Mine power: providing energy a major hurdle for mine development.

• Author: Liles, Patricia

[ILLUSTRATION OMITTED]

Most of Alaska's major mine operations, whether currently producing or in the development stage, face a substantial infrastructure challenge--finding a reliable, affordable source of electric power in the quantity necessary for industrial use.

To answer the electric power source question, mine operations in Alaska utilize site-specific solutions that best fit the location and logistics. Most mine operations either use diesel-fired generators installed on-site or have linked into the existing regional power grid.

But some mine operations, including the Red Dog zinc and lead mine in Northwest Alaska and the Donlin Creek gold project in Southwest Alaska, are researching alternative energy options, including shale gas and wind, for future power development.

While a desire to operate in an environmentally friendly manner is one motivation, lack of electric infrastructure in Alaska is the driver. The state's existing electric grid that runs along the Railbelt currently serves three large-scale mines but misses many mineral deposits in Alaska that need an industrial source of electric power generation.

RED DOG RESEARCHES REGIONAL GAS RESOURCE

Included in those off-grid operations is Alaska's largest mine operation, the Red Dog zinc and lead mine located near the coast of the Chukchi Sea in remote Northwestern Alaska. There, electricity is provided by eight on-site diesel-fired generators, each capable of generating 4.5 megawatts of power.

About 14 million gallons of diesel is burned each year to provide the required electric power for Red Dog, according to Jim Kulas, environmental superintendent at Red Dog.

Another 4 million gallons is used by the operation's fleet of heavy-duty mining equipment.

Those diesel costs at Red Dog have grown substantially in recent years, both in the amount of total dollars spent on the petroleum-based fuel and in the percentage of the mine's operating costs.

"In 2001 our diesel fuel cost was $18.3 million, 15.5 percent of operating cost," said Kulas. "Regarding diesel for 2006, it was $30.2 million, 18 percent of operating cost. For 2007, we are expecting a slight increase for the year in both fuel cost and percent, a few million more dollars and a couple percentage points (of operating costs)."

Mine managers hope to eventually replace most of that diesel-fired electric power generation with a local source--shale gas, which was initially discovered during mineral exploration drilling in the late...