Alaska railroad priorities.

• Author: Stricker, Julie
• Position: SPECIAL SECTION: Transportation

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It's shaping up to be a relatively quiet year for the Alaska Railroad Corporation, in terms of large projects, but the railroad is looking ahead with plans to expand and diversify both its reach and its revenue sources.

Although the railroad is owned by the state, it operates as a private business and receives no state money for operations, says spokesman Tim Sullivan.

"We run our operation in a way to be self-sufficient," he says. "What affects us are world markets for coal, for diesel prices, and those sorts of things."

Tumultuous Years

The railroad is coming off a couple of tumultuous years. In May 2014, the Flint Hills Resources North Pole Refinery, a major railroad customer, shut down. All southbound petroleum transportation stopped, while some northbound shipments increased. Overall, the total volume is only about a fifth of peak, according to its 2014 annual report. Despite that, the railroad turned a higher-than-expected net income, $14.1 million, exceeding its original budget by $5.5 million.

Starting in 2010, increased oil and gas exploration on the North Slope led to an uptick in the Alaska Railroad's rail and barge sector. Nearly 90 percent of the freight hauled via the Alaska Marine Highway system is oil and gas related, the report states. From 2012 to 2014 shipments of pipe alone increased 62 percent.

"That was great for us because we were moving a lot of equipment such as pipe and drilling mud," Sullivan says.

In 2015, however, low prices for coal and oil threw another curve at the state-owned railroad; the current low oil prices and uncertainties in the exploration tax credits offered by the state resulted in a precipitous slowdown in freight.

On top of that, in fall 2015, Usibelli Coal Mine announced it would halt coal exports for the remainder of the year. Usibelli, the only operating coal mine in Alaska, relies on the railroad to ship the coal from Healy to the loading docks in Seward. As of April, it was unclear when shipments might start anew, although Sullivan said "it is my understanding we will have ships in to Seward this summer."

Overall in 2015, the railroad hauled 4.29 million tons of freight, most of which was gravel, coal, and petroleum-related products.

Amid the uncertainty, the railroad has tightened spending and looked for ways to expand and diversify its revenue stream, while maintaining a focus on safety, the annual report states.

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