Ambler road work resumes; state closes on utility purchase

Gov. Bill Walker’s administration has lifted a spending freeze on the controversial Ambler Mining District road, which will allow the Alaska Industrial Development and Export Authority to spend the $3.6 million it has for early work on the project.

“As we wrestle with a $3.5 billion deficit, it’s important that we examine all spending,” Walker said in an Oct. 21 statement. “With the Ambler road project, the $3.6 million had already been appropriated, so this clarification allows the project to progress to a natural stopping point instead of (being) stalled mid-step.”

AIDEA spokesman Karsten Rodvik said the money would allow the state development authority to complete the environmental impact statement, or EIS, scoping process, which could take up to a 18 months.

The scoping process is used to determine the appropriate contents of the EIS. It involves gathering significant input from the stakeholders of prospective development.

On Dec. 26, 2014, Gov. Walker halted state spending on six large state projects mostly in preconstruction phases of development to evaluate their merits as the state budget situation worsened. The Ambler road is the last project to be resolved.

If constructed, the road to the Ambler Mining District would be a roughly 220-mile industrial use gravel road from the Dalton Highway west to the mining district located along the southern edge of the Brooks Range in Northwest Alaska.

Financing construction of the road would likely be the responsibility of mine developers in the area, who have said the it must be built to make mining the multi-metal deposits financially viable.

NovaCopper, a Vancouver-based company, has spent more than 10 years evaluating its claims in the Ambler Mining District and is currently conducting a feasibility study for a primarily copper mine.

NovaCopper CEO Rick Van Nieuwenhuyse said in a formal statement he is happy with the administration’s decision to move into the EIS and that NovaCopper will work with the state to advance the permitting process.

Chair of the Brooks Range Council, John Gaedeke, urged the AIDEA board to stop the project because it would benefit a Canadian mining company while area villages oppose it.

How the mine would impact water quality in the Upper Kobuk drainage and how the road would affect the migration of caribou relied upon for subsistence have been among the concerns raised by locals.

“To spend millions more on scoping now suggests that we wasted the last two years (of public meetings) or you’re not listening to the villages and their residents,” Gaedeke said during the public comment period of the Oct. 22 AIDEA board meeting.

The Brooks Range Council was formed in 2012 by residents along the road corridor to oppose the project.

To date, $26.25 million has been appropriated by the state to the project since the 2011 fiscal year. AIDEA is leading the state’s work on the proposed road, and the $3.6 million is from past appropriations, the remnants of which total about $8.1 million, according to an Oct. 15 memo to AIDEA from the Office of Management and Budget.

AIDEA would still additional funding up to $6.8 million to complete the EIS beyond the scoping process.

Interior Energy Project update

AIDEA is officially the proud owner of Fairbanks Natural Gas.

The state development authority took ownership of Pentex Alaska Natural Gas Co., which owned Fairbanks Natural Gas and other related companies Oct. 20 when the Regulatory Commission of Alaska formally approved the sale.

A tentative deal between AIDEA and Pentex leadership was announced in January. The $54 million sale total includes the Titan LNG plant — a Pentex subsidiary — located on Point MacKenzie, which supplies Fairbanks Natural Gas.

Attorney General Craig Richards denied an agreement earlier this year in which Pentex would have sold the Titan plant to Hilcorp Energy subsidiary Harvest Alaska. That deal also included a 10-year LNG supply contract, which Richards found could have limited the access of other producers to the Fairbanks market and potentially shut off access to cheaper gas for Fairbanks Natural Gas customers.

Harvest is also one of five finalists to supply the Interior Energy Project with liquefied natural gas in the second phase of the project.

Going from private ownership under Pentex to a public entity under AIDEA is expected to save FNG customers 13 percent on their gas bills, AIDEA officials have said. The AIDEA board will have Fairbanks Natural Gas rate adjustment proposals to consider in December, staff said at its Oct. 22 meeting.

Now, AIDEA is preparing for a Nov. 4 Interior Energy Project public meeting at the Pioneer Park Civic Center in Fairbanks. Each of the five project finalist proposers will pitch their plans to get Cook Inlet, North Slope or imported natural gas to the Interior and answer questions in a town hall-style meeting, according to project leaders.

A final plan will be recommended to the AIDEA board at its Dec. 3 meeting and a special meeting to select another Interior Energy Project partner is tentatively scheduled for Dec. 17.

On Nov. 9 a 13,000-gallon LNG tanker trailer is scheduled to arrive at the Port of Anchorage. The tanker, built by Seattle-based trucking supplier Western Cascade could improve the economics of the Interior Energy Project if its test runs go well.

Trucking LNG from Southcentral to Fairbanks costs FNG up to $3 per thousand cubic feet, or mcf, of gas, according to CEO Dan Britton. That expense is about 20 percent of the $15 per mcf target price for consumers of the Interior Energy Project.

By increasing the carrying capacity of each tanker-truck over the 10,000-gallon tankers Fairbanks Natural Gas currently uses, LNG transportation costs could be directly cut by up to 30 percent.

The Alaska Department of Transportation and Public Facilities has not yet approved the 13,000-gallon LNG trailer for commercial use in the state.

AIDEA board member and former Fairbanks state senator Gary Wilken said the Interior Energy Project team needs to use the trailer as a “campaign sign” as further proof that more natural gas is coming to the region.

“That trailer to me is an indication of progress; it’s an indication of the future of natural gas in Interior Alaska,” Wilken said at the Oct. 22 meeting. “We need to use that trailer as a tool to see that this thing is real. You don’t see pipe in the ground — you do see that trailer. It’s big, it’s impressive and it’s something that people can touch. They need to know that this is real. They need to know that something is happening in Fairbanks and they have to start thinking about conversions, which are so important,” to the feasibility of the project.

Elwood Brehmer can be reached at [email protected].

Updated: 
11/24/2016 - 3:31pm