HOUSTON (ICIS)--Alaskan legislators on Wednesday approved expanding a bill to subsidise in-state refineries, which will allow Agrium’s Nikiski shuttered nitrogen plant to be added to the list of entities qualifying for state aid.
The bill was proposed by Governor Sean Parnell and would offer a 40% tax credit or cash refund for qualified infrastructure expenditures by refineries. Legislators decided to expand the list of possible projects to include the shuttered fertilizer plant that Agrium has been considering restarting.
Agrium is inspecting and assessing possible renovation of the existing nitrogen plant, which was closed in 2007 due to a natural gas shortage but during its operation was the company’s largest facility with a listed production capacity of 1.25m tonne/year with its output primarily sold to overseas buyers.
The plant was purchased from Union Oil Co. of California in 2000.
The producer has not decided whether to restart the facility, but officials have said that a decision will be made this year. A review of the facility was conducted this past summer with officials saying at the time that overall market conditions had raised the possibility of resuming production.
It is estimated that this restart project could cost upwards of $200m for updates and renovations and likely take the producer as long as two years to return to full production.
According to the bill, the 40% credit would be for “an expenditure directly attributable to the in-state purchase, installation, modifications, adjustment or other alteration of tangible personal property for the manufacture or transport of refined petroleum products or petroleum-based feedstock”.
Agrium has previously requested assistance from the Alaska Industrial Development and Export Authority (AIDEA) in its efforts to restart the plant. Company officials said going forward with the project may lead them to request a loan from AIDEA.
Funds received from the agency could assist Agrium in completing a review of the plant including finalising engineering and establishing its business model.
Last October the fertilizer producer applied to the Alaska Department of Environmental Conservation (DEC) for a Prevention of Significant Determination air permit. Agrium is collecting that data on behalf of the application, and the state should issue a decision no later than the fourth quarter of 2014.