Coal gaining ground as gas and oil prices soar: Alaska sees growing interest in state's bountiful resource.

• Author: Orr, Vanessa

As energy prices continue to increase, so does the need for finding alternative, affordable sources of fuel. While coal was once looked upon as a poor second to natural gas and oil, dwindling supplies, rising costs and a growing Asian market have brought renewed interest in mining the plentiful mineral.

"We're definitely seeing an awakening of the market," said Steve Denton, vice president, Business Development for Usibelli Coal Mine Inc. "Energy prices went through the roof about three years ago after being at a level that very few in the industry thought was sustainable. Once prices corrected to what they should be, coal was once again able to take its rightful place as a lower-cost fuel."

This new focus on coal has resulted in several companies expressing interest in establishing new coal mines in Alaska, which possesses roughly half of the nation's coal reserves. Companies are also exploring state-of-the-art technologies that will enable them to utilize coal in innovative ways, such as in coal-gasification plants and coal-to-liquids facilities.

LEADING THE WAY

As the only working coal mine in Alaska, Usibelli Coal Mine Inc. provides approximately 1.5 million tons of coal annually for domestic and export use. Of this, roughly 900,000 tons remain in Alaska and is used to supply six Interior Alaska power plants.

"Usibelli supplies coal to the University of Alaska Fairbanks, Aurora Energy in Fairbanks and the Golden Valley Electric Association," explained Bill Brophy, vice president, customer relations. "We also supply coal to Fort Wainwright, Eielson Air Force Base and Clear Air Force Station through a Defense Energy Support Center (DESC) contract."

Approximately 600,000 tons of coal is exported annually to South Korea, and Usibelli also has provided "spot sales," or short-term, single shipments to Chile. "Prior to this year, we were providing Chile with single shipments through Glencore International AG, which is a very large coal-trading company," said Brophy. "In January 2007, we began providing larger quantities for a longer term, which includes shipping 70,000 tons of coal to the country three times a year, which is definitely a step in the right direction."

According to Denton, Usibelli will continue to head in the right direction through its involvement in several coal-related developments. "The two brightest spots on our radar screen are the Agrium coal-gasification facility near Kenai and Matanuska Electric Association's plans for...