Alaska Railroad tries again for federal grant to complete Port MacKenzie rail extension

Another try is being made for a federal grant to complete a rail extension from Port MacKenzie to the Alaska Railroad mainline track at Houston.

The railroad, with support from the Matanuska-Susitna Borough, will make an application in June under the federal Consolidated Rail Infrastructure and Safety Improvement, or CRISI, program for funds to install 32 miles of track and complete rail embankments, Alaska Railroad Corp. spokesperson Meghan Clemens said. About $275 million is needed for the work.

An earlier application was submitted that was unsuccessful but the application has now been fine-tuned and the railroad hopes to overcome problems in the initial application. One wrinkle is that a local match is required for the federal money, Clemens said. Typically that is about 20 percent, or a bit over $50 million.

Given the difficult financial circumstances for the state of Alaska and lean budgets at the borough as well it may be difficult to secure a cash contribution from either government. However, the match might be provided in other ways with in-kind contributions, she said. For example, the borough might be able to contribute gravel toward the construction.

Also, the federal government might allow some of the $180 million paid to date by the state of Alaska for construction of gravel embankments that have been completed. No matter how it is done, the match will have to be identified when the federal application is submitted, which has a June 22 deadline, Clemens said.

Getting the rail extension completed has been a top priority for the borough for over a decade. Substantial work was done on the embankments, the rail connection at Houston, where track was installed, as well as a rail “loop” at Port MacKenzie to allow bulk commodities and cargo to be efficiently unloaded. The work was supported by state capital appropriations but activity stopped in 2016 when world oil prices plummeted and state revenues, then provided mainly from petroleum production, dropped abruptly.

Since then the borough has worked to find money to finish the extension but with no success. At one point the effort was almost abandoned, with the rail embankments converted to a road. However, the borough was unable to get money to do the conversion either.

If it could be built there would be a continuous rail connection between Port MacKenzie, the borough’s bulk commodities port on Upper Cook Inlet, and Interior Alaska where important mineral projects are underway. The Port of Alaska, Anchorage’s general cargo port, could also handle exports of mineral ore, but Anchorage’s port is primarily designed to handle containers with consumer goods and equipment.

Mat-Su officials say Port MacKenzie, with a rail connection and some improvements, could be more efficient in shipping ore because there is ample vacant land available for storage and because the distance in transportation from the Interior would be reduced. The Alaska Industrial Development and Export Authority, or AIDEA, the state development finance agency, has identified Port MacKenzie as an attractive option for shipping ore from copper deposits in Northwest Alaska that are now being explored.

AIDEA is working with companies that are exploring discoveries in the Ambler Minerals District, in the western Brooks Range east of Kotzebue, and is also engaged in development of a a 211-mile industrial access road that would connect with the Dalton Highway, the north-south state highway connecting Interior Alaska with the North Slope oilfields. From that road connection ore could be trucked on the Dalton to Fairbanks and then by rail to a port in Southcentral Alaska.

Meanwhile, related indirectly to a rail extension, Mat-Su officials are busy with a new $34 million federal grant, part of $115.4 million awarded for improvements to several Alaska ports. Port MacKenzie and Skagway got the lion’s share of the money. The work planned includes improvements on a rail loop at the port, which is linked to the hoped-for completion of rail connection, but it includes improvements that will help the port serve other industrial customers.

The new federal grant was awarded under the U.S. Department of Transportation’s Port Infrastructure Development Program. The near-term work also includes a 110-acre pad for the laydown of equipment and storage, said Dave Griffin, the borough’s director of Port MacKenzie. “We have lots of land but we don’t have improved land,” like the pad will provide, he said.

“We’ll need the pad for warehouses and other buildings.” Currently the port had 15 acres for buildings, and that’s not enough to accommodate growth. The federal grant would also pay for needed electrical upgrades as well as improvements to access roads in the port area.