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New focus on Beluga/Chuitna coal: Alaska, Taiwan sign agreement to encourage low rank coal development
Patricia Liles
Top government officials from Alaska and Taiwan signed an agreement Sept. 16 to encourage development of low rank coal resources located within a few miles of Cook Inlet, about 50 miles due west of Anchorage.
The Beluga and Chuitna coal fields contain more than 1.5 billion tons of sub-bituminous coal, considered inferior because of its high moisture content. But the untapped energy resource close to tidewater has become more attractive to consumers in recent months, thanks to a doubling in market prices in the Pacific Rim coal market. Along with high-ranking representatives of Taiwan’s government, Alaska Gov. Frank Murkowski Sept. 16 signed a memorandum of understanding to “jump-start development” of the Southcentral Alaska coal resource.
“This signing establishes firm commitments from both Alaska and Taiwan to push for development of one of the world’s most important coal reserves, the Beluga/Chuitna coal fields,” Murkowski said, in a press release.
Murkowski and Taiwan government officials made the announcement during a six-day trip to Alaska by 14 government and business representatives from Taiwan, which concluded Sept. 21. Contract next step Now that a government-to-government agreement has been inked, it’s up to developers and consumers of coal to put together a contract to tap Southcentral Alaska coal, something that has yet to occur. According to Margy Johnson, director of international trade in the governor’ s office, a new player interested in developing the Beluga/Chuitna coal fields is KFx Inc., a Denver-based company that has developed technology to upgrade low rank coal. KFx “will be negotiating with land owners to develop coal ... to take on the development themselves,” she said.
Earlier this spring, a KFx representative said that using heat and pressure incorporated in the company’s K-Fuel process to treat Beluga/Chuitna coal would add roughly $30 to $35 per ton in production costs.
The scenario outlined then included construction of a $320 million facility that would produce annually 8 million tons of coal upgraded from 8,000 to 11,000 Btu.
Upgraded coal from Beluga/Chuitna is the focus of the Alaska/Taiwan government agreement, according to the press release.
“The agreement shows that Taiwan’s industry has serious expectations that Alaska’s high-moisture coal can be processed sufficiently to meet their nation’s energy needs at a reasonable cost — providing a new market for one of our most abundant natural resources,” the governor said in the press release. Leaseholders advance project Although not involved in the recent governmental agreement, Bob Stiles, president of Anchorage-based DRven, said he’s seeing more interest in the Chuitna coal reserves his company manages.
“Certainly there’s progress,” Stiles said, on Sept. 20. “Either you’ve sold coal or you haven’t. At this point in time, we have not. ... We are upbeat about the prospects of marketing the run-of-mine coal in the Pacific Rim.”
A sales contract could develop soon, he added, anytime “from two weeks to two years.” International market trends, particularly an increase in coal consumption and a corresponding decrease in coal exports by China, has helped create a “very dynamic” market for coal on the Pacific Rim, Stiles said.
“We are moving ahead with marketing on our property,” he said. “We have approximately one billion tons of proven and measured reserves and of that, 700 million tons are in the proven category.” So far, $40 million has been invested in the Chuitna project, although no infrastructure currently exists, Stiles said. He estimates the property will require about $300 million to start production of run-of-mine coal, not including any equipment to decrease the moisture content.
Editor’s note: For more information about this story, see the October issue of North of 60 Mining News.
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