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Nutrien continues to work on re-starting Alaska fertilizer plant
Kay Cashman Petroleum News
Nutrien is continuing to work on re-opening its fertilizer facility on the Kenai Peninsula near Nikiski, its Alaska manager Fred Werth told Petroleum News June 3.
A long-term, affordable natural gas supply from the Cook Inlet basin is crucial to re-starting the Kenai plant, north of the city of Kenai. When the facility ran at full capacity it employed 400 people. It closed in 2007 for lack of a reliable and reasonably priced supply of gas.
“Gas price is our biggest challenge,” natural gas feedstock being the highest cost component in the manufacturing process, Werth told PN in a previous interview.
In 2007, the Cook Inlet gas fields were in significant decline but have since experienced an exploration and production resurgence.
Today, the Alaska Department of Natural Resources and the U.S. Geological Survey estimate 19 trillion cubic feet of recoverable natural gas remains to be discovered in the Southcentral Alaska basin, which doesn’t include several discovered but untapped gas pools.
Slow but sure progress Werth sounds more hopeful than when last interviewed by Petroleum News in 2018, but he cautioned not to expect a re-opening announcement any time soon.
To fully supply the Nutrien complex the company will need a guaranteed 160 million standard cubic feet of natural gas per day, more than Enstar, the regional gas utility, uses on average.
“I am anticipating that our daily consumption number will move lower as we find ways to achieve better energy efficiency,” Werth said June 3, “most notably within our reformers (first stage in production of ammonia from natural gas).”
“We are currently working with a couple of the industry leaders to better understand new technology (for the facility) mostly related to ‘firing’ improvements. You can imagine that plants brought online around the world in the last 10 years have significant advantages over the Kenai Plant in terms of cubic feet of CH4 (methane) per ton of NH3 (ammonia) produced.”
Location, location, location Nutrien, formed with the merger of Potash Corp. and Agrium in early 2018, offers Cook Inlet natural gas producers a stable, long-term gas contract. Although the price Nutrien can justify would be under market value, which is currently high compared to other markets, it would not be subject to the fluctuations of consumer demand and thus allow Cook Inlet basin producers to make long-term development plans, Werth said in an earlier interview.
Agrium’s North Kenai/Nikiski facility had been the second largest producer of ammonia and urea in the United States, most of which was sold overseas to South Korea, Mexico and Taiwan.
“The greatest advantage of the merger was that it brought together Potash Corp. and Agrium’s marketing and production strengths, making products more readily available across North America,” Werth said last year, noting the merged company trades all over the world.
The Alaska facility, consisting of two utility, two ammonia and two urea plants, “is strategically located in North Kenai on a deepwater port to distribute to the Pacific Rim,” he said.
Potash and urea ammonia are used in caring for crops. Potash adds potassium, while urea ammonia supplies nitrogen.
Urea is the most popular form of solid nitrogen fertilizer, particularly in the developing regions of the world: “They don’t need any special equipment to put urea on their fields … they can put it on with a gunny sack and a coffee can,” Werth explained.
Liquid nitrogen, which the Nutrien facility would also produce, is primarily used in North America, as it is sprayed on. Before U.S. farmers used nitrogen, their average yield was 100 bushels an acre for corn; today production is 250 bushels per acre.
Boon for Southcentral Alaska The re-opening of the mothballed fertilizer facility could provide an economic boost for the region, with both the full-time employees needed to run the operation and an upgrade of the facility.
Reportedly, rehabilitating the Kenai Plant for re-start would cost about $350 million, whereas the cost for Nutrien to construct a similar facility elsewhere in the Pacific Rim could run $2-3 billion.
Werth did not confirm or discuss these estimates.
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