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Vol. 9, No. 44 Week of October 31, 2004
Providing coverage of Alaska and Northwest Canada's mineral industry

MINING NEWS: Usibelli looking at mine-mouth power plant

Company: Proposed coal-fueled Emma Creek plant would produce electricity for Alaska’s Railbelt, both Fairbanks, Southcentral

Sarah Hurst

Mining News Contributing Writer

A coal-fueled power plant could help meet the growing energy needs of Alaska’s Railbelt, Usibelli Coal Mine Inc. believes. But the company faces a bumpy road to the realization of its Emma Creek Energy Project, with some electric utilities skeptical about the idea. At a meeting of the Alaska Support Industry Alliance in Anchorage on Oct. 20, Usibelli’s vice president for business development, Steve Denton, gave a multimedia presentation on Emma Creek, promoting coal as a clean and cost-efficient alternative to oil and natural gas.

“This is a concept,” Denton said as he introduced a CD with maps, videos and an animated view of the power plant showing coal burning to produce ash and steam, with water subsequently being recycled. The 200-megawatt mine-mouth plant would be located near Usibelli’s Jumbo Dome deposit in the Healy area at a cost of $421 million. Usibelli, Alaska’s only operator of a coal mine, currently serves the Golden Valley Electric Association’s plant in the same area. Usibelli was also supposed to supply the Healy Clean Coal Project, but the 50-megawatt power plant, using experimental technology, has been shut down.

Project would take 7.5 years

The Emma Creek Energy Project would take 7.5 years to realize. After completing the long permitting process and constructing the plant, it would “provide stability to the electricity market in the Railbelt,” Denton said. “The price of oil is way up, and being dependent on it, we’re kind of stuck with that.” Coal constitutes 91 percent of Alaska’s energy resources, with 171 billion tons identified in the state. Over half of all electricity produced in the United States is from coal.

Denton expects opposition from the National Parks Service and environmentalists, as the plant would be within 15 miles of Denali Park. “The air quality permit will be the tough one,” Denton said. However, the Aurora plant in Fairbanks, owned by the Usibelli family, supplies distributed heating and does not create ice fog: it actually improves air quality in the city, Denton added. Improvements in technology mean that coal is not the dirty fuel it used to be.

Another hurdle to building the plant would be the up-front capital cost. The loan would take 30 years to pay off, but the plant could be expected to last “well in excess of 50 years,” Denton said. It would employ 53 people full-time.

After damming Emma Creek to create a reservoir, the proposed Jumbo Dome mine would produce around 1.5 million tons of coal a year to feed the power plant. The plant would be conveniently located close to the new northern Healy-Fairbanks Intertie, Denton said.

Response of utilities mixed

For utilities in Southcentral Alaska the plant is less convenient.

“We have chosen not to comment, being that Emma Creek is a long way away and the electricity usually comes from Anchorage, rather than the other way around,” said Chugach Electric spokeswoman Patti Bogan. Usibelli argues that Emma Creek is roughly at the midpoint between Anchorage and Fairbanks, and would provide 100 megawatts to the north and 100 megawatts to the south.

The Railbelt’s six utilities have yet to come up with a coordinated response to the December 2003 recommendations of the Alaska Energy Policy Task Force. According to the Task Force, Railbelt electric power generation needs could grow 39 percent from 2008 through 2028. “Alaska must be active in its pursuit of developing new generation technologies … and must be self-sufficient due to the lack of any electrical interconnections outside of Alaska,” the Task Force’s report said.

Matanuska Electric opposed

The report mentioned the Emma Creek Energy Project as one of the possibilities to consider. Matanuska Electric Association agrees that coal has great potential, but the state’s first electric cooperative does not want a power plant to be built at Emma Creek.

“We are very glad to see Usibelli making every effort to draw attention to the advantages of coal,” said Tuckerman Babcock, Matanuska Electric’s manager for government and strategic affairs. “But we are way too often the first off and the last on. We prefer a power generator located within our service area.”

Golden Valley more positive

Golden Valley Electric Association in Fairbanks gave a slightly warmer reception to the proposal. “The Emma Creek Project is a good concept for a Railbelt power plant,” Golden Valley’s President and CEO Steven Haagenson said in a statement. “A power plant at Emma Creek, as proposed by Usibelli Coal Mine, would use a stable-priced fuel source and employ proven technology. As proposed, it would produce power at a reasonable cost. But there are a lot of details to work out yet. Someone needs to build the plant. Someone has to purchase the power. And the capacity of the existing transmission lines would need to be increased to transmit the power generated in Healy to Fairbanks and Anchorage.”

If Usibelli were to build a power plant farther away from its mine, the cost of transporting fuel would push the electricity price up to 4.5-5 cents per kilowatt-hour, Denton said. With the plant at the mine-mouth, the price would be 4.1 cents per kilowatt-hour. Usibelli estimates that if oil, gas and coal prices continue to escalate at historical rates, the Emma Creek Energy Project will save Railbelt consumers $300 to $500 million over the first 30 years of its life, and even more after that, when the plant is paid off.

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