Lawmakers briefed on Ambler, Juneau road projects
Legislators were brought up to speed on $900 million worth of work on two of the road proposals on the state’s ever-growing list of mega projects at a March 6 committee hearing.
The Joint Transportation Committee heard from Alaska Industrial Development and Export Authority leadership on the Ambler Road project in Northwest Alaska and from the Department of Transportation and Public Facilities regarding the Juneau Access road.
AIDEA Deputy Director Mark Davis told lawmakers that the authority took over work on the proposed corridor to the Ambler Mining District from DOT last June so the state’s infrastructure financing gurus could investigate options beyond traditional capital appropriation funding for the project.
The road would provide access to four copper, zinc, lead and silver deposits that stretch for about 75 miles between the Brooks Range and the upper Kobuk River.
Exploration of the deposits has so far been led by NovaCopper Inc., which owns the rights to the largest copper claim known as the Arctic deposit. NovaCopper has also teamed with NANA Regional Corp. on exploring the Bornite deposit, just south of the main Ambler claim belt.
A February 2013 report from NovaCopper estimated the Bornite deposit holds roughly 2.4 billion pounds of copper. In July of last year the company issued a preliminary economic assessment of the Arctic deposit that estimated a total resource value of between $619 million and $1.4 billion. The final version of that report, released in September, projected mining and income tax payments to the state of $273.4 million over a 12-year mine life.
“Without a road the mines cannot be developed,” Davis said.
The Ambler Road would run west for approximately 200 miles from near milepost 135 of the Dalton Highway and give any Ambler-area mines that are developed rail access in Fairbanks. There, AIDEA would likely partner with the Alaska Railroad to build a small ore terminal, Davis said.
DOT took up the project in 2010 when it began reconnaissance studies on the corridor. Since then, the state has put $17.75 million towards the Ambler Road and Gov. Sean Parnell has asked for an additional $8.5 million in his proposed fiscal 2015 budget.
Rough cost estimates have put the road in the $400 million range. Davis said AIDEA has value engineered DOT’s two-lane proposal down to a one-lane industrial road that should cost “significantly less,” he said.
If AIDEA can secure private funding for the Ambler Road and avoid using public money for construction, its classification as an industrial road could allow restricted use and lower costs.
One or more partners would be sought for all construction and maintenance costs, Davis said, similar to what AIDEA has done with the Red Dog mine road north of Kotzebue.
“The rationale is to put some of the construction and design on the private sector,” he said. “They tend to be more innovative; they tend to be quicker; they tend to be less expensive than the government.”
By starting the National Environmental Policy Act environmental impact statement process this year, environmental permitting could begin in 2016, with construction in 2019, he said.
Davis said bonding the state’s portion of work — possibly up to $90 million — could mean no other state contributions would be needed beyond the NEPA process. AIDEA estimates it will need between $15 million and $21 million beyond what Parnell has proposed until permitting is complete.
NovaCopper and AIDEA have a memorandum of understanding to keep each other updated on work, given the ties between the road and mine development, according to Davis.
This year, AIDEA is continuing discussions about the subsistence, access and economic impacts of the road and mines with area villages, he said. Also, the authority will contract again with DOT and the University of Alaska on geotechnical and environmental impact study work.
Years from now, if the road is built and all activity in the Ambler Mining District has wrapped up, Davis said there are multiple options that could provide increased public access on the road. Those decisions will be made during the NEPA process, he said. The first half of the 52-mile Pogo gold mine road near Delta will open to the public once the mine is closed, he said.
Lois Epstein, engineer and Arctic program director for The Wilderness Society, testified before the Transportation Committee and raised concerns about how fast the state is moving on the project.
“The administration has gotten ahead of itself on Ambler Road,” she said.
Before the state puts any more money towards Ambler development, Epstein said there should be clear facts about the viability of the mine prospects and the support garnered from area villages.
She questioned whether the state would be able to find private partners to finance enough of the road to justify the estimated $273.4 million return in taxes.
NovaCopper’s July 2013 report justifies moving forward with a pre-feasibility study, the company has stated.
Epstein said the villages of Bettles, Evansville, Alatna and Allakaket all recently passed resolutions stating positions against the proposed road.
One of the biggest concerns area residents have is how the east-west road would impact caribou migration patterns, she said. The Red Dog mine road, which has been promoted as an example of responsible resource development, runs north-south and could affect herds differently, Epstein said.
Rep. Craig Johnson, R-Anchorage, said the direct return on investment the project could have is secondary to the benefits of job creation in the very rural region and all but dismissed Epstein’s testimony.
“I just hope that at some point we get to see the benefits of development testified to,” Johnson said. “I know we’re looking at specifics, but at some point I think we also need to look at the positive impacts that jobs, and creation of jobs and access to less expensive energy plays in this and we can’t just deal with a piece of dirt turned over and a caribou having a good road to walk on north and south instead of having to cross east and west.”
In his testimony, AIDEA’s Davis said the possibility of ice roads used to deliver lower-cost fuel to area villages off of the Ambler Road exists if the road is built.
Greta Schuerch, government relations coordinator for NANA, said the state’s partnership with the Native corporation on Red Dog stands as a successful model for Ambler, but that everyone still needs more information on the Ambler project before decisions are made.
Juneau access road
Extending a road almost, but not quite, to Skagway from Juneau was the second topic for the Transportation Committee.
DOT Division of Program Development Director Jeff Ottesen said extending Juneau’s Glacier Highway 48 miles north to the Katzehin River, about three quarters of the way to Skagway, would save the state untold millions in the coming years. The savings would come from retiring one of the state’s mainline ferries without replacing it and the lower maintenance cost of a road versus a 400-foot ferry.
“One thing about a road, is that most of that first investment is retained over decades and decades and decades,” Ottesen told the committee. “It doesn’t wear out; it’s not steel that corrodes; it’s not engines that wear down.”
Over 50 years, building and maintaining a mainliner ferry costs upwards of $1.4 billion, even after money recovered from fares is factored in. A November cost analysis put the road “right at $500 million,” Ottesen said.
The state put $4.6 million towards the project in the current fiscal year and Parnell has $55 million for it in his budget.
Currently, DOT is working with federal agencies to complete a supplemental environmental impact statement, or EIS, needed after the 9th Circuit Court of Appeals ruled in 2011 that the state’s original document failed to consider the possibility of improving service with the existing ferries and terminals.
The road would end at the Katzehin because the National Park Service deemed the area around White Pass to be a national historic resource and an area that can’t be impacted based Federal Highway Administration regulations. That means the “day boat” ferries on the verge of being built for running Lynn Canal would run up to 10 times per day between a ferry terminal at the end of the road, Haines and Skagway.
DOT projects that activity would increase vehicle capacity in the corridor nearly 10-fold by 2020 — anticipated completion of the two-lane road — and demand by more than 18 times from 71 vehicles to more than 1,300 vehicles traveling the route per day. Additionally, travel time between Skagway and Juneau would be cut in half, from an average now of about 7.2 hours with wait-time, to about three hours.
Gary Hogins, DOT’s lead on the project, said the traffic added to Juneau’s road system would be “insignificant.”
Elwood Brehmer can be reached at [email protected].