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Usibelli shifts to Two Bull Ridge Alaska’s only producing coal mine celebrates opening new mine area and 60th anniversary, talks about expansion into other businesses Patricia Jones Petroleum News Contributing Writer
Coal production at Usibelli Coal Mine near Healy, Alaska, shifted entirely about a month ago to the company’s newest open-pit mine area called Two Bull Ridge.
Development of this new coal-rich area started about two years ago, with some coal being mined in late 2002, according to Bill Brophy, vice president of customer relations at Usibelli.
That coal was blended with remaining resources extracted from the company’s 25-year producing Poker Flats open-pit mine during the first few months of 2003. The blend stopped about a month ago, and total production of coal from Usibelli now comes from Two Bull Ridge, Brophy said.
To celebrate the new mine opening and the company’s 60th anniversary of mining coal in Interior Alaska, Usibelli hosted an open house on July 26. Brophy said about 1,100 to 1,200 people turned out for the event, which included bus tours of the new mine area and a ribbon-cutting ceremony by members of the Usibelli family, descendents of coal miner Emil Usibelli who started the company in 1943.
Long life Two Bull Ridge, located on the north side of Hoseanna Creek about two and one-half miles from the former mine workings, provides Usibelli with a resource that requires less time-consuming overburden removal.
The strip ratio of overburden to coal at Two Bull Ridge is 3.5 to 1 cubic yards, while at Poker Flats, that ratio was 4.5 to 1, Brophy said.
Two Bull Ridge is believed to contain enough coal to support Usibelli’s current operation for 25 to 30 years, he said, based on current production of about 900,000 tons of coal a year.
Yearly production could increase with reestablishment of a sales contract with Korean power producers.
Since 1984, Usibelli shipped more than 17 million tons of coal to Korean power plants, using the Alaska Railroad to move coal from Healy to the port of Seward, then by barge overseas to Korea.
Yearly Korean coal shipments ranged from 600,000 to 750,000 metric tons, Steve Denton, Usibelli’s vice president of business development, told Petroleum News in March. The company failed to land a contract extension in 2002, and subsequently laid off about one-third of its workforce. Contract talks continuing Early this year, Usibelli resumed contract talks with its coal purchaser, Hyundai Merchant Marine. A memorandum of understanding was created, Brophy said, and final contract negotiations should be concluded by this fall, the first opportunity for coal shipments to resume on the Alaska Railroad.
“In the summer months, the Alaska Railroad is more heavily-laden with cargo of sand and gravel (for construction projects) and passengers, so those trains consume most of the rail,” Brophy said.
The memorandum of understanding involves supplying Korea with about 400,000 tons of coal per year, for a two-year period, Brophy said.
“That’s a relatively short period and obviously we would hope for a five to 10 year contract,” he said. “It’s about half the quantity we had previously shipped … at any rate the details will be set out with the final contract negotiations.” Power plants could boost coal consumption Usibelli could also increase its future coal production operation significantly by supplying two different coal-fired power plants.
The state-owned Healy Clean Coal Project, built in the 1990s and shuttered since January 2000, would consume 350,000 tons a year at full capacity. This spring, the Alaska Industrial Development and Export Authority resumed talks with Fairbanks-based Golden Valley Electric Association to try to restart that $300 million state and federally funded power plant, capable of producing about 50 megawatts of power.
Usibelli has put forward its own power plant proposal, releasing in May a project concept summary for a 200-megawatt coal-fired power plant proposed to be located about 15 miles from the Parks Highway on Emma Creek.
The proposed power plant is on Usibelli’s Jumbo Dome mining leases located a few miles north of the recently-opened Two Bull Ridge mine. Cheap power source With an estimated price tag of $421 million, the proposed 200-megawatt power plant would consume roughly 1.5 million tons of coal a year, Brophy said.
The estimated strip ratio of the shallow Emma Creek coal seams is even better than Two Bull Ridge, at 2:1 cubic yards.
“It would be easier to get out of the ground, and with a mine-mouth power plant, you reduce handling of coal,” Brophy said. “It’s a very attractive project.”
The power plant proposal is directed at Railbelt utilities, in the midst of planning construction of future power supplies to meet future electric demand, Denton told Petroleum News in mid-May.
“With the very favorable geology of the new leases we have, we think it can be done to provide a competitive source of power to stabilize utility rates in the Railbelt,” Denton said. “Most price predictions for oil and gas are not favorable, and we think it would be a good time for the utilities to give this some real serious thought.”
Power costs of the proposed plant would be about 4.1 cents per kilowatt, compared to current Railbelt firm costs of five cents per kilowatt, according to the project summary.
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