Alaska makes preliminary decision to lease new coal reserves

The Alaska Department of Natural Resources said in a Nov. 20 public notice that its Division of Mining, Land and Water has written a preliminary decision to offer for competitive coal lease about 13,175 acres of land in the Canyon Creek area, approximately 18 miles southwest of Skwentna and 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 separately.

“The Department of Natural Resources (DNR) has received a request from Alaska Energy Corporation for a coal leases or prospecting permits in the proposed sale area,” said the preliminary decision. “Under AS 38.05.150, 11 AAC 85.005, and 11 AAC 85.010, when the DNR receives requests for coal leasing or prospecting permits the Division of Geological and Geophysical Surveys (DGGS) evaluates the potential for commercial coal development and ranks that potential as high, moderate, or low. If the potential is found to be moderate or high, the land is designated competitive, and disposal of interest in coal must be through a competitive lease sale. If the ranking is low, coal prospecting permits may be issued. Mr. James Clough, of the DGGS, has performed the coal evaluation and assigned a rank of high for those portions of the proposed lease underlain by coal. The DGGS ranked portions of the area underlain by igneous and metasedimentary rocks as having low coal potential. Therefore, this decision addresses whether holding a competitive coal lease sale is in the best interest of the State.”

Based on drilling and field investigations of the Canyon Creek area, Mobil Oil in the past identified up to five seams that are potentially minable in this area. Individual coal seams range in thickness from 10 to 45 feet thick, with one area where they report four seams come close together with a net coal thickness of 63 feet. Based on observations, these thickened coals may represent folding related to faulting as well as slumping. The coal seams in the Canyon Creek area have shallow to steep dips. Mobil Oil estimated 500 million tons of minable coal for both the Canyon Creek area and the Johnson Creek area, located to the north, combined. “Based on the available data, we estimate there are approximately 257.9 million short tons of Indicated coal resources within the proposed Canyon Creek coal lease area,” said the preliminary decision.

The preliminary decision was first noticed to the public on Oct. 16. The close of the public comment period was initially Nov. 21. But the DNR received requests from the public to extend the comment period, and to hold a second public meeting near the proposed lease sale area. The public comment period will now end on Dec. 21.

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.

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.

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.