Port Mac: Mat-Su's energy artery?

March 30, 2007

By Russell Stigall

Frontiersman

MAT-SU - Alaska is an energy export state. And with state interest in ANWR, AGIA, a renewable energy fund and the Chuitna coal fields, it appears Alaska plans to stay that way. But what role will the Mat-Su play in that future?

According to three Valley legislators, Port MacKenzie, with the potential of exporting coal and petrochemical products, will be the nexus Mat-Su's artery of energy.

Since Port Mac's inception, the borough has worked to get a rail spur into the port, said Mark Van Dongen, director of Port MacKenzie.

&#8220We see a rail line as a critical component of the long-term success of the port,” Van Dongen said.

A railroad spur at Port Mac is a &#8220great concept,” said Rep. Vic Kohring, R-Wasilla. Kohring is the chair of the House Oil and Gas committee. He said he hopes the Legislature gets behind a Willow to Port Mac spur.

Rep. Mark Neuman, R-Big Lake, would be one pro-spur legislator.

&#8220So Point MacKenzie can run 24/7 like it's supposed to,” said Neuman, whose sprawling rural district encompasses that area.

Senate President Lyda Green, R-Wasilla, would like to see the rail spur to Port Mac for loading cargo ships.

&#8220Saves all of the rail miles to Anchorage and Seward,” she said.

Plans for the rail spur to Port Mac include a three-mile loop where the port can stockpile commodities, such as wood chips, sand and gravel, large volumes of coal, Van Dongen said.

But Port Mac is not designed to compete with the Port of Anchorage, Van Dongen said. Anchorage offloads container ships, while Port Mac is being developed to export natural resources.

As an example, Anchorage has 115 acres to stockpile and cannot store coal or gravel.

&#8220Port Mac has 14 square miles,” Van Dongen said. &#8220We also have deeper water.”

Anchorage also has hit its limit on fuel storage, Van Dongen said. Fuel from North Pole refineries could fill a tank farm at Port Mac. As Anchorage's tanks age, Van Dongen said, they will be switched to the Port Mac side.

In bypassing Seward, the spur would eliminate 140 miles of transportation for the railroad and its customers, Van Dongen said. In the case of Usibelli, the family-owned coal producer in Healy could save an estimated $4 to $5 per ton shipping out of Knik Arm.

Along with coal that is cost-competitive for the international market, the port is also working with Agrium and Usibelli for in-state needs, Van Dongen said. The petrochemical company Agrium, in North Kenai, would need 3.3 million tons of coal per year to run Blue Sky, its coal-to-gas generator. That is five to six times the coal currently being shipped out of Seward.

&#8220That would be a train with 100 cars delivering coal every 18 hours from April to mid-December,” Van Dongen said.

Agrium coal is a key component to the feasibility of Port Mac's rail spur, according to John Binkley, chairman of Alaska Railroad's board of directors.

&#8220I think it is a great project,” Binkley said. &#8220Port Mac could be the resource port for interior and central Alaska.”

The railroad is working with Agrium in looking at coal for the Blue Sky project, Binkley said. The needs of Blue Sky would help start the spur project.

&#8220You need a base tonnage of freight to be able to justify the capital cost to make a project like that work,” Binkley said.

Port Mac could also see coal from Chickaloon if the Mental Health Trust Land is opened to mining, Van Dongen said.

However Seward mayor Vanta Shafer said she is not so sure Seward will be easy to circumvent.

The railroad started Seward just after the turn of the 20th century. Its role as the farthest north ice-free deep-water port has been Seward's calling card for years.

&#8220There is a lot to be said for the port itself that it doesn't freeze up and doesn't need dredging,” Shafer said. She referenced Homer's fishing fleet, currently trapped by ice.

Seward also has coal infrastructure already built. Every year approximately $10 million worth of coal is loaded onto Korean ships by the &#8220Big Dipper” facility, operated Aurora Energy Services.

Shafer said the loss of the coal facility would negatively affect the city.

&#8220We have people that have jobs unloading the coal,” Shafer said.

Besides revenue from jobs, the railroad's long history in Seward has resulted in little tax revenue going to the city of 2,500 residents. Usibelli stores its coal on railroad property in Seward and doesn't have to pay city taxes.

&#8220We don't receive anything, I'm pretty sure,” Shafer said.

The railroad and Usibelli have also burdened Seward recently with clouds of fugitive coal dust.

&#8220We've always had some coal dust on the boats, but this year has been worse,” Shafer said. The railroad has been trying to do something about it, she said.

However, she said she isn't about to give up on the railroad.

&#8220You don't know what kind of negative effect that would have in the long run,” Shafer said.

The Mat-Su Borough and Port Mac are looking to grant funds from the state for an environmental impact study for the 43-mile rail spur route, Van Dongen said. It will take two to three years to complete a study. So far, the spur route is just a general corridor and could move East or West by a least a half mile or more.

Contact Russell Stigall at 352-2267 or russell.stigall@frontiersman.com