Fertilizer plant starts layoffs

Posted: Tuesday, April 29, 2003

ANCHORAGE - The Agrium fertilizer plant in Nikiski will lay off 65 employees over the next few months, the company has announced.

The job losses amount to 22 percent of the work force, said general manager Mike Nugent. The downsizing comes despite a state lawmaker's attempt to help the plant.

The fertilizer factory, which converts Cook Inlet natural gas into ammonia and urea, has been studying costs in recent months with an eye toward remaining competitive. A shortage of natural gas supplies has the fertilizer plant operating at just 70 percent capacity and as supplies dwindle, costs rise.

Ed Aisenbrey, who has worked at the plant for more than 25 years, said he was not surprised by the layoff news. Aisenbrey will lose his job as a technical support supervisor sometime over the next two months.

"It's been a long time coming. The fertilizer business is so rough, they had to do something," said Aisenbrey.

The extent of the layoffs caught him a bit off guard:

"They might have gone a little overboard."

Finding similar high-paying jobs on the Kenai Peninsula could be tough. The average Agrium worker takes home an annual salary of $85,000, according to a study by The McDowell Group, a Juneau research firm.

Agrium's woes have roots in the company's relationship with Unocal, which supplies enormous volumes of natural gas to the Nikiski plant. Unocal this winter cut back its deliveries because of strained supply. Agrium has sued Unocal, claiming contract violations.

Rep. Mike Chenault, R-Kenai, has sponsored legislation to help the plant. Chenault's bill would assure the plant more certainty in the price it pays for natural gas. The legislation would change the royalty structure associated with the gas Agrium buys in a way that's favorable to the company.

The bill would give Agrium more certainty over the price it pays in future gas contracts but would cost the state an estimated $11.5 million in lost royalty revenue, according to estimates from the Alaska Division of Oil and Gas.

Chenault said Friday that if the plant ends up closing, more would be lost than the $11.5 million. Some 240 remaining jobs would go away, along with millions of dollars in sales and property taxes Agrium pays to the Kenai Peninsula Borough.

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