Remote Industrial power generation: mine operations eye natural gas potential.

AuthorLiles, Patricia
PositionMINING

For more than a decade, managers at the Red Dog Mine in northwest Alaska have been slowly but steadily advancing a minerals exploration project. But unlike most drilling and geological studies conducted at Red Dog, the world's largest producer of zinc, this long-term program is targeting natural gas as the natural resource to be extracted.

Red Dog's operating team hopes to find in a known shallow shale rock formation enough natural gas to eventually replace some or all of the 14 million gallons of diesel consumed by the hard rock mine each year for its electric power generation.

"We've been working on this program since the late 1990s, and it has culminated in this review of all the information we've gathered," said Jim Kulas, manager of environmental and public affairs at Red Dog. "Right now we have our consultants doing a reservoir analysis. The outcome will determine our next steps."

Availability of natural gas from a local source would not only cut the mine's operational costs, but also provide cleaner emissions for the industrial operation, he noted.

"Our power generation costs could be offset," Kulas said, in a mid-February telephone interview. "We're burning diesel, so we are affected by the rise and fall of that commodity. It's not too bad now, compared to a year ago."

Other mine operations and mine developments in Alaska are considering the economic and environmental potential that natural gas could provide. Those include existing operations like Fort Knox and Usibelli, which currently buy electric power off the state's Railbelt grid, and development projects like Donlin Creek and Pebble.

"Regardless of being on the Railbelt grid, we still purchase significant electricity as a retail customer," said Bill Brophy, vice president of customer relations at the Healy-based Usibelli Coal Mine, which participated in a wildcat gas exploration well drilled last summer in the Nenana Basin. "So if any local gas were to be discovered, and prove more affordable to use to generate our own power on a wholesale or small scale, it would clearly be logical for us to pursue that."

SUMMER SEALIFT SETS COST

Reservoir analysis is anticipated for the Red Dog shale gas program. Unlike diesel fuel purchasers on the state's railroad network, road or year-round barge system, Red Dog does not immediately realize drops in the cost for fuel. That's because the mine's fuel supplies, along with other consumable products required in the production of zinc and lead...

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