Beluga coal deposits eyed as Southcentral gas wanes

As declining oil and gas resources in Alaska and across the globe come under increasing market pressure, developers are eyeing the profit potential of the Beluga coal field deposits.

One such undertaking already well along in the environmental impact process is the Chuitna Coal Project, a surface coal mining and export venture proposed by PacRim Coal LP located at the Beluga Coal Field northwest of Tyonek. Its mine would tap an estimated 1 billion-ton, ultra low-sulfur, sub-bituminous coal resource about a dozen miles from Cook Inlet.

Documents filed with the U.S. Environmental Protection Agency show the project would include the surface coal mine located within PacRim’s 20,571-acre coal lease, assorted support facilities, an access road and an airstrip. The project would also include a covered, overland coal transport conveyor capable of moving 15 million metric tons of coal to the proposed Ladd Coal Export Terminal at Cook Inlet. A 10,000-foot-long trestle built out into the inlet would deliver the coal to waiting ships, mostly headed to overseas markets.

On its lease, PacRim would begin by mining the first of three possible areas, called Logical Mining Unit No. 1 (LMU 1), from which the company hopes to excavate approximately 300 million metric tons (MT) at roughly 12 million MT per year for 25 years. The environmental impact study currently under way is evaluating the LMU 1 project only. Other units within the lease area could be developed in future years.

The Ladd Landing development would be built on Kenai Peninsula Borough property at North Forelands. Coal conveyed from the mine would either go directly onto a ship or be stored onshore, the stored amounts varying with shipping schedules, weather conditions and mining operations downtime, the EPA documents said.

Coal dug from the earth along the course of the coal seam would leave a hole in the earth. As digging proceeded, the hole behind would be refilled and the surface reseeded and reclaimed in a continuous process.

Bob Stiles, president of DRven Corp., which is under contract to PacRim and providing project management services, said the mining process is not unlike a backyard project, only a good deal bigger.

”Visualize digging a hold in the backyard. You put the dirt to the side. Then you dig on one side of the hole and throw the dirt over your shoulder behind you,” he said.

When you’re done, you fill the remaining hole with the original dirt you put to the side, he said.

In the case of the mine, what’s removed can be turned into profit. Coal would be crushed and sent by conveyor to the terminal for loading. So far, Stiles said, the project’s potential is ”looking extremely” good.

”We are moving in a logical and consistent manner through the permitting and regulatory process,” he said. ”We are enthusiastic about the prospects of having an economically viable project that can compete in the marketplace.”

As it proceeds along the permit path, DRven and PacRim are keeping potential markets appraised, Stiles said. He would not discuss details of those markets other than to say there was potential in South Korea, Japan and mainland China. Taiwan, he said, was more difficult because of the distance.

”Clearly, there is also potential on the west coast of Mexico and as far south as Chile,” he added.

No one is signing contracts at this point, he said, because those markets are not motivated to do that before permits are secured.

”You have to move through the regulatory, engineering, design and environmental processes as markets develop along so that at the end of the day you have them all in line,” Stiles said.

Some of the Chuitna project coal may be put to use in Alaska. An integral part of the terminal project design is the ability to load shallow-draft vessels ”” barges ”” to serve local markets, Stiles said.

One possibility is Agrium’s Kenai Blue Sky coal-gasification project, a development that would use coal to supply energy and feedstock to Agrium’s Nikiski fertilizer manufacturing complex, and deliver excess electrical energy to the Railbelt energy grid.

Stiles declined to talk specifics about Agrium’s project or PacRim’s connection to it. But ever since Agrium officials said they might have to close their plant for lack of an affordable natural gas supply, and then later announced they were studying a coal gasification project, the possibility that Beluga coal might be the source has been a subject of public discussion on the peninsula.

”Any reasonable person would have to assume that is a possibility,” Stiles said.

Tapping the Beluga coal fields is not a new idea, and in the early 1990s, a project design was evaluated in an environmental impact statement and actually obtained applicable state and federal permits. However, for several reasons the project was delayed and by the mid-1990s market conditions had rendered the project economically unfeasible.

Since then, conditions have improved. The project’s new design, subsequent regulatory changes and the potential for the mine to have ”significant impacts” on the environment, however, led EPA to require PacRim to produce a comprehensive, stand-alone supplemental environmental impact statement. It is anticipated that that work will be completed by summer 2007.