UPDATE 1-Agrium mothballs Alaska nitrogen plant

(Adds remarks from Senator Murkowski)

WINNIPEG, Manitoba, March 13 (Reuters) - Agrium Inc. (AGU.TO: Quote, Profile, Research) said on Thursday it would soon mothball its Kenai nitrogen plant in Alaska after determining that coal gasification was too expensive to supply the facility.

The Calgary, Alberta-based fertilizer company said in September it would shut down the plant because of a shortage of natural gas, but had said it would study whether it could use coal gasification to eventually reopen it.

Agrium said it continues to work on gasification opportunities at other locations in Louisiana and Alberta.

"It is severely disappointing that after all the years spent trying to facilitate the Agrium Blue Skies project, it will not go through," U.S. Senator Lisa Murkowski, a Republican, said in a statement.

"It is disheartening to not only the more than 200 former workers of the plant, or to the citizens of the Kenai area, but also to the entire state, that an opportunity to develop 21st century technology that would have converted the state's abundant coal resources into value-added products has slipped away," the statement added. (Reporting by Roberta Rampton in Winnipeg and Yereth Rosen in Anchorage; Editing by Christian Wiessner)