With coal demand on the rise both in Alaska and the Pacific Rim, Usibelli Coal Mine Inc. coal sales are expected to top 2 million short tons in 2010, marking another record year for the family-owned business.
Usibelli Vice President of Planning and Budget Keith Walters told Mining News that the record sales are split nearly evenly between in-state and overseas buyers.
Located next to the Alaska Railroad in Healy, Usibelli’s operations are well suited for meeting the needs of its Alaska buyers as well as helping supply growing demand on the Pacific Rim. While the bulk of in-state users of Usibelli coal are in the Fairbanks area at the northern terminus of Alaska’s railbelt, the southern extent of the tracks terminate at the ice-free port in Seward, Alaska, where a Usibelli affiliate, Aurora Energy Services, LLC, operates a coal terminal owned by the Alaska Railroad Corp.
Recent upgrades to the ship-loader at Seward have increased the speed by which the facility can load ships by more than 22 percent, while, at the same time, decreasing coal dust emissions and spillage.
The new conveyor system installed at the Seward terminal in 2010 has increased the capacity of the ship-loader from around 700 metric tons per hour to 858 mtph, shaving a day off the time it takes to load an 80,000-metric-ton vessel.
Pac Rim sales jump 24 percent
A record 15 ships bound for Pacific Rim destinations were loaded at the Seward coal-loading facility in 2010, a 25 percent increase over 12 vessels in 2009. In terms of tonnage, more than one million tons of coal was shipped out of Seward, a 24 percent jump over about 800,000 tons shipped in 2009, and more than twice the average of the preceding five years.
About 80 percent of the coal shipped out of Seward was bound for Chile, with most of the remaining 20 percent bound for South Korea.
Usibelli Vice President of Customer Relations Bill Brophy told Mining News that inquiry about delivering Usibelli coal to overseas locations has increased significantly in recent years. One of the primary reasons for the increased demand, according to Brophy, is the quality of the Alaska coal.
The sub-bituminous C-rank coal mined in Healy typically runs about 7,650 Btus per pound, with 28 percent moisture, 9 percent ash and 0.2 percent sulfur content. The “ultra-low” sulfur content of the Healy coal is one of the primary reasons power facilities, under pressure to reduce the emissions of sulfur oxides, are requesting larger quantities of Usibelli’s product.
Japan test shipment
In addition to Chile and South Korea, one ship loaded with Usibelli Coal was sent to Japan in 2010. The test shipment was part of a collaborative effort between J-Power, a Tokyo-based company that operates 67 power plants with a total output capacity of about 17,000 megawatts of electricity, and Usibelli.
J-Power is interested in buying bituminous coal from Usibelli’s Wishbone Hill project near Palmer.
As part of a feasibility study being undertaken for Wishbone Hill, the JP Azure, a super-Panamax ship, was loaded with Usibelli Coal at Port MacKenzie in May. The vessel, was first loaded with 76,000 tons of coal in Seward, and the massive ship, too large to transit the Panama Canal, then traveled up Cook Inlet to dock at the Matanuska-Susitna Borough-owned port where another 1,250 tons trucked down from Healy topped off its load.
If Alaska-based Usibelli decides to develop Wishbone Hill, some 500,000 tons a year of the cleaner-burning coal will likely be shipped to Japan via Port MacKenzie, which is on the west side of upper Cook Inlet directly across from Anchorage.
“J-Power has been identified as the most likely purchaser of the coal. They have expressed interest in purchasing all of the output from Wishbone Hill,” Usibelli spokeswoman Lorali Carter said.
The day before the big ship arrived, the State of Alaska set aside US$35 million for the Port MacKenzie Rail Extension, a rail line that would link the port to Alaska’s existing rail system. Another US$750,000 was earmarked for completion of an expansion of the barge dock.
By linking the port to the rail system, the borough hopes it will be economically feasible to export Healy coal and other natural resources directly to global markets.
In addition to moving Wishbone Hill coal through the port, Denton said the rail extension to MacKenzie could increase Usibelli’s capacity to ship Healy coal to world markets.
HCCP provides growth potential
Though overseas growth has been robust in recent years, Usibelli says Alaska is its most important market. Though the company’s in-state and export sales are about par in 2010, Walters told Mining News that Usibelli’s contracts with its in-state customers typically have much longer terms than those with Pacific Rim customers.
The family-owned company’s relationship with in-state power producers goes back four generations.
Usibelli got its start in 1943 when founder Emil Usibelli landed a contract to supply coal to the newly constructed Ladd Army Air Field (now Fort Wainwright). Today, the Fort Wainwright facility continues to buy coal from the Usibelli family, burning more than 230,000 tons of Healy coal to generate heat and power at the army base next to Fairbanks.
In addition to Fort Wainwright, Usibelli ships coal to power and heat plants at Eielson Air Force Base, Clear Air Force Station, University of Alaska Fairbanks and a plant in Fairbanks owned by Aurora Energy. Healy #1, a 25-megawatt power plant owned by Golden Valley Electric Association, is located next to the mine and feeds electricity and power into Alaska’s railbelt power grid.
Walters said the five coal-fired power plants currently on-line in Interior Alaska are running at nearly full capacity, and Usibelli does not expect any significant increase in demand from these facilities. The Healy Clean Coal Project, sitting idle next to the Healy #1 plant, has the potential to provide 50 megawatts of power to the Alaska railbelt electrical grid, and has the best possibility to offer near-term expansion to Usibelli’s domestic market.
HCCP was designed and constructed to burn low-grade coal mined by Usibelli. By burning the coal in stages and adding limestone to the coal the plant was designed to reduce nitrogen and sulfur oxide emissions. The plant was completed in 1997 and testing ran through 1999, but the plant has sat idle over the past 10 years.
GVEA, an electric cooperative serving some 100,000 residents of Interior Alaska, agreed to purchase HCCP from AIDEA at the end of 2009 and is in the process of renewing the permit it needs to bring the power plant online. The Alaska Department of Environmental Conservation has approved the permit and the U.S. Environmental Protection Agency is in the process of reviewing it. Once the permit is approved, GVEA estimates it will take between 18 to 24 months to bring the plant online, depending upon the legal challenges by environmental groups.
Usibelli says it has maintained a long-term commitment to clean coal technology and is ready to provide coal to the facility whenever HCCP is returned to service.
The company says it has the infrastructure in place to double production without significant capital investment and it is positioned to supply both domestic and international markets in the foreseeable future.
