The Expanding Reach of Coal: Alaska has rich coal reserves, but getting them to market is a challenge.

• Author: Schmitz, Richard F.
• Position: Mining Special Section - Statistical Data Included

Want coal?

No problem there. Alaska is home to some of the most extensive coalfields in the world. There's coal in the Northwest Arctic. There's coal all around Healy. There's coal in the Mat-Su Valley. There's coal along Cook Inlet. In Alaska, there's lots of coal.

For Alaska's few coal producers, the problem comes in finding new markets for all this coal. The long-established Usibelli Coal Mine in Healy has a relatively small but stable market in Rail-belt power plants and in a long-term contract with a Korean power provider.

Bob Stiles, president of the Drven Corp., as well as the Alaska Coal Association, sees some new opportunities to sell Alaska coal to Asia-and possibly to Lower 48 users-as the price of energy overall inches upward.

Stiles, as Drven Corp. head, is manager for the Chuitna Project, which entails 20,000 acres of state leases (coalfield) adjacent to the Beluga coalfields, near Tyonek, on the west side of Cook Inlet.

The Chuitna Project, 50 miles due west of Anchorage, has proven and measured reserves of over a billion tons of coal, Stiles explained. About $40 million has been spent so far to develop the project, but the next-and considerably more difficult-step is to find a market for these coal reserves.

Stiles emphasized Alaska is a very small player in the worldwide scheme of coal mining, selling, buying and consuming. But should one or more long-term sales contracts be successfully negotiated, Alaska could reap, relative to its size, great benefits in employment, revenue and economic development.

Coal Prices Rise

New optimism surrounding Alaska coal is prompted by steady-albeit not dramatic-increases in the price users pay for coal. In fact it is the mundane increases in coal prices that are its attraction. While the price for crude oil jumped 51 percent in the 20 years from 1979-1999, coal increased just 4 percent. But in the past two years, coal prices have caught up a little, Stiles said. "World coal prices are up significantly from last year, after several years of decline. In inflation-adjusted terms, we're where we were in the mid-1980s. In general, the inflation-adjusted price of coal increases about 1 percent a year-2 to 3 percent with regard to demand on a global basis."

Slow, steady price movements are an attraction for energy producers and other coal users, Stiles explained. "It's not terribly volatile. You don't see big swings." It's that factor that makes coal an ideal commodity for long-term contracts.

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