Deep dock moves forward

MAT-SU -- An arrangement between would-be chip-shipper NPI, LLC and the Mat-Su Borough may mean the borough's deep-water dock can be constructed a year or more ahead of plan.

The Mat-Su Borough Assembly agreed unanimously Tuesday to enter into an agreement with NPI that will provide $3 million worth of items that will take several months to be shipped and ready for construction of a deep-water dock.

Terry Nininger, project manager for NPI, said he was pleased by the assembly's decision, and their support for the project.

"I really appreciate the full support of both the Port Commission and the assembly," Nininger said.

The ability to move forward on obtaining the long lead-time items -- mainly steel pilings -- Nininger said, will significantly speed up the construction time of the deep-water dock. Having the dock in place would allow NPI to begin filling contracts for wood chips in the Asian market -- a market Nininger said is watching progress at the dock with great anticipation. After three years of watching, however, Nininger said his company runs the risk of losing face with the companies they're marketing to.

"The Asian community is very excited about the Mat-Su Borough port facility," Nininger said. "But they have been waiting patiently in the wings for the past two years."

NPI is a fully-owned subsidiary of Horizon Natural Resources Inc. out of Tulsa, Okla. The company, Nininger said, plans to log, chip and export hardwood and soft wood chips to pulp and paper companies in Japan, Korea and China. The logging, Nininger said, is geared to leave forests intact and leave no slash from trees behind. Everything from the downed trees -- branches and all, he said -- goes into the chipper and is removed from the forest. Aspen, birch and white spruce would be NPI's three main exports, and they would be shipped via large Panamax-class vessels -- 650 feet long and 150 feet wide, in most cases. The large ships, he said, require at least 34 feet of water. The existing dock, at low tide, is about 20 feet deep, while the deep-water dock would be around 50 feet deep at low tide, with the potential to dredge deeper if needed.

The location would be ideal for the Asian market, Nininger said, mostly because it is five shipping days closer to Japan than chip facilities in the Lower 48. Shipping, he said, is one of the most expensive aspects of making paper -- up to 30 percent of the end cost.

If NPI had not presented the borough with a funding opportunity for the steel, dock construction may have been delayed longer. Borough Manager John Duffy said the borough assembly deliberately held off on constructing the deep-water dock until a user was solidly in place. NPI's commitment to help fund construction solidifies their position as a user and allows the borough to move forward with construction. It also solves the problem of delaying construction after a contract is approved by having the steel on hand. That's not something borough officials felt they were able to do. Purchasing the items before the contract is let, Germer said, may be considered an irresponsible use of public money. If the dock construction costs exceed the $13 million the borough has available, the borough could be stuck with unusable pilings.

The assent from the assembly to move forward on negotiations doesn't mean NPI will immediately cut a check for the purchase of the items. The action memorandum passed Tuesday will allow borough administration to work with NPI to iron out a use agreement for the dock. The basics are in place -- in exchange for the $3 million, NPI will have exclusive rights to install a bulk loading facility on the borough's docks, and exclusive rights to load bulk materials through its loading facility, whether or not the material is owned by NPI or a third party -- and to charge for the service. NPI will also receive scheduling priority for dock usage and non-exclusive priority use to the dock. The priority use agreement would extend for 10 years.

After the use agreement is approved by NPI and the assembly, NPI will make the $3 million payment. When that happens, bids for design and construction of the deep-water dock will be let, reviewed and awarded by the assembly.

"This, hopefully, will allow us to load wood chips by next spring," Nininger said.

In presenting the information to the assembly Tuesday, assistant borough manager David Germer said the administration believes the arrangement has merit for four reasons. It provides a source of non-borough funds for dock construction, the dock is completed more quickly, it results in an $8 to $9 million improvement to the dock from the bulk loading facility owned by NPI and, perhaps most importantly, it creates commerce and jobs at Port MacKenzie.

Germer said the borough would work out the details of the use agreement -- such as what happens if, for some reason, the borough and NPI part ways before the 10 years is up -- through the negotiation process. Nininger said he's confident his company will be able to make up the costs for purchasing the items through fees loading materials for other companies alone, and is glad to see a project that has been talked about, hoped for and planned for 20 years or more get off the ground.

"We are at the point now where we can move ahead quickly," Nininger said. "This will bring the community to a new level of private industry and local governmental cooperation. This is something that needs to happen -- it happens frequently throughout the Lower 48."