Chuitna project could be economic boon to Kenai Peninsula

Posted: Monday, December 18, 2006

The Chuitna Coal Mine project would mean hundreds of jobs and millions in capital investment, and with Kenai as the work force embarkation point, many mining employees could choose to live on the Kenai Peninsula, said Bill Popp, borough Mayor John Williams’ liaison to the energy industry.

While most of the coal is destined for overseas markets, coal supplied to local markets could help feed the energy needs in Southcentral Alaska and diversify the energy base for power generation in Cook Inlet, Popp added.

“On the flip side, obviously we have to look very carefully at the technologies that are going to be used to generate power for the coal gasification process,” he said. “But from the get-go, as a purely export-based facility, we see it (Chuitna) as being a positive for the Kenai Peninsula Borough.”

Agrium USA might need as much as 10,000 metric tons per day for its Kenai Blue Sky gasification process, Popp noted. Perhaps even more Beluga coal might be used in coal-to-liquids manufacturing “if that was to get off the ground,” he said.

The idea of an Alaska coal-to-liquid plant is in preliminary studies funded by the Chinese Petroleum Corp. of Taiwan ($1.5 million) in conjunction with the Alaska Industrial Development and Export Authority and a company called Alaska Natural Resources-to-Liquids LLC. Such a plant would produce synthetic fuels and other products from Beluga coal.

Among the major economic challenges in using coal — either by burning it for power generation or in a gasification process — is what to do with the daily production of perhaps hundreds of millions of cubic feet of carbon dioxide, a greenhouse gas. Sequestering it underground is the most probable destination for the gas.

“It has to go somewhere,” Popp said.

But that CO2 could be turned from a “pure cost center” into a profitable product if it could be sold to the oil industry, which would pump it into the aging, marginal oil fields of Cook Inlet to enhance oil recovery.

Popp said current estimates suggest there could be as much as 300 million barrels of oil that could be recovered over the next couple of decades in this way.

The Beluga coal resource has a very long life expectancy, Popp said, even with the proposed Chuitna mine.

“The issue is trying to promote a balance of technologies that can make use of that resource,” he said. “The Kenai Peninsula Borough would, obviously, support value-added manufacturing within the borough as opposed to shipping out raw material. Coal gasification, coal-to-liquids, even coal-fired power generation would fit that definition.”

It is becoming ever more apparent that there is little room for complacency regarding future energy supplies for the Kenai Peninsula and Southcentral Alaska. Natural gas now generates over 70 percent of the electricity and heat for Alaska, Popp said.

“That’s hugely significant. For utilities, we have probably no more than a seven- or eight-year supply before we cross that threshold where demand exceeds availability,” he said. “We can fall back on LNG imports. That’s an option. We can continue to explore. It only seems prudent to diversify your energy base.”

That includes coal.

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