CHAPTER 9 THE ALASKAN COAL INDUSTRY A STATUS REPORT

• Jurisdiction: United States

Alaska Mineral Development
(Sep 1978)
CHAPTER 9
THE ALASKAN COAL INDUSTRY A STATUS REPORT
Cole E. McFarland
Placer Amex Inc.
San Francisco, California

TABLE OF CONTENTS

SYNOPSIS

SUMMARY

THE RESOURCE BASE

COAL RESERVES

MINE OPERATIONS

Existing Mines

Potential Developments

MARKETS

Local — Alaskan

Export — West Coast and Asia

TRANSPORTATION

REGULATORY CLIMATE

COAL TECHNOLOGY

FUTURE OUTLOOK

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LIST OF TABLES AND FIGURES

Table 9-1	Summary of Alaskan Coal Resource Areas
Table 9-2	List of Major Equipment at the Usibelli Mine
Table 9-3	North Slope Coal Mine — Estimated Costs
Table 9-4	Susitna Coal Field (Cook Inlet Area) — Estimated Costs
Table 9-5	Projected Market Growth in Southeast Asia
Table 9-6	A List of Legislation Affecting the Coal Mining Industry
Figure 9-1	Major Alaskan Coal Resource Areas
Figure 9-2	Coal Resources and Proposed Withdrawals

SUMMARY

Alaskan coal is a major State and national fuel resource. Based on geologic criteria, the total coal resource is estimated to be several trillion tons. Recoverable coal reserves are estimated to be over 100 billion tons. Future availability of this important energy resource must be taken into account by the Congress in making land use decisions.

A large part of the coal resource is situated in northern regions far from the existing railroad system so that it is subject to Arctic shipping constraints. Coal reserves which may be developed in the near term are close to transport systems or local markets. These areas contain predominantly lower rank subbituminous coal and minor reserves of bituminous coal. Alaskan coals are generally low in sulfur and are well suited for raising steam to generate electric power. The timing of new coal mine developments will be affected by availability and price of competing fuels, national energy policies, political and environmental considerations, and new coal technology.

The most likely markets will be future coal-fired power plants, to be constructed to meet expanding Alaskan industrial and utility demands for electric energy. Export of Alaska coal to west coast states as alternates to Great Plains coal and nuclear power remains a reasonably good possibility. The most rapid growth in coal markets will be in the Asian countries of Korea, Taiwan, and Japan. Competing for these markets will be coal from Australia, Canada, China, and the USSR. Alaskan subbituminous coals will probably require some type of upgrading to successfully compete in these markets.

Current operations in the Nenana coal field demonstrate that a surface coal mine can be operated successfully year-round in the extreme sub-zero temperatures of northern Alaska. Projected world demand for energy fuels, evolving transport and process technology, and proximity to Pacific-rim markets will make the State an important supplier of coal and coal-derived products in the years ahead.

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THE RESOURCE BASE

State coal resources have been estimated on a regional basis by the State Division of Geological and Geophysical Survey (ADDGS), the U.S. Geological Survey (USGS), and the U.S. Bureau of Mines (USBM). These estimates are based on limited data composed of outcrops, drill hole information and geologic interpretation of basin stratigraphy. Quaternary and Recent gravels and vegetation cover much of the area underlain by coal measures. It is understandable that total coal resource estimates vary to a considerable degree.

Using the joint USGS-USBM criteria for estimating coal resources, the State Division of Energy and Power Development has recapitulated the various estimates and arrived at a total identified and undiscovered coal resource of two to five trillion tons.

McGee and O'Connor of the ADGGS estimate recoverable (demonstrated and inferred) coal reserves at 133 billion tons. For this paper we have taken some liberties with the ADGGS report and have summarized the resource data by areas in Table 9-1. The location of these principal coal regions is shown on Figure 9-1 and a brief description follows:

1. Northern Alaska Region: Lying north of the Brooks Range, this region contains coal measures over thousands of square miles. A potential exists for locating multiple blocks of near-surface subbituminous coal containing several hundred million tons each. This area also contains the high quality bituminous coal fields at Point Lay, Icy Cape and Point Lisburne. The high costs associated with arctic conditions, remoteness and indefinite land status deter active exploration and development of this region for the immediate future.

2. Nenana Coal Field: The only major operating coal mine in Alaska is located in this subbituminous field. Proximity to rail transport and expanding local markets underscore its importance. A thick seam encountered on the west side of McKinley Park is thought to be a southwest extension of the Nenana coal measures lying on the north and northwest flank of the Alaska Range.

3. Jarvis Creek Coal Field: Although a relatively minor reserve of subbituminous coal, this field could supply power generation for the Delta area. Frustrated by years of indefinite Federal land status, the lessors are currently exploring the deposit.

4. Matanuska Field: Located east of Palmer this field principally contains underground bituminous coal. The structure is complex and coal seams tend to pitch. An excellent steam coal, this area could supply coal for industrial package boilers and limited power generation. Data from old underground mines is available. Conceptual mine engineering work has been completed in recent years.

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5. Susitna Coal Field: This includes the Beluga and Yentna areas where large tonnages of thick subbituminous coal measures are reasonably close to tidewater or the Alaska Railroad. A proven mineable reserve has been developed to supply future power generation needs in the Cook Inlet region or other markets that may be developed.

6. Kenai Coal Field (Homer District): Subbituminous coal exists over a wide area with surface mining permitted only outside of the Kenai Moose Range. There may be multiple seam-strippable reserves for local power plant and industrial needs.

7. Alaskan Peninsula: Insufficient information precludes assessment of these subbituminous and bituminous coals. A reasonably flat lying seam of bituminous coal, adjacent to tidewater, could support a local coal mine and provide a source of domestic and commercial fuel for coastal communities. Reportedly, the coal would have to be washed to reduce ash and sulfur content.

8. Eagle District: Subbituminous coal of unknown extent may provide coal for future local needs.

9. Bering River Field: This field includes low volatile coking-quality bituminous coal located in southeastern Alaska. Seam thicknesses are reported to be from 20 to 30 feet thick. The complex geologic structure has prevented development of mineable reserves to date.

10. Interior Region (Nulato District): This region includes the area between the Alaska and Brooks Ranges. Lignite, subbituminous and bituminous coal occurrences are scattered over a wide region in northwest Alaska from the Nenana Field to the Seward Peninsula. For the most part, excepting the Nenana Field, insufficient information is available to establish a resource estimate. Considerable work is required to delineate these interior basins and assess this potentially large coal resource. The Nulato District has bituminous coal which out-crops along the Yukon River bank and was an early source of fuel for riverboats. If a mineable reserve could be developed at this site, domestic and commercial coal to supplement high cost fuel oil could be barged up and down the Yukon. Similar outcrops of bituminous coal occur on the Kuskokwim River and the same concept of supplying domestic and commercial coal to river villages applies.

COAL RESERVES

A reserve is that portion of the resource base that can be developed for use. More precisely, a reserve is measured as to quantity

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and cost of mining by specific means. Consideration must be given to production and transport costs as well as existing and potential markets. Further consideration must be given to external events which may aid or hinder the transition from resource to reserve category. These may include: 1) change in available markets; 2) discoveries of competing fuels; 3) national policy regarding fuel utilization; 4) government policies/regulations which increase costs, result in dislocation of supply patterns or affect availability of resource lands; 5) new developments in fuel transport and process technology.

An estimate of mineable coal reserves requires good geologic data and careful consideration of the direct and indirect cost factors which affect the profitable extraction of coal from a given area. Lacking this necessary information we can nevertheless, draw some general conclusions as to order of magnitude of current "mineable" reserves by using a few assumptions and considerable intuition. The coal fields are listed in order of access to transportation, potential market development and drilled reserves. The tonnages are the writer's rough estimate:

Field	Rank	Recoverable Tons
Nenana	Subbituminous	200 million
Susitna (Beluga)	Subbituminous	700 million
Kenai (Homer)1	Subbituminous	65 million*
Matanuska	Bituminous	30 million
Jarvis Creek	Subbituminous	5 million* ——————
TOTAL	1,000 million

As mentioned earlier, the resource base would permit considerable expansion of these mineable reserves given a market incentive to conduct additional exploration and development work.

MINING OPERATIONS

From 1890 through 1977, Alaska coal production totalled close to 26 million tons and averaged about 700,000 tons over the past 25 years. Historically, production came from the Nenana and Matanuska coal fields. In 1968, the Anchorage military...