Homer, Alaska - Business - Tyonek takes lead in development 11/12/08

Story last updated at 9:39 PM on Wednesday, November 12, 2008

Tyonek takes lead in development

By Tim Bradner
Morris News Service - Alaska

Tyonek, a village on Cook Inlet's west side, is working to facilitate several major industrial projects in the area that could give the state's economy a big boost and possibly lead to new communities being formed near Beluga, 50 miles west of Anchorage.

Tyonek's interest is to help shape the development so that it doesn't adversely affect the traditional Tyonek village or fish and wildlife habitat in the area, says Tom Harris, CEO of Tyonek Native Corp.

The village corporation is in a key position to influence projects being planned because the corporation owns 45,000 acres in a strategic block, and has a local industrial road and a dock that is free of ice year-round.

"We welcome these projects on terms and conditions that are acceptable to our community, beginning with 'don't toast our wildlife,'" Harris said.

Projects currently planned include:

* A $600 million coal mine, being developed by PacRim Coal and owned by the Hunt interests of Dallas that would export coal;

* A multi-billion-dollar coal-to-liquids plant proposed by Alaska Natural Resources-to-Liquids LLC, an Anchorage firm, that would manufacture environmentally clean liquid fuels like diesel from coal, which would be sold in the western United States. Waste heat from the plant could generate up to 400 megawatts of power;

* The $2 billion Chakachamna hydro project planned by TDX Power. The project could provide 300 megawatts of electricity for the Southcentral-Interior railbelt power grid.

* A $3 billion Mount Spurr geothermal project on leases recently issued by the state to Ormat Technologies Inc., which could generate between 150 megawatts and 400 megawatts of power.

There are several other projects a bit farther down the road. Tyonek itself would like to export gravel from its lands. California and other West Coast states are now importing gravel. The Jones Act, which requires U.S.-built vessels to operate between domestic ports, is a barrier, however.

John McClellan, a consultant to Tyonek, said the Beluga area also is being looked at as a possible storage and shipping point for natural gas liquids brought to Southcentral Alaska from the North Slope through a spur pipeline built from a large natural gas pipeline in Interior Alaska.

Because the Chakachamna and Mount Spurr projects are relatively near each other, they could partly share a power transmission line built across Tyonek lands that could bring electricity to the existing grid at Chugach Electric Association's Beluga power plant, which is only 12 miles from Tyonek. Camps and other support facilities also could be shared.

"We don't see any show-stoppers for the power-transmission lines from Chakachamna and Mount Spurr. There are no river crossings," Harris said. Chakachamna is a lake-tap hydro project that uses a tunnel and doesn't need a large dam, which lessens its environmental impact.

Waste heat power from a coal-to-liquids plant could use the same transmission lines to deliver electricity to the grid at the Beluga power plant.

If there is a connection between several of the proposed projects for Tyonek, it is their potential to deliver low-cost energy to a Southcentral-Interior power grid that needs new generation capacity and new sources of fuel.

The combined new generation capacity of the three projects could be 850 megawatts to 900 megawatts, about what is used now in Southcentral and Interior communities.

Harris said the combined rate for power from the three projects could average 4.4 cents per kilowatt hour, which compares with 12.3 cents per kwH it now costs Chugach Electric to generate with natural gas at the Beluga power plant.

"Tyonek's position is that there is a (regional energy) problem that has to be solved, and we feel it is our obligation to help bring forward solutions," Harris said. "If energy costs in Anchorage go up it will affect the cost of goods and services in rural Alaska as well as Anchorage. We have to get Southcentral Alaska off gas as a fuel for power generation."

It will take years for the projects on Tyonek's list to be built and the combined power capacity might be more than railbelt communities can absorb if other power projects, like Fire Island wind and a Susitna hydro projects, are also pursued.

The planned Pebble Mine might soak up all available power, however, and Harris believes a submarine transmission cable could be built from the Beluga area down Cook Inlet's west side to Iniskin Bay, where the Pebble ore shipping port would be located.

Once inexpensive power is brought to the Iniskin Bay area and an ore-shipping terminal is built, there are several minerals projects in the area that could be developed, including some prospects on lands owned by Alaska Native village corporations.

Pebble also could also be a catalyst for a regional power grid that connects Cook Inlet with Naknek. This could create one grid connecting Alaskans with power from Bristol Bay to Fairbanks.

Tyonek has been proactive in its planning for years. In 2007 the corporation set aside a 1,000-acre parcel for an industrial site. Separately, there are plans now for a new community with 700 homesites. These are intended for shareholders of the corporation, but there is ample space for additional subdivisions on nearby state and Kenai Peninsula Borough lands.

Harris believes there could be a population of 5,000 if just some of the projects planned for the inlet's west side come to fruition.

"We believe the driver for this growth will be the industrial projects. We have seen that when people come to the area to work, some of them decide it would be a nice place to live," said McClellan.

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