND:   In 2000, Agrium Corp, a Canadian chemical company, purchased the Nikiski fertilizer plant.  Soon after, rising prices and tight supplies for natural gas, which the plant used to produce urea and ammonia, resulted in reduced production and lay-offs.  To save the plant, Agrium turned to coal gasification using the Fischer-Tropsch process to provide the feedstock needed to make its products. Homer Electric Association agreed to partner with Agrium to build a 200 megawatt coal-fired power plant at the facility, with coal shipped down from the Usibelli coal mine in Healy on the Alaska Railroad. 

The project did not attract sufficient private financing.  Therefore the Alaska Legislature passed HB 229 granting the Alaska Railroad Corporation the authority to issue $2.9 billion in tax free bonds to build and operate the facility, which would have included a rail spur to Port MacKenzie across from Anchorage to ship the coal. If the project had been completed as planned more than 500 year-round jobs would have been created in the coal industry, at the gasification facility and the power plant.  However, in March 2008, Agrium announced it was abandoning the proposal, citing poor economic conditions and the rising costs of the project as construction estimates topped $2 billion.

Sierra Club opposed this project, listing the cancellation as a “victory” on its “Stop the Rush to Coal” database.  

LINKS: http://www.entrepreneur.com/tradejournals/article/158090705.html
http://www.alaskajournal.com/stories/031408/hom_20080314001.shtml
http://www.inletkeeper.org/energy/HEAagrium.htm
http://www.sourcewatch.org/index.php?title=Kenai_Blue_Sky_Project 
http://www.agrium.com/news/05784_6899.jsp http://www.agrium.com/sustainability_report/agrium_sr07/growing/communities.html http://www.sierraclub.org/environmentallaw/coal/plantlist.aspx

LAST UPDATED:  November 16, 2010