Knoxville, Tenn. (Platts)--14Jul2005

Fertilizer maker Agrium Inc Thursday said it had negotiated gas supply
contracts with Cook Inlet producers that will allow it to keep its Kenai,
Alaska, fertilizer plant open through November 2006. The Calgary,
Alberta-based company had threatened to close the plant in November after a
current contract with Unocal expires. The new agreements will allow the
company to operate half of the plant's facilities--one ammonia plant and one
urea plant--using about 27 Bcf/year. 

Agrium said price provisions are confidential under the agreements with
"numerous" producers which it declined to name. The Unocal supply had been
sold to Agrium under a long-term deal at $1.20/Mcf. The fertilizer maker had
offered to buy gas from producers for $3/Mcf. The company issued a request for
proposals to supply the plant in March, and extended the bid deadline in
April.

In recent weeks, Agrium and others had reached an agreement in mediation to
open up a high-pressure gas gathering line owned by Marathon and Unocal in the
Cook Inlet to permanent third-party transportation, to allow easier access to
regional gas supply. Alaska's governor and various state and local officials
had become closely involved in the negotiations to keep the plant, which
employs 180 workers, open. 

In a statement issued Thursday, Agrium thanked Alaska Gov Frank Murkowski and
his staff for their support, as well as the cooperation of all of Cook Inlet's
producers, local distribution company Enstar, and the pipeline companies.
Agrium added that it plans to "be back at the table soon" to negotiate a
longer term arrangement to keep the plant open, a spokeswoman said. Agrium
said the continued operation of the plant could add 15 cts to 40 cts per share
to its earnings during the additional one-year period.

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