Alaska gets application for coal reserve leasing from new company

Alaska’s Department of Natural Resources said Oct. 16 that its Division of Mining, Land and Water has written a preliminary decision to offer for competitive coal lease approximately 13,175 acres of land in the Canyon Creek area, south of the Skwentna River.

The proposed sale area is approximately 18 miles southwest of Skwentna, and about 6 miles southwest of Shell Lake. The intent of the proposed lease sale is to provide for coal exploration and potential surface coal mining. The proposed coal leases only grant an exclusive right to explore for and develop coal deposits. They do not permit any physical activity within the lease area. All exploration and prospecting activity, as well as any subsequent mine development, must be permitted through the state at a later point.

The DNR said it has received a request from Alaska Energy Corp. for a coal lease or prospecting permits in the proposed sale area. The DNR preliminary decision report doesn’t give any details on Alaska Energy. State corporate records show that an “alien affiliate” of the company is CanAm Coal Corp. out of Canada, with CanAm CEO Timothy Bergen listed as the president of Alaska Energy. CanAm has several producing mines it partially owns in Alabama and has been trying for years to develop the Limon lignite coal reserve in Colorado. Another officer of Alaska Energy is CanAm CFO Jos De Smedt. The Alaska Energy office address listed in state corporate records matches the CanAm address in Calgary, Canada, as listed on CanAm’s website.

To assist in the evaluation of the proposed coal lease block for coal mining potential in the Canyon Creek area, the state used available drill logs from eight coal exploration drill holes drilled by Mobil Oil Corp., thirteen outcrop localities from F.F. Barnes U.S. Geological Survey coal evaluation of the Beluga-Yentna region, and three coal outcrop evaluations by R.D. Merritt. Net coal thicknesses within the Tertiary rocks inside the proposed lease blocks range from 5 feet to over 60 feet, with evidence from Barnes that some of the thicker deposits of coal may represent coal seams that are folded (and therefore thickened) or slumped. Mobil Oil estimated a total of 500 million tons of minable coal for both the Canyon Creek and Johnson Creek areas. Based on the available data, the DNR estimates there are approximately 257.9 million tons of indicated coal resources within the proposed Canyon Creek coal lease area. This is sub-bituminous coal.

Usibelli Coal Mine Inc. has for many years been the only coal producer in Alaska, serving small utility and industrial markets in the state and exporting some coal to other countries. But several companies have over the years pursued mine projects in the state, with a big lure being the state’s relatively shorter shipping distance to some Pacific Rim markets compared to cargoes coming off of the West Coast of the mainland U.S.

DNR says there has been coal development activity in this area in recent years

Major projects in the area in recent years include the 7,434 acre Wishbone Hill mine located approximately 40 miles northeast of Anchorage and ten miles northeast of Palmer, near the community of Sutton. Surface mineable reserves at Wishbone are estimated at 14 million tons of clean bituminous coal. Usibelli began developing its Wishbone Hill reserve in 2010.

In May 2007, the permitting process was begun for a drilling program in the Chickaloon portion of the Matanuska Coal Field, but plans for developing the Chickaloon Coal Field in the Matanuska Valley were subsequently abandoned. If the Chickaloon project were developed, coal could be exported through the port at Point MacKenzie. More recently, a permit to conduct underground coal mining at the Jonesville mine near Sutton was renewed by Ranger Alaska LLC in May 2011.

The Chuitna coal project, a large project that has been under consideration for the last three decades, is located on the west side of Cook Inlet, about 45 miles west of Anchorage and 40 miles south of the proposed lease area. The Chuitna project is being developed by PacRim Coal on land owned by a combination of public and private entities, including the state of Alaska. The project is anticipated to include a surface coal mine, access road, coal transport conveyor, air strip, personnel housing, logistic center, and an export terminal that includes a 10,000-foot trestle from shore to load coal transport ships at Ladd Landing. If coal were to be mined from the Canyon Creek proposed lease area, one potential transportation route could involve the export terminal proposed for the Chuitna project, the DNR report said. However, no specific transportation routes for coal from the Canyon Creek area have been proposed at this time.

In 2009, the Cook Inlet Region Inc. (CIRI) native corporation announced plans to build a 100 MW Underground Coal Gasification (UCG) plant on the west side of Cook Inlet. This project would use syngas from coal in the Beluga coal field, the same field that contains the site of the prospective Chuitna mine. CIRI hopes to start producing gas as early as 2015, the DNR said.

The Alaska Mental Health Trust Authority has also recently announced plans to conduct a licensing program on their lands on the northern Kenai Peninsula, the Cook Inlet Basin, and in the Railbelt region of the state. The Alaska Mental Health Trust Authority granted over 181,000 acres of UCG coal exploration licenses in January 2011.

Several routes possible for any Canyon Creek coal to get to export facilities

There are several possible routes and modes of transport for any Canyon Creek coal production. The nearest tidewater shipping location is the Tyonek/Ladd Landing area, about 50 miles south-southeast of the proposed coal leasing area. Ladd Landing is a few miles north of Tyonek on Cook Inlet, and is the proposed shipping point for the Chuitna project. The community of Beluga also lies eight miles northeast of Tyonek, and is connected to Tyonek and Ladd Landing by road. Chugach Electric Association has a gas-fired power plant at Beluga, and it is the proposed initiation point for a gas line to the Donlin Gold Project in southwest Alaska.

A transportation route south to the Tyonek/Ladd Landing area would need to avoid the large wetlands area around the headwaters of the Talachulitna River and between Beluga Lake and Little Susitna Mountain. The route could pass to the west of the wetlands by Judd, Coal Creek, and Beluga Lakes, or it could go down the west side of Beluga and Little Susitna Mountains. Any transportation route south toward Tyonek would have to cross the Talachulitna State Recreation River. An alternative route would be to transport the coal to Port MacKenzie, or possibly to a point along the proposed Port MacKenzie Rail Extension. A route into the Port MacKenzie area would be roughly 60-70 miles long, and would require crossing the Talachulitna and Susitna rivers. One logical route to the Point MacKenzie area would generally track east from the proposed lease sale area across the Talachulitna River to the north end of Beluga Mountain, then along the east flank of Beluga and Susitna Mountains to near the Susitna River. The route would likely cross the Susitna River near the community of Susitna, then follow a route over the highest ground into the Point MacKenzie area.

A public hearing for the Canyon Creek competitive coal lease sale will be held Nov. 13 in Anchorage. All comments must be received no later than 5:00 p.m., Nov. 21.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.