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MINING NEWS: Calista Corp. chooses Canadian coal Alaska Native corporation subsidiary says study shows burning Canadian coal at Bethel plant produces lowest cost electricity Patricia Liles Petroleum News Contributing Writer
A draft feasibility study completed this spring by Nuvista Light & Power Co. recommends construction of a coal-fired electric generation plant at Bethel, Alaska, plus construction of a 191-mile transmission line to the Donlin Creek gold project as the lowest wholesale power cost for the remote southwest Alaska region. Nuvista, a non-profit formed by Calista Corp., the Native corporation in southwest Alaska, is seeking comments through May 7 on the study, which recommends that initial design and permitting work begin on the coal-fired power plant project.
“Assuming the coal plant and the transmission line are financed using $150 million in grant funds with the balance of the $370 million project financed at 5 percent, wholesale power cost would be in the range of 8.1 cents per kilowatt hour using Luscar Coal Valley coal from British Columbia,” the executive summary said. The study, completed March 20, outlines plans to construct a 100-plus megawatt coal-fired plant at Bethel, either on two barge structures or on land one mile south of town. A connecting 138-kV transmission line from Bethel to Donlin Creek would supply the 70 megawatts of peak power needed if the 28 million ounce gold deposit is to be produced by its developers, Placer Dome and NovaGold Resources.
“This study assumes the Donlin Creek gold mine will begin full scale mining operations in mid-year 2010,” the executive summary of the study said. “Placer Dome Inc., has, however, indicated that it may want power at the mine prior to 2010. Realistically it will be difficult to construct (the coal-fired plant and transmission line) prior to 2010.” Other power supplies more costly Another electric supply alternative considered by Nuvista is construction of a combined cycle power plant, either oil-fired or natural-gas fired, at Bethel or at Crooked Creek, a village in the upper Kuskokwim River valley 14 miles from Donlin Creek. Oil would be barged in, according to the study. Natural gas would be supplied via a pipeline built from Cook Inlet to Crooked Creek, or from a proposed shallow gas development in the Holitna Basin, about 50 miles southeast of Donlin Creek.Canadian coal produces lowest cost power Other power supply alternatives considered by Nuvista but rejected as more costly were two types of transmission lines that would be built between the mine site and Nenana, Alaska, on the state’s existing Railbelt power grid. Nuvista previously evaluated those alternatives and found them to produce more expensive power than the Bethel coal-fired generation option. “Coal is by far the cheapest source of fuel per million Btu delivered to Bethel, averaging less than one-third the cost of petroleum based products,” the study said.
Nuvista’s study evaluated coal from eight different sources, including coal produced by the Usibelli Coal Mine Inc., in Healy, Alaska. Five of the eight coals considered are mined in Western British Columbia.
Two coals, produced by Kennecott Energy from mines along the Wyoming/Colorado border were also considered. Coal would be shipped by bulk freighters to Bethel’s nearest coastal port facility, either Goodnews Bay or Security Cove, then loaded onto barges and lightered the 135 to 160 miles along Alaska’s coast and up the Kuskokwim River to Bethel. The study recommends that Nuvista operate its own lighter service, purchasing three barges and a tugboat, cheaper than contracting with an independent barging firm.
Luscar coal shipped to Goodnews Bay or Security Cove would cost $43.25 per ton, or $1.99 per million Btu. A higher grade of Canadian coal, Fording Coal from the Black Bear Mine, would cost $55 per ton, or $2.25 per million Btu. Usibelli coal would cost $28.70 per ton, or $2 per million Btu, prices effective in January 2004, according to the study. Usibelli coal’s heating value is 7,128 Btu per pound, versus 10,843 Btu per pound for Luscar coal and 12,284 Btu per pound for the Black Bear/Fording coal.
The study estimates that a power plant requiring 300,000 tons of Fording coal would require 500,000 tons of Usibelli coal to produce the same amount of power. Larger coal storage facilities, power plant equipment and increased expenses to move more coal, air and combustion gases would increase the project’s capital costs by $35 million, and add $500,000 to annual operating costs. Additional lightering for Usibelli coal would also mean an increase of $1.1 million per year, increasing the per kilowatt hour costs for using Usibelli coal, the study said.
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