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Struggle simmers over power source Calista continues with plans for B.C. coal-fired plant, while TKC backs shallow gas Patricia Jones Petroleum News Contributing Writer
A power struggle appears to be simmering between Alaska Native corporations planning to build and operate — in remote southwest Alaska — a large electric generation plant, capable of providing power needed to develop one of the world’s largest untapped gold deposits.
One plan calls for construction of a large, coal-fired power plant on a barge at Bethel, using Canada coal shipped to Alaska, and running a large transmission line almost 200 miles northeast to the upper Kuskokwim River area.
The second Native-backed proposal involves tapping coalbed methane and free gas from an unexplored shallow gas field in the upper Kuskokwim region.
At stake is control and operation of a power plant that could provide up to 80 megawatts of power to the remote Donlin Creek deposit, estimated to contain almost 28 million ounces of gold. Donlin Creek developers Placer Dome and NovaGold Resources, in the process of completing a feasibility study, need to identify an affordable supply of power used in the chemical process of separating microscopic gold from its host rock. (See related story on page 19.)
Among a host of ideas floated for an industrial source of power generation in the region, far from Alaska’s existing electric grid, are two proposals backed by Native corporations with ties to the land. Calista backs coal plant Calista, the regional Native corporation and subsurface land owner in southwest Alaska, is leaning towards a coal-fired power plant in Bethel, based on a power study completed in 2002.
A final report with a detailed analysis is expected before the end of the year from the corporation’s Nuvista Light & Power Co., Bob Charles, Calista’s vice president of government and corporate relations, told Petroleum News Oct. 13. A 96-megawatt power plant mounted on a barge, powered by coal shipped to Bethel from British Columbia, appears to be “the lowest cost option,” he said.
The coal plant would provide electricity to Donlin Creek and local villages via a 191-mile, 138-kilovolt power line from Bethel. Costs are estimated at $372 million, although Charles said Calista is “looking at ways to reduce those capital costs.”
While Calista is looking at a number of different options for producing power for Donlin Creek, Charles said local shallow gas development, proposed by another Native corporation, is not among those alternatives: “We are looking at what we know is current and available right now for development,” he said. “Until it presents itself, no one can say whether it even has potential.”
Calista’s past research of potential gas supplies in the region were not encouraging, Charles added. “We couldn’t get other established oil and gas companies interested — it’s a remote region with high development costs and a limited market … (and) all indications from other people is that they believe it’s too small.” Shallow gas ‘perfect solution’ But the potential of shallow gas development in the region is viewed by the local Native corporation as “the perfect solution,” according to Trevor Smee, president and CEO of The Kuskokwim Corp.
Called TKC, the corporation represents Natives in 10 villages in the upper Kuskokwim River area, where the proposed gold mine is located. In addition, TKC owns surface rights to land neighboring four shallow gas leases sought by Holitna Energy, state ground some 50 miles southeast of the Donlin Creek deposit.
TKC has partnered with Holitna Energy to develop gas and related power infrastructure from those gas leases, forming a company called Naniq Energy Co. LLC.
“Once you determine the gas field’s capacity — the quantity, pressure and potential volume, then you know how feasible the field is to build an 80-megawatt power plant,” Smee said. “We can save about five years off of any other plan suggested to fire up the mine, and we can get the villages in the upper Kusko power as well.”
Holitna Energy’s early estimates for developing shallow gas, building a power plant and running electric lines to Donlin Creek and nearby villages is about $90 million.
A coal-fired power plant is “a waste of federal money,” Smee said. “It goes against everything Congress is trying to do, to get off obligations on international fuels.”
Shallow gas is less costly, it would use a local source of energy and it would produce fewer emissions than the coal-fired plant proposed by Calista, he added.
“At this point, there seems to be a little bit of resistance at looking at a non-Calista run solution,” Smee said. “We’re trying to get them to team with us. … We both win if we work together.”
Smee and Holitna Energy president Phil St. George are seeking funds for a detailed gravity survey and gas drilling in the region, planned for this winter. (See story in Oct. 19 Petroleum News.)
Included in their queries are federal organizations, such as the Department of Energy and Alaska’s congressional delegation. Smee said he’s spent time in Washington, D.C., to “make sure everyone on the Senate energy committee understands there are multiple solutions on the table.”
U.S. Sen. Lisa Murkowski, R-Alaska, introduced legislation earlier this year, which would authorize up to $100 million in grants and $50 million in loan guarantees to Calista for development of a power plant. Coal and wind turbines were cited in the funding request.
Murkowski’s staff said the federal funds could be used for either coal or gas, and that people in Calista will make the decision.
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