Reports: Rail an economic home run

PALMER — A pair of reports received by the Mat-Su Borough this past week say savings on shipping costs through Port MacKenzie over other Alaska ports will far outweigh the costs to build a rail line to get there.

The reports compare shipping through the Borough’s nascent Port MacKenzie to shipping through Seward and Valdez.

The first, commissioned by the Borough from Northern Economics Inc., shows shipping materials for construction of the proposed pipeline to bring natural gas from the North Slope will save $122 million over shipping through Seward and $165 million to $176 million when compared to moving materials in through Valdez using trucks to bring them north.

The other report, prepared by the Institute of Social and Economic Research, shows the project rates a 2.2 in a cost-benefit analysis. By comparison, Borough Manager John Duffy said state projects are usually slated for construction if the cost-benefit analysis is rated at 1.

One of the projects listed in the analysis will likely have to be subtracted — coal heading to a now-mothballed Agrium coal gasification plant in Kenai. And, if the pipeline isn’t built, that impact will have to be subtracted as well.

Still, even without those two items, the project rates a 1.4, Duffy said, adding that building a new rail spur line from Port MacKenzie to the Interior is a great fiscal investment and could have potentially huge payoffs for the Borough.

Adding additional mineral and commercial development a rail line is expected to bring, the rating goes up to 50, according to the report.

And that’s not just wishful thinking, Duffy said.

“It lowers entry costs so much that it allows entry into new mineral development,” the Borough manager said.

He pointed out the possibility of developing previously untapped limestone deposits. Add limestone to Alaska coal, and “Alaska could supply 5 percent of the country’s cement needs.”

The rail extension is projected to cost $300 million, paid for through federal bonds. It is a joint project between the Borough and the Alaska Railroad.

The line would save 140.7 rail miles over a one-way trip to or from Seward, according to the Institute of Social and Economic Research study.

ICF International is working to draft an environmental impact statement of the rail project and is six months ahead of schedule, Duffy said.

The process of selecting a route for the line, which will run from the railroad’s main corridor more or less following the Parks Highway to the port, has been contentious. Residents of Houston, Willow and other areas potentially along the route have debated the merits of having a rail line run through their communities. The Borough has not settled on a route. ICF will recommend one as part of the impact statement process.

Duffy said the port is basically ready to go. Plans for the rail extension include a 3-mile loop to bring trains to the dock.

The only addition the Borough needs to build is a conveyor running under the tracks to the docks, on to which train cars could dump their loads directly.

Contact Andrew Wellner at andrew.wellner@frontiers-man.com or 352-2270.