Consultants recommend shooting

for bigger industry at Port MacKenzie

By RINDI WHITE-Frontiersman reporter

MAT-SU -- To make Port MacKenzie an economic engine, borough officials need to set their sights higher than wood chips, sand and gravel and manufactured homes, according to a study recently released by borough consultants.

"Under the status-quo, the do-nothing scenario, you're not going to handle any cargo that has a huge impact on the economy," said Pamy Arora, executive vice president of Cornell Group Inc., who was hired last August by the borough to complete a commodities study at the port. "These are no-value commodities."

Consultants from Washington, D.C.-based Cornell Group Inc. presented findings from a study they recently completed to members of the Mat-Su Borough Assembly and Port Commission at a joint meeting Tuesday. Arora and Robert Goethe, Cornell's regional director, told borough officials a lot of work -- and monetary investment -- was ahead in order to make the port a success.

Borough Port Director Marc Van Dongen said Wednesday he believes the consultants' didn't take all the facts into account -- like the fact that a lot of the sand and gravel that could be sold would be owned by the borough, or that the borough would receive royalties on timber products that go through the port. The figures used in the draft document, he said, also appeared to be a little off.

"There was no projection for coal. Once we get a rail spur in, we'll have all kinds of coal coming in and out of the port," Van Dongen said. "The sand and gravel -- it's going to be millions of tons, not just a few thousand tons. I don't agree with some of the data they had."

Van Dongen said he's working on geotechnical studies that will show exactly what lies beneath the soil in the port district. He estimated there was 40 million tons of usable sand and gravel just on the north and south sides of the port road. If excavated, he said, the borough would receive at least two dollars per ton in royalties, wharfage and docking fees -- more money generated in a relatively small space of time than what the Port of Anchorage currently brings in each year with container shipping.

"We're sitting on a gold mine at Port MacKenzie, with the gravel that's there right now," Van Dongen said.

Aside from disputing the numbers, Van Dongen said he believes the borough is proceeding along the lines suggested in the study. Duffy agreed, adding that the study was a reaffirmation that there's a lot of work yet to be done.

"It's going to continue to take a lot of hard work to get the port up and running and turned into the economic engine we want it to become," Borough Manager John Duffy said Wednesday.

Arora told those at Tuesday's joint meeting there were several hurdles to overcome before the larger, more lucrative shipping contracts would recognize the port as a potential base of operations.

"The transportation costs must be competitive with Anchorage … and they may need subsidizing," Arora said. "The margin of transportation costs right now, without a direct connection to Anchorage, is not worth it. It costs too much to haul cargo from the port to Anchorage to justify it right now."

Several transportation projects need to be completed, or at least under way, in order to make the port appealing, Arora said. A rail spur to the port, an airstrip for cargo planes, an industrial-grade road and a ferry link to Anchorage are all needed at the port to boost its viability, he said. Once those things are in place -- and even while they're being built -- a public education program needs to be put in place, Arora said.

"Nobody knows Outside about Port MacKenzie," Arora said. "Few do outside Anchorage."

Those are things the borough is working on, Van Dongen said, and he speculated that within three years, the port will look significantly different from what it does today. He was quick to add that Port MacKenzie was not being built as a competitor to the Port of Anchorage.

"We do not bill ourselves as a competing port with the Port of Anchorage," Van Dongen said, noting that the borough's emphasis was more on natural resource-based products than industrial products or containers, such as are shipped through of Anchorage. "Our port will benefit Anchorage as much as the Mat-Su Borough."

While the uses at the port may evolve as the area's needs change, one thing's for sure -- another port in Alaska sparked interest. Arora said his staff sent out 1,800 surveys to potential port users, both inside and outside Alaska. Thirteen percent returned the surveys from inside the state, but only about 1 1/2 percent returned them from outside Alaska. The central question of the survey, Arora said, was "Will you locate at Port MacKenzie?"

"Almost 40 percent (of responders) said 'Yes, if …,'" Arora said.

Arora said the "if" portion of that response generally dealt with providing the transportation links and basic infrastructure planned or outlined in future plans for the port. He added that a lot of responders had said "maybe" and asked to be given more information about the port and kept informed of its progress.

Duffy said the "if" and "maybe" responses have been heard by borough officials before. In recent discussions with VECO, for example, company officials have been enthusiastic about locating a facility to manufacture natural gas modules at the port, but don't feel they can do so until they have a faster transportation link to Anchorage.

"That's the type of industry that creates a lot of jobs -- a lot of well-paying jobs," Duffy said. "It's not going to happen overnight. We all know that, but sometimes we forget that, as you work on it day-to-day."