People working on studies of in-state gas demand for the pipeline seem to assume that coal-fired power plants in Interior Alaska, Usibelli's prime market, will switch over to gas.

But the coal company, which has produced at Healy for 65 years, thinks it will easily be able to beat gas on price when it comes to power generation.

Steve Denton, Usibelli's vice president for business development, believes his company could supply coal to a new mine-mouth coal-fired power plant, such as one proposed by Usibelli at Emma Creek, for $1.50 to $2 per million British Thermal Units, which could be one-third to half the cost that gas brought to Interior Alaska from the North Slope is likely to cost.

That's for a power plant near the mine in Healy. Coal shipped from the mine to the Fairbanks-area power plants costs more because of the Alaska railroad charges. Still, coal will be competitive compared with gas from the Slope, said Bill Brophy, Usibelli's vice president of customer relations.

There are no guarantees a gas pipeline will be built, of course, and in any event its completion is 10 to 12 years away. However, the state's Southcentral-Interior power grid needs new generation capability before then with a mix of fuels that will include gas from Cook Inlet as well as coal and renewable energy like hydro and wind.

Still, coal will remain the most economical fuel for Alaska and the rest of the nation, Denton said. New clean-coal technologies are reducing harmful emissions from coal-fired power plants, too, and the industry is working on ways to capture carbon dioxide, a greenhouse gas many believe is linked to global warming.

There are huge coal resources in the Interior and Southcentral parts of the state that could help meet the state's long-term power needs. There is an operating coal mine in Healy - Usibelli's mine - and a new mine planned at Beluga, 50 miles west of Anchorage, by the Texas-based Bass-Hunt group.

There is a lot of coal. Bill Brophy, Usibelli's customer relations vice president, says his company has resources sufficient for 30 years at its current production rate on currently permited lands from existing state coal leases, and potential for more coal to be developed in the region when there is a need.

Usibelli owns other coal deposits in Alaska. In 1997 the company purchased coal leases at Wishbone Hill, in the Matanuska-Susitna Borough, for possible future mining. The Wishbone Hill leases cover 8,000 acres that contain about 14 million tons of coal. The coal is of a higher bituminous grade, where Usibelli's coal at its Healy mine is a lower-grade sub-bituminous coal.

In addition to Usibelli's resources, there are estimated coal resources of more than 1 billion tons of sub-bituminous coal in the undeveloped Beluga deposits.

There are also very large coal deposits on in the western Arctic Slope on lands owned by Arctic Slope Regional Corp. ASRC is now assessing the possibility of mining coal in this remote region in partnership with BHP Billington, a major natural resources company. Because of its remoteness, development of Arctic coal is will be well into the future, however.

While Usibelli believes it can hold its own in competition with gas from the North Slope as a power generation fuel, the company isn't complacent about its future, either.

The company is working on several new ideas for selling and using its coal. One possibility the company is exploring for using its coal is a large 200-megawatt power plant at Emma Creek, which is nearer the Jumbo Dome coal, and which is close to the existing Anchorage-Fairbanks electric intertie.

Because of its location near the coal supply and the power grid, a coal-fired power plant at Emma Creek that uses the latest clean-coal technology could be an economical source of new power supply, Denton said.

Another concept being investigated is coal gasification, or the direct conversion of coal to a synthethis gas that can be used, like natural gas, for power generation, or the making the products, Denton said.

Usibelli mines about 1.2 million to 1.5 million tons of coal yearly, and employs about 95 to 100 people. The mine supplies power plants Fort Wainwright and Eielson Air Force Base, the Clear defense radar facility, the University of Alaska Fairbanks and the coal power plant Aurora Energy, all of which are in or near Fairbanks.

Denton said the company has also exported coal to power plants in South Korea and Chile. Sales to South Korea have dropped off but Usibelli is still planning shipments later this year to Chile.

He said one of the challenges in the export market is that while Pacific Rim coal prices are rising, the price of fuel oil used by ships carrying coal is rising even faster. However, Chile's only alternative supply of coal is Indonesia, which involves shipping distances even farther than Alaska.

One of the key problems for Usbelli in export markets is the high moisture content of the coal, about 25 percent. That means that one-fourth of whatever is shipped is water. Beluga coal, near Anchorage, has similar water content.

There have been many attempts over the years to develop methods of removing moisture from the coal, but Denton said most of these have not worked out. Either the coal reabsorbs the moisture, which defeats the exercise, or it becomes unstable and subject to spontaneous combustion, which is something to be avoided.

“The K-Fuels technology is about as close as anyone has come to something that might work in removing moisture, but it is very expensive,” Denton said. K-Fuels is a technology company that has proposed use of its method at Beluga and built a test plant in Wyoming as a demonstration of its process.

One of the big selling points for Usibelli coal, as well as a mine built in Beluga, or someday on the Arctic Slope, is its extreme low sulfur content of the Alaska coals. That means burning the coal in a power plant puts less sulfur dioxide, a major pollutant, into the atmosphere.

This is the main reason why Chilean power plant operators, and those in South Korea, continue to be interested in Usibelli coal. They are able to blend the low-sulfur coal from Alaska with other coal to meet local air quality standards.

Most geologists believe the low sulfur content of Usibelli's and other Alaska coals came about because of the relatively young age of the Alaska coal and conditions existing on earth at the time. Most of the world's coals were formed much earlier, about 150 million to 200 million years ago, during times of major volcanic activity, when large amounts of sulfur were being spewed into the atmosphere. The volcanic sulfur was absorbed in the ancient vegetation, which later became coal.

When many of the Alaska coals were formed about 8 million to 20 million years ago, geologists surmise there was less volcanic activity, less sulfur in the earth's atmosphere and hence less sulfur embedded in the coals that were eventually formed.

The Healy coal formations would be deeply buried and inaccessible to mining, however, were it not for the forming of the Alaska Range 8 million to 10 million years ago. The collision of major plates of the earth's crust, in this case the Pacific plate with the North American plate, led to the uplifting of what were once broad plains to become the rugged mountains of the Alaska Range, and including Mount McKinley, North America's highest peak.

The uplift, bending and folding actions of the rocks lifted the coal seams, and their later exposure at the surface as rivers and creeks eroded the rock and soil covering them, attracted the attention of early prospectors at the turn of the century.

The propectors were looking for gold, but quickly began using the coal as fuel. Coal mined from exposed seams along the Yukon River was used, along with wood, to power steamboats on the river that carried gold miners and their supplies.

Underground coal mines were developed in Southcentral Alaska, and later near Healy, to provide fuel for early communities, the Alaska Railroad when was built, and for the military bases later built in the Interior and Southcentral.

When Emil Usibelli, the founder of Usibelli Mines, started the company in 1943 in Healy, his innovation was to develop the relatively shallow coal seams with a surface mining method that was then just beginning to be used in the U.S.

Usibelli's mine was to be the first, and so far the only, Alaska surface coal mine.

Most previous coal mines, including those in Alaska, were underground mines, where the coal was extracted from tunnels burrowed into a below-ground coal seam from the surface. The work was labor intensive and often dangerous.

Other Alaska coal miners teased the senior Usibelli when he first started his surface mine in Healy, Bill Brophy said. Some called him a “farmer” of coal rather than a miner.

But Usibelli was successful in his approach. The underground Alaska coal mines eventually ceased operations.

In surface mining, surface soil and rock, called the “overburden,” was removed with heavy earth-moving equipment to expose the coal seams, which there then mined with heavy equipment. Surface mining became possible only with the development of large earth-moving equipment such as heavy bulldozers and shovels.

Surface mining is safer than underground mining and can be much more economical. Today about 60 percent of U.S. coal production comes from surface mines like Usibelli's, Brophy said. The remaining 40 percent from underground coal mines.

At Usibelli, three coal seams are being mined, with a layer of about 100 feet of soil and rock to the top of the first coal seam, which is about 20 feet thick, and another layer of 120 feet of “inner-burden” rock and soil to the second coal seam. Usibelli must mine down to about 400 feet to tap all three coal seams, Denton said.

The “stripping ratio,” or how much dirt and rock is moved relative to coal, is what determines whether surface mining is profitable, Denton said.

To keep costs low, Usibelli uses the largest mobile earth-moving equipment in Alaska, including a monster dragline Healy-area schoolchildren named Ace-in-the-Hole.

The huge machine has a 325-foot boom and a 240-foot reach, and is used to remove the overburden over coal seams. It can move 33 cubic yards of material in one bucket and 24,000 cubic yards in one 24-hour period.

Once the overburden is moved away, the coal seams are mined with small shovels and backhoes and moved in trucks capable of carrying 150 tons or more to a “tipple,” or a facility that loads the coal on trains that carry it to customers.

At Usibelli the stripping ratios for mining are favorable, but the mine managers must be diligent in planning to keep them that way, said Keith Walters, Usibelli's general manager.

Stripping ratios in the Poker Flats mining area, where Usibelli has completed mining and is now mostly reclaimed to near its original state, was about 5 to 1, meaning five cubic yards of soil and rock had to be moved for each ton of coal extracted, Walters said.

At Two-Bull Ridge, where mining is now being done, the stripping ratio is better, about 4 to 1, Walters said. The stripping ratio is expected to be better, possibly 2.5 to 1, at Jumbo Dome, a new area Usibelli plans to mine, after Two Bull Ridge mining is complete, he said.