Homer Alaska - Business

Story last updated at 9:42 PM on Wednesday, June 15, 2011

Alaska could see another record year for coal exports



By Tim Bradner
Morris News Service - Alaska

Alaska could set another record for coal exports in 2011, Alaska Railroad Corp. and Usibelli Mine Inc. managers say.

Usibelli produces coal from its mine near Healy, about 90 miles south of Fairbanks, and is considering whether to develop a small coal deposit at Wishbone Hill, near Palmer.

Alaska Railroad President Chris Aadnesen told the Fairbanks Chamber of Commerce June 7 that the state-owned railroad expects to carry about 1.2 million tons of coal to Seward for shipment to export markets this year from Usibelli's Healy mine.

Usibelli is cautious, however, saying that while the company's mine in Healy has the mechanical capability of producing to that level, it would put a strain on its people.

"We can do it if the stars align, but we will certainty produce at the same level as 2010," Usibelli marketing manager Bill Brophy said.

Usibelli is studying what it would take in additional facilities to sustain an increase in production at Healy.

"There are many facets to this: in equipment, people and rail capacity," although the coal resources are available, Brophy said.

A decision on whether to develop the Wishbone Hill deposit is likely to be made late this summer, he said. Wishbone Hill has bituminous coal, a higher quality than the sub-bituminous coal mined from Healy. If Wishbone is developed, its coal could be sold directly to buyers or blended with the coal from Healy, Usibelli has said.

The Healy mine produced a total of 2 million tons in 2010, which was a record. About half of that was exported and half shipped to local markets in Interior Alaska, Brophy said.

Export markets have been growing, but so have coal purchases by the U.S. Army for Fort Wainwright, in Fairbanks, he said.

In 2009, some 801,000 tons were shipped overseas out of the port in Seward, compared to the 471,000 tons exported in 2008, according to data supplied by the Alaska Railroad to the Fairbanks North Star Borough.

Shipments from the Usibelli mine to power plants in Interior Alaska have averaged about 800,000 tons yearly, but have increased of late. Brophy said the additions of infrastructure and new personnel on Fort Wainwright have added to the demand for power from the coal-fired plant on the installation.

Usibelli supplies coal to Fort Wainwright as well as the plant on Eielson Air Force Base, the missile warning radar station at Clear Air Base, the University of Alaska Fairbanks power plant and the Aurora Energy power plant in Fairbanks.

Export markets for Alaska coal have shown strong and sustained growth in recent years as oil prices have climbed and the environmental qualities of Alaska coal, which is very low in sulfur, becomes better known to power plant operators in Pacific Rim nations.

Coal from the Usibelli mine has been shipped to South Korea since 1985, but in recent years markets have been expanded to include plants in Chile. The shipping distance from Seward to Chile is approximately the same as from Australia, the nearest competing source of coal.

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