Port MacKenzie project back on track


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Port MacKenzie Director Marc Van Dongen overlooks the future site of a mile-long rail loop terminating the 32-mile rail extension from Houston. Van Dongen said he envisions the site as a place for commodity storage and business development.

Photo/Elwood Brehmer/AJOC

Marc Van Dongen is a big man with bigger plans. As director of Port MacKenzie he oversees all operations across Knik Arm from Anchorage, including the largest project at the port since it was built in 1999: the rail extension from Houston to Port MacKenzie.

Work on the rail line had been suspended due to an Oct. 1 stay issued by the U.S. 9th Circuit Court of Appeals. On Nov. 28 the three-judge panel reversed the stay, allowing work to resume and denying a petition for review filed jointly by the Sierra Club and Cook Inletkeeper.

The groups questioned the Surface Transportation Board’s 2011 finding that the rail extension project met all National Environmental Policy Act, or NEPA, guidelines.

The court’s written opinion states that “the (Surface Transportation Board’s) ‘purpose and need’ statement complied with NEPA and that the Petitioners no longer raise ‘serious questions’ on this point.”

The ruling also cited an estimate — provided by Alaska Railroad Corp. and the Matanuska-Susitna Borough — of $10 million to $12 million added to the cost of the publicly funded project if the work stoppage continued as a reason to lift the stay.

“There’s a lot of false claims out there about how we’re hurting wetlands and the fish, and by what they’ve got planned it’s anything but that,” Mat-Su Borough Public Affairs Director Patty Sullivan said.

With the ruling, Sullivan said the borough can resume advertising contracts for the project and 200 construction workers will be able to return to work at winter’s end.

The quicker-than-expected ruling allowed the project to stay on track.

“By the end of 2016, that’s what our goal is, to have the rail line completed,” Van Dongen said. “So far, we’ve received 54 percent of the funding for the project. We’re asking for the full amount in the next legislative cycle. If we get it, we can get the project done faster.”

The borough needs $126 million to fully fund the 32-mile, $272.5 million undertaking.

Over a 50-year period, the rail line is expected to provide a 23-fold return on invested state dollars if it’s fully utilized, according to a University of Fairbanks study.

Van Dongen said that filling the rails won’t be an issue and he believes adding a new export route will spur mine development along the rail corridor. Talk of limestone and gold expansion near Livengood and Fairbanks is well under way, he said.

“It’s going to impact the Interior more than it impacts the (Mat-Su) Borough. These mines, as they’re developed, there’ll be a lot more jobs created in the Interior from that,” Van Dongen said. “That’s where the jobs are going to be, and on the railroad. It’s a positive thing what we’re doing here. It’s a makes-sense sort of thing.”

A 2011 University of Alaska Fairbanks study of the rail line looked at revenue generated by shipping 3 million tons of materials yearly to Port MacKenzie.

Estimating 3 million tons of exports yearly is based on port operating capacity with current infrastructure, one deep-draft dock. Van Dongen said the next project in line is adding a second deep water landing.

The study estimates State of Alaska revenue at $70 million per year in royalties and fees, with another $72 million being generated by the Alaska Railroad. For the railroad, that represents a nearly 40 percent increase total revenue over 2011. Port income is projected at roughly $5 million per year.

Van Dongen said he has briefed the legislature and the governor as to the benefit the rail line will provide Alaska.

“They understand the benefits, the jobs, revenue and economic development available to the state by having a rail line come down to our port.”

When finished, Van Dongen said the rail line will terminate with a mile-long loop at the port where companies “can stockpile commodities on both sides of the rail.”

Port MacKenzie offers 14 square-miles of land available for development and material storage. Van Dongen noted that large quantities of material could be accumulated to wait for large ships or optimal shipping times.

Vitus Marine, the company that coordinated the emergency fuel shipment to Nome last winter, is set to construct tanks for storing 5 million gallons of fuel at the head of the Port MacKenzie rail loop.

Initial exports shipped down the rail will be coal from the Usibelli coal mine near Healy, Van Dongen said.

Lorali Simon, spokeswoman for Usibelli, said the company currently ships about 1 million tons of coal out of Seward every year, and is excited about the chance for expansion.

“We would love to be able to use Port MacKenzie as a supplemental port for Healy coal. We don’t have any intention of dropping the Seward facility and only using Port Mackenzie, but we would like to use both. That certainly gives us the opportunity to increase our export,” she said.

Though large ships have delivered to Port MacKenzie, the current dock and conveyor system is designed primarily for exporting raw materials. Adding to the existing infrastructure would ease the importing of goods and make future port operations nearly limitless, Van Dongen said.

Plans for the expansion add 1,450 feet to the current 1,200-foot deep-draft dock. A 20-acre gravel pad and second conveyer will make additional exporting or roll-on roll-off importing simple exercises, he said.

“It’s eight to 10 years down the road before I’d expect to have that project completed,” Van Dongen said. “I intend to be retired, sipping mai tais somewhere, but I intend to get the permit for it.”

Despite the long-range timeline for completing a second deep-draft dock, Van Dongen said the need for it is obvious when one looks at the potential it holds for Alaska with goods both coming and going. The need magnifies if the Alaska Stand Alone Pipeline is built.

If built, the pipeline would terminate at a site roughly 20 miles from Port MacKenzie. The line would carry twice as much LNG as Southcentral initially needs, providing export opportunities.

“There’d be a long-term export of natural gas liquids, that’s a reason I’m trying to get a permit to expand our dock because we could bring in LNG ships to export,” Van Dongen said.

The port commission sees the space at Port MacKenzie as a prime location to build a gas processing plant if the pipeline comes down from the North Slope, he said.

Van Dongen pointed to a partnership with Klondike Concrete to import cement as a glimpse of what expanded port operations could mean for Alaska.

“Three years ago we started importing cement. With the first ship we brought in, guess what happened to the price of cement. It went from $176 a ton down to $125 a ton,” he said.

In early November the port proved it could move scrap steel, a commodity spread throughout Alaska. When the Thai ship Billesborg left Port MacKenzie with 8,000 tons of steel for South Korea, it was the first time a deep-draft vessel had carried scrap steel from Southcentral and the first time the steel went directly to its destination.

Previous exports of steel left Anchorage and barged to Seattle, where they were consolidated before being sent to the West, Van Dongen said.

“They proved that we could do it. I expect future shipments — you’ll see bigger ships,” he said. “You save over a quarter to a half-million dollars (shipping direct) versus bringing it down to Seattle.”

NPI LLC is one of several companies currently leasing property at Port MacKenzie. NPI spent $7 million to build the half-mile long, multi-use conveyor system at the port prior to exporting wood chips to South Korea in 2005. In 2010, the company coordinated a test-run coal shipment from the port, as well.

Van Dongen said the partnership with NPI to build the conveyor benefits everyone involved. NPI has exclusive rights to move materials on its conveyor and leases it out to other companies with materials to export. Usage fees are set by a group of five Mat-Su Borough and NPI individuals, with the borough holding the majority. It’s an example of the efficiency of the port and how to best utilize your assets, he said.

NPI Manager Dane Crowley said his company invested in the port because operations there look promising.

“(Van Dongen) has done a fantastic job in developing the infrastructure of the port. His future plans that he’s got laid out are all very well thought-out and certainly the rail extension to Port MacKenzie is going to be a huge driver,” Crowley said. “I really expect that we’ll see Port MacKenzie grow significantly in the next few years.”

Elwood Brehmer can be reached at elwood.brehmer@alaskajournal.com.

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