Blue Sky Coal Gasification

Agrium to explore alternative feedstock for Kenai Nitrogen Operations

KENAI, Alaska - Agrium U.S. Inc. (TSX and NYSE: AGU) announced today that in conjunction with industry partners it would conduct a feasibility study to evaluate the potential use of coal gasification as a feedstock for the Kenai Nitrogen facility.

The proposed gasification plant would use local low-sulphur coal to produce the feedstock needed for ammonia and urea production. It would also produce a significant amount of energy that could be sold into the Alaska power grid.

“We believe this proposal contains a lot of merit,” said Bill Boycott, General Manager, Agrium Kenai Nitrogen Operations. “We plan on working with a number of partners to evaluate the potential to commercialize one of Alaska’s largest natural resources in an environmentally responsible manner. This project would create an off-take gas agreement opportunity for Agrium and generate another source of competitively priced electricity into the power grid, if it were to proceed to completion. It would also provide excess CO2 for use in the exploration of oil and gas and keep Alaska’s largest value-added industry in business for decades to come.”

Boycott said the company has been working with the U.S. Department of Energy and Alaska’s Congressional Delegation. Senators Ted Stevens and Lisa Murkowski have been very supportive of the project. Other partners in the study include Usibelli Coal Mine and the
engineering firms Black & Veatch and Uhde. Agrium is in discussion with Shell for its proprietary coal gasification technology. The coal would be sourced from the Beluga Coal Field, located about 40 miles across Cook Inlet from the Agrium plant. The field contains more than two billion tons of proven reserves, making it one of the world’s largest low-sulfur coalfields. The project name, Blue Sky, is in reference to the new environmentally friendly coal gasification process.

Agrium’s Kenai operations consist of two ammonia plants and two urea plants. The facility could produce over 1.5 million product tonnes if it were to operate at full capacity. The project could retain 230 direct jobs at Agrium and create additional jobs at the coal gasification facility and related coal mine. The gasification facility could be in operation as early as 2011 if results from the analysis were positive.

Agrium is a leading global producer and marketer of agricultural nutrients and industrial products and a major retail supplier of agricultural products and services in both North and South America. Agrium produces and markets three primary groups of nutrients: nitrogen, phosphate and potash as well as controlled release fertilizers and micronutrients. Agrium’s strategy is to grow through acquisitions as well as the development, commercialization and marketing of new products and international opportunities.

The photos are from the Nuon Buggenum power plant in the Netherlands. Bill Boycott and Tim Johnson along with some men from Usibelli Coal Mine visited the facility. If they built one here next to our plant it would be larger than this. Here is a link to
NUON It is a very enviromentally friendly process. Here is another article from Petroleum News
about the project.