Jun20 07

R E V I E WRESOURCE

A PERIODIC PUBLICATION OF THE RESOURCE DEVELOPMENT COUNCIL FOR ALASKA, INC. www.akrdc.org

This Edition Sponsored By:

Extraordinary days in his-tory most often take on theappearance of ordinary days,and so it was on that gray,overcast morning of June 20,1977 at 10:26 a.m. whenpumps were started, valveswere opened, and the firstcrude oil from Prudhoe Bay –North America’s largest oilfield – flowed into the Trans-Alaska Pipeline System(TAPS) for its 800-mile jour-ney down the pipeline toValdez, where it would beloaded aboard a tanker des-tined for the U.S. west coast.

It was the eve of the summersolstice, but it was chilly atPrudhoe Bay as scores of re-porters and dignitaries hud-

dled behind Pump Station 1 atMilepost 0, the beginning ofthe pipeline, waiting patientlyto witness the event.

For the field operators, BPand ARCO, it was a long-awaited moment that was theculmination of a major pushinto the Arctic that begannearly 20 years earlier, whentheir geologists venturednorth to probe this remotefrontier. For the companies’technicians, operators andothers working in the PrudhoeBay field, the day was anti-climactic. The major work –drilling the wells, getting theflow lines and other pipelinesconstructed, building and test-ing the production facilities –

had been done.They were ready. They

waited day after day for thosewords, the command: “PumpStation 1 is ready to receiveoil.”

For the U.S. news media,the startup was a TAPS startupstory rather than an oil fieldstory. How would the pipelineperform on its trial run? Whenwould the oil front reachValdez? The wager capturedeveryone’s imagination. Thefeat of barging oil field facili-ties thousands of miles fromthe U.S. west coast to theArctic Ocean; the massive effort of constructing thepower station and other oilfield facilities in a hostile

Arctic environment; themulti-billion dollar invest-ments needed to produce thatfirst barrel of oil, were for themost part unheralded.

In its remote spot near thetop of the world, Prudhoe Bay

Past issues of the Resource Review (1978-2007) are available at www.akrdc.org/newsletters/

I N S I D E

TAPS Anniversary 1, 4

Beluga Whale Listing/Quyana 3

Pebble: When To Decide 5

RDC Annual Meeting 6-7

Park Service Access Guide 8

Alaska Clean Coal 9

Alaska Gasline Act 10

RDC News Digest 11

(Continued to page 4)

Koniag, Inc.

PRUDHOE BAY“OIL IN!”JUNE 20, 1977

June 20, 2007, the eve of the summersolstice, marks the anniversary of animportant date in Alaska’s history — whenthe Trans-Alaska Pipeline System, or TAPS,received first oil from the Prudhoe Bay field.

By Frank Baker

Construction crews place a segment of the pipeline into the Tonsina River in 1975. At the time construction began in 1974, TAPS was the largest private constructionproject in the world with an estimated price tag of $900 million. When completed in 1977, final costs were over $8 billion. Please see TAPS facts on page 4.

The Resource Review is the official periodic publica-

tion of the Resource Development Council (RDC),

Alaska's largest privately funded nonprofit economic

development organization working to develop

Alaska's natural resources in a responsible manner

and to create a broad-based, diversified economy

while protecting and enhancing the environment.

Resource Development Council121 W. Fireweed, Suite 250Anchorage, AK 99503Phone: (907) 276-0700Fax: (907) 276-3887E-mail: resources@akrdc.orgWebsite: www.akrdc.org

Material in this publication may bereprinted without permission providedappropriate credit is given. Writer & Editor Carl Portman

Executive Committee OfficersPresident John ShivelySr. Vice President Rick RogersVice President Wendy LindskoogSecretary Scott ThorsonTreasurer Stephanie MadsenStaffExecutive Director Jason BruneDeputy Director Carl PortmanMembership Director/ Deantha CrockettProjects CoordinatorProjects Coordinator/ Marleanna SotoAMEREF Development Director

Page 2 June 2007 Resource Review www.akrdc.org

S E R V I N G A L A S K A

1997 2007

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A DIVISION OF YUKON-KUSKOKWIM HEALTH CORPORATION

I was fascinated when I read an actionalert on the website of the Center forBiological Diversity, a conservation or-ganization based in Arizona, urging itsmembers to support the proposed list-ing of beluga whales in Cook Inletunder the Endangered Species Act. Itread, “Bush’s friends in the fossil fuelindustry, who wish to build offshore oilrigs in the beluga’s critical habitat, areadamantly opposed to the whale’s pro-tection.”

I could only laugh. As most know,there have been oil rigs in Cook Inletfor over 40 years. In fact, belugas inCook Inlet have thrived with oil and gasexploration and development, commer-cial and sport fishing, vessel traffic,community wastewater discharges, andmore. The well-being of wildlife, in-cluding belugas, is of utmost concern toall Alaskans, including “Bush’s friendsin the fossil fuel industry.”

The agency responsible for thewhales’ oversight has identified the lonecause of the beluga population declineas the unsustainable subsistence harvestof the mid-90s. This has now been lim-ited to no more than two animals peryear.

But still, as the Center’s action alertimplies, development must be having a

big impact on belugas. Interestingly,these animals possess the lowest con-taminant level of any Alaskan belugapopulation in tissue sampling studies.It appears development and wildlife cancoexist. No surprise.

Fortunately, beluga whales in CookInlet are showing signs of a growingpopulation. A recent study has shownover 40 percent of the population isclassified as sub-adult, and not yet capa-

ble of sexual reproduction. When thesejuveniles start reproducing, watch out!But note, it takes three years of parentalinvestment to bring a new beluga intothe population. As I’ve often said,they’re not mice. It will take time.

Another interesting thing to ponderis the fact that the development com-munity has spent between $5 and $10

million alone in the last five yearsstudying the beluga whales in CookInlet. Does this sound like folks thatare opposed to the whale’s protection?

I dare ask, how much has the Centerfor Biological Diversity, or other conservation organizations for thatmatter, spent on the whale’s protection?Not on legal fees used to delay or stopresponsible development, but on goodhard science to learn more about the an-imals and their ecology.

Nearly 30,000 comments have beensubmitted on this listing to date, likelyall from websites like the Center forBiological Diversity. I urge you to sub-mit comments as well. However, I askthat you oppose the listing. Requestmore time for the whales to recover andencourage the agency to increase its re-search effort.

The comment deadline is August 3,and hearings will be held on July 19 inHomer and July 20 in Anchorage.

Additional information will be avail-able soon on our website. I can onlyhope the the same people reading theCenter’s website will read ours.

JASON BRUNE

(907) 276-0700 June 2007 Resource Review Page 3

Gunalchéesh! Quyana! Tsin'aen! Thank You!

To the sponsors, speakers, and attendees of RDC’s 32ndAnnual Meeting, I’d like to express my sincere gratitude.For those of you who missed the event, I am sorry. Youmissed a lot.

Hearing the stories of Bobbi, Marie, and Matthew and howtheir Native Corporations have made the commitment to responsible resource development without sacrificing theirtraditional ways of life was awe inspiring. Though not thesame as hearing them in person, copies of their speeches are available on our website at www.akrdc.org.

The Alaska regional corporations are the future of ourstate and RDC is proud and honored to call all of them members.

Opportunities for Alaskans.Hope for the future.Honoring the past.The models of responsible resource development these

companies have put forward are something for all of us toemulate.

Gunalchéesh! Quyana! Tsin'aen! Thank you!

A MESSAGE FROM THE EXECUTIVE DIRECTOR

BELUGA WHALES IN COOK INLET PROPOSED FOR ESA LISTING

Page 4 June 2007 Resource Review www.akrdc.org

has over the past 30 years told its own story through a partner-ship with Alaska that has benefited both the state and the indus-try. The State of Alaska has benefited from billions of dollars oftaxes and royalties; billions of dollars more from investment; thecreation of the Permanent Fund that has grown to more than $38billion; thousands of Alaska jobs and the emergence of manylocal companies that support the oil and gasindustry. Alaska has been a key supplier of energy for the UnitedStates. More than 15 billion barrels of North Slope oil have beensent to market in the U.S., accounting for an average 15-20% ofthe nation’s production for three decades.

But over the past 30 years Prudhoe Bay has yielded more thanoil, revenue and jobs. It has been a proving ground for oil fieldtechnology and Arctic engineering. It has been a one-of-a-kind,outdoor laboratory for environmental science.

Because of Prudhoe Bay, there are now 24 separate oil fieldson the North Slope – five of which are among the nation’s top 10largest producing fields. And despite the natural oil productiondecline of the big fields, the North Slope is today producingabout 800,000 barrels per day – a significant contribution toAmerica’s energy production.

Because of Prudhoe Bay, Alaska is poised to reap a new Arcticbounty – the trillions of cubic feet of natural gas lying beneaththe surface, natural gas that an energy-hungry America needs.

A few years after his moon landing on Apollo 17, former as-tronaut and New Mexico Senator Harrison Schmidt visitedPrudhoe Bay during winter. After being shown around the area,he commented, “if we can live and work here, we can go toMars.”

He got it right. In one sentence he revealed a deep under-standing of Prudhoe Bay’s importance to Alaska, the nation, andthe world. Prudhoe Bay has been a testament to what human be-ings can do when they set their mind to it.Frank Baker is a lifetime Alaskan resident, who has been writing and reporting forthe oil and gas industry for 30 years.

PRUDHOE BAY, TAPS TRANSFORM ALASKA

It was the discovery of the giantPrudhoe Bay oil field In 1967 that es-tablished Alaska as a world-class oiland gas province. Two years later theState of Alaska received a record $900million from the North Slope lease sale.With the discovery of Prudhoe Bay andthe building of the Trans-AlaskaPipeline System, oil and gas develop-ment became the economic driver forAlaska. The industry today accountsfor 90 percent of Alaska’s general fundrevenues. Since 1957, the state has collected over $72 billion from the industry in taxes and royalties.

• Diameter of pipe: 48 inches• Highest elevation: Atigun Pass, 4,739 feet• Length of line: 800.3 miles• River and stream crossings: 34 major, 500 others• Air temperature along route: -80F to 95F• Valves: 178• Vertical support members: 78,000• Time for pre�construction effort: 6 years• Years built: 1974-1977• Construction workforce: Total for project

was 70,000 (1969-1977) with a peak of 28,072 in Oct. 1975• Cost: Original estimate $900 million, final cost $8 billion+• Caribou: TAPS crosses the range of the Central Arctic

Herd on the North Slope and the Nelchina Herd in theCopper River Basin.

• Earthquake: On November 3, 2002 the pipeline with-stood magnitude 7.9 earthquake that was centered alongthe Denali Fault in Interior Alaska. It was among thestrongest earthquakes in North America in over 100 years.

• Oil throughput: More than 15 billion barrels since 1977.Peak daily throughput was over 2 million barrels per day in1988. Today nearly 800,000 barrels per day travel throughthe pipeline to its marine terminal in Valdez. Up to 20% ofU.S. domestic production has been shipped through TAPS.

• State revenue: Since completion, TAPS has accounted for84 percent of Alaska’s unrestricted general fund revenues.

• Pipeline operator: Alyeska Pipeline Service Company• Pipeline owners: BP (Alaska) Inc. 46.93%

ConocoPhillips Transportation Alaska, Inc. 28.29%ExxonMobil Pipeline Company 20.34%Koch Alaska Pipeline Company 3.08%Unocal Pipeline Company 1.36%

For more Alaska oil and gas facts,see www.akrdc.org

the factsTrans-Alaska Pipeline System

(Continued from page 1)

(907) 276-0700 June 2007 Resource Review Page 5

GUEST OPINION

PEBBLE PROJECT: WHEN IS RIGHT TIME TO DECIDE?

GLEN ALSWORTH, JR.

Opponents of the Pebble Project havebeen advertising a very strange message.They have been telling us that the timeto stop the Pebble Mine is now, before acompany applies for permits.

This concept is perplexing. The min-ing company will have invested tens – ifnot hundreds – of millions of dollarsworth of environmental and engineeringdata before it applies for permits. Whyshouldn’t Alaskans get the opportunityto review the information before wemake a decision? Only after the agen-cies have evaluated the data and the de-sign can we say whether the project iscompatible with our critical fisheriesand resources.

Because this message is so perplexing,it is easy to overlook the implicit mes-sage in advertisements and of those whooppose the project. That message is this:“Don’t trust the permit process. Oncethe company applies, the agencies willnever deny the permits.” This messageappears to motivate some who wish tosay “No” before the information isavailable.

History shows agencies do say “No”to projects. (See box at right developedby RDC). Alaska has a rigorous permitprocess. We will have adequate oppor-tunity to disapprove the mine if it failsto protect our resources.

There is a lot we do not know aboutthe Pebble Project:

The currently discussed design waspublished before the company really ex-plored the underground, high-grade,east zone. As a result, we do not knowif the mine will be an open pit mine, un-derground mine, or combination.

We do not know when the permit ap-plication package will be submitted. Itmay be years away before Alaskans canreview the proposed design andalternatives.

We do not even know what companywill apply for permits or operate a mineif it is permitted. Northern Dynasty hasindicated that it is currently marketingthe project. The owner may be a singleinternational mining company or a

consortium. Northern Dynasty may ormay not be involved.

With over 50 permits required for ahard-rock mine, there are numerous op-portunities for agencies to deny ap-provals. Perhaps the most importantbasis for denial would be if the minecannot protect water quality.

Both the state and federal govern-ments (the U.S. EnvironmentalProtection Agency and the AlaskaDepartment of EnvironmentalConservation) must agree that the minewill protect water quality. Both govern-ment entities are required to deny per-mits if the project cannot show it willprotect water quality. This is not a po-litical decision, it is a technical one. Ifthe agencies’ scientists do not agree thatwater quality is protected, the agenciesmust deny the permits.

Scientists’ predictions of future waterquality are not foolproof. Therefore,the agencies must evaluate the predictedwater quality, but they must also reviewcontingencies. The project must have a

safety net and back-up facilities in thesystem in case the predictions are wrongor a reasonably foreseeable accident oc-curs. In the critical location wherePebble is found, the project must notonly show that it will meet Alaska’swater quality standards, it must alsoshow there are back-up mechanisms inplace to protect water quality fromerrors in prediction or accidents. If theproject cannot do this, Alaskans andagencies have the obligation and legal re-sponsibility to deny permits for theproject.

But to do so now, before Alaskanshave had a chance to review the data anddesign, or even the technical and opera-tional capacities of the proposed operat-ing company, is wrong.

In the words of ancient KingSolomon, “He who answers a matter be-fore he hears it, it is a folly and a shameto him.”

Glen Alsworth Jr., is the mayor of the Lake andPeninsula Borough

Projects AbandonedQuartz Hill: In 1987, U.S. Borax abandoned $100 million+ molybdenum project (al-

most $180 million in today’s dollars). After the EIS evaluation, EPA would not authorizethe tailings system that the company said was necessary to develop the project.

Ryan Lode: In 1996, the owner of the Fort Knox Gold Mine acquired the Ryan Lodeproperty and began the process to permit gold mining. After an initial public meeting, thecompany realized that the environmental and neighborhood protections that the agencieswould require made the project uneconomic to develop. As a result, the company aban-doned plans to mine the property and reclaimed the site.

AJ Mine: Echo Bay Mining Company’s attempt to re-open the historic Alaska JuneauGold Mine near Juneau was dropped after the agencies refused to authorize a tailings sitein the Sheep Creek valley. The company began the process for submarine tailings disposal,but shut down the project for economic reasons before the agencies decision becameknown.

Projects ChangedIn addition to those above, there are many other projects where the agencies refused to

permit the company’s initial design, but the company was able to re-design the mine tomeet agency approval. Two out of numerous possible examples are below:

Pogo Gold Mine: State and federal agencies denied the company’s request to approvean exploration shaft, and then took issue with the company’s initial mine design. Bothtimes, Teck (now TeckCominco) was able to redesign the project to gain agency approval.

Illinois Creek Gold Mine: The company’s initial plans called for a road to the mine. Itre-designed the project to be a fly-in facility to mitigate agency and public concerns.

ALASKA PROJECTS REJECTED BY PERMITTING PROCESS

Page 6 June 2007 Resource Review www.akrdc.org

NATIVE CORPORATION LEADERS SPEAK BEFORE

SOLD-OUT RDC ANNUAL MEETING LUNCHEON

Above are RDC’s 2007-2008 officers. John Shively was re-elected to his fifth con-secutive term as president. Re-elected to additional terms were Rick Rogers,Senior Vice President, Wendy Lindskoog, Vice President and Stephanie Madsen,Treasurer. Scott Thorson, not pictured, was elected Secretary. At right are mem-bers of the new RDC Statewide Board of Directors. Joining the board this yearare Greg Baker, Westward Seafoods; John Binkley, Alaska Cruise Association;Joseph Everhart, Wells Fargo Corporation; Eric Fjelstad, Perkins Coie; Becky Gay,Colville, Inc.; Lee Horst, Northrim Bank; Bill Stewart, Chugach ElectricAssociation and Mayor John Williams, Kenai Peninsula Borough.

“Developing Our Resources While Honoring The Past”was the theme three Native Corporation leaders addressed before a sold-out crowd of 660 at the RDCAnnual Meeting June 19 in Anchorage.Matthew Nicolai, President, CalistaCorporation, Marie Greene, President,NANA Regional Corporation and BobbiQuintavell, President, Arctic Slope Regional

Corporation highlighted current operations, new develop-ment prospects and the benefits such development has

brought to their regions. They also spoke onthe balance they have struck between resource development and the need for pro-tecting the environment and maintaining traditional way of life for local residents.

NATIVE LEADERS SPEAK BEFORE 660 AT RDC ANNUAL MEETING LUNCHEON

Marie GreenePresident, NANA Regional Corporation

Matthew NicolaiPresident, Calista Corporation

Bobbi QuintavellPresident, Arctic Slope Regional Corporation

Photos by Judy Patrick

Shell Exploration & Production Co.Usibelli Coal Mine, Inc.

VECO Alaska, Inc.Wells Fargo AlaskaWestward Seafoods

Totem Ocean Trailer Express

AERO-METRIC, Inc. Agrium, Inc.

Alaska AirlinesAlaska Industrial Development

& Export AuthorityAlaska Railroad Corporation

Alaska USA Federal Credit UnionAleut Corporation

Alyeska Pipeline Service Co.At-Sea Processors Association

Bering Straits Native CorporationBristol Bay Native Corporation

CH2M HillChugach Alaska CorporationChugach Electric AssociationDowland Bach Corporation

DRven CorporationEvergreen Helicopters of Alaska

(907) 276-0700 June 2007 Resource Review Page 7

Barrick Gold Corporation/Donlin CreekBP Exploration (Alaska), Inc.

NANA Development Corporation/TeckCominco

GOLD SPONSORS

CENTERPIECE SPONSOR

SILVER SPONSORS

DENALI SPONSORS

Thank You!The Resource Development Council would like to acknowledge the many generous sponsors ofour 32nd Annual Meeting Luncheon. Because of your support, RDC continues to play a key rolein advancing responsible resource development in Alaska. Thank you for helping grow Alaska!

Annual Meeting LuncheonDeveloping Our ResourcesWhile Honoring The Past

32 nd

AICAlaska Aerospace

Development CorporationAlaska Frontier Constructors

Anadarko Petroleum CompanyAnchorage Sand & Gravel

Arctic Slope Regional CorporationASRC Energy Services, Regulatory

& Technical ServicesAT&T Alascom

Bradley Reid + AssociatesCalista Corporation

Carlile Transportation SystemsChevron

Cook Inlet Region, Inc.COEUR Alaska – Kensington Mine

Colville, Inc./BrooksRange Supply

ConocoPhillips Alaska, Inc.Crowley

Doyon Family of CompaniesExxonMobil

Flint Hills Resources, Inc.GCI

Holland America LineKennecott Greens Creek Mine

Koniag, Inc.Lynden

Northern Dynasty Mines Inc.North Slope Borough

Northrim BankNovaGold Resources

Pioneer Natural Resources AlaskaSalt + Light Creative

ENSTAR Natural Gas CompanyFairbanks Gold Mining, Inc.

FairweatherFEX

First National Bank AlaskaGovernment of Canada

Hartig, Rhodes, Hoge & Lekisch, PCHawk Consultants LLCH.C. Price Company

Judy Patrick PhotographyKey Bank

Koncor Forest ProductsLaborers Local 341

Marathon Oil CompanyMikunda Cottrell & Company

Nabors Alaska DrillingNEEPA

Nome Joint UtilitiesNorthwest Arctic Borough

Outdoor Heritage Foundation of AlaskaThe Palmer Group

Peak Oilfield Service CompanyPenAir

Petroleum NewsPetro Star Inc.

Petrotechnical Resources of AlaskaPerkins Coie LLP

PND Engineers, Inc.Princess Cruises & ToursRoyal Caribbean Cruises

Sealaska CorporationSourdough Express

Southeast StevedoringSTEELFAB

TeckPogo, Inc.Teamsters Local 959

Tesoro Alaska CompanyTransCanada

Ukpeagvik Inupiat Corporation

Page 8 June 2007 Resource Review www.akrdc.org

Three years ago, a series of events re-lated to access to private propertywithin Wrangell-St. Elias National Parkstarted a remarkable process that hasreached an important milestone thissummer.

We are publishing an interim regionalpolicy, “A User’s Guide to AccessingInholdings in a National Park ServiceArea in Alaska.” That title may notcause bells and whistles to immediatelysound off, but the document representsa significant accomplishment on the partof scores of landowners, businesses, andstate and federal employees. All whohad a hand in its crafting can be proud ofthe product.

What is that product? First, a littlecontext. Alaska is home to more than 54million acres of national parkland.Within those boundaries are about 1.6million acres of non-federal land, a mixof generally large parcels of Native cor-poration and state or university land,and smaller parcels of privately ownedproperty such as mining claims.

Some have obvious access along stateroads. Others are on rivers where boataccess makes the most sense. Many haveoverland access routes which cross na-tional parkland. In most cases, that ac-cess has never been officiallydocumented.

Title 11 of the Alaska Lands Act guar-antees the right of access to non-federallands within parks, subject to reasonableregulation to protect the underlyingpark resources. In the 27 years sinceANILCA passed, the NPS has neverhad a consistent policy or process indocumenting those access routes or in

handling requests for new routes. Ournew Access Guide is designed to pro-vide a consistent approach by managersand to allow property owners to under-stand both their rights and responsibili-ties.

Our first attempts at writing the guidewere flawed. Landowners, interestgroups and others were not shy inpointing that out. Members and staff ofthe Resource Development Councilwere among those who helped us find adifferent and better path. At their urg-ing, we held stakeholder meetings thatincluded executives from ChugachAlaska, Ahtna, Doyon, the Universityof Alaska, the Alaska MinersAssociation, the Alaska Land RightsCoalition, Residents of the Wrangells,the State of Alaska and representativesof environmental groups. We held pub-lic meetings in Fairbanks and Slana, inMcCarthy and Anchorage, and heardfirst hand from property owners howwe were progressing.

The result of a process that put twodraft guides out for public review, andused multiple stakeholder meetings, is aguide that – we believe – meets the needsof landowners and meets our responsi-bilities as stewards of national parks.

We took to heart several suggestionsfrom the public.

We heard that while we were clearlymapping out procedures, our larger in-tent remained unclear. The access guidenow includes guiding principles whichacknowledge, among other things, theguarantees of ANILCA 1110(b), thatour processes should be simple, and thatresidents within national park areas arepart of the essential fabric of thoseparks.

We heard concerns about costs, espe-cially from landowners who were happywith their existing access. The decisionwas made that the evaluation of an ac-cess route through an environmental as-sessment will be free to the landowner.Federal regulations require requesters toshare the cost of more complex environ-mental impact statements.

Many commenters felt that ANILCAprovided a permanent right of access,and that rights of way should not be fora set number of years. After somelengthy consideration, we agreed. Theguide provides an indefinite term for theright of way, so long as needs and condi-tions remain stable.

Many people also bristled at the no-tion of applying for a “permit.” We willinstead authorize ANILCA 1110(b)right of ways.

This summer, the National ParkService will start an environmental as-sessment on about 40 existing accessroutes within Wrangell-St. EliasNational Park and Preserve as our first“test drive” of the access guide. Ourstaff, landowners and others will recom-mend changes as we move through thedocumentation and authorizationprocess.

We believe this summer’s guide is a farbetter product thanks to the input of theResource Development Council andmany others. Our mutual success willdepend on keeping these lines of com-munication open and active. We lookforward to your continued involvement.

The interim access guide will soonbe available on the web atwww.nps.gov/akso/AccessGuide.Marcia Blaszak is the Alaska Regional Director of theNational Park Service.

MARCIA BLASZAK

PARK SERVICES PUBLISHES NEW ACCESS GUIDE

GUEST OPINION

“The access guide now includes guiding principleswhich acknowledge, among other things, the guarantees ofANILCA 1110(b), that our processes should be simple, andthat residents within national park areas are part of theessential fabric of those parks.”

“We believe thissummer’s guide is a farbetter product thanks to theinput of the ResourceDevelopment Council andmany others.”

(907) 276-0700 June 2007 Resource Review Page 9

Possibly half of the nation’s coal re-source lies buried in Alaska, undevel-oped due to lack of markets andinfrastructure.

Geologists say Alaska may contain asmuch as 6 trillion tons of coal, enoughto supply the entire nation’s need formore than 1000 years. Upwards of 80percent of these huge reserves underliethe 23-million-acre National PetroleumReserve on the North Slope. Othermajor deposits are located in CookInlet-Susitna Lowland and the NenanaTrend.

While Alaska is coal-rich, it is miningpoor. The Usibelli Coal Mine operatesthe state’s only coal mine near Healy,selling about half of its annual produc-tion to Interior power plants and ship-ping the rest to Korea and Chile.

All that may be about to change. Newadvances in clean-air technology andrising natural gas prices have promptedseveral of the state’s largest fuel con-sumers to take a hard look at coal.

The most exciting prospect is on theKenai Peninsula where Agrium is pur-suing an environmentally-friendlytechnology that could add decades tothe life of its Kenai NitrogenOperations, support hundreds of good-paying jobs, preserve a major tax base,and provide a new source ofcompetitively-priced electricity.

Agrium’s Kenai Gasification Projectwould develop a world-class, low-

emission coal gasification facility thatwould provide Alaska’s largest value-added business the feedstock it needs tooperate over the long term. The plantnow uses Cook Inlet natural gas tomake fertilizer but has operated at halfcapacity in recent years due to a naturalgas shortage.

Agrium began investigating coal gasi-fication in the winter of 2004 and isconcluding its Phase 2 analysis, whichincludes a detailed feasibility study. Ifthe company decides to go forward, thefacility could be operational by 2011-2012.

First discovered in 1792, coal gasifica-tion has made huge environmentalstrides in recent years. Today’s tech-nologies efficiently turn coal into a gasthat can be cleaned of virtually all of itspollutant-forming impurities. The CO2

that is surplus to the manufacturer offertilizer could become its own value-added product by injecting it into theaging Cook Inlet oil field to produce anestimated 300 million barrels of addi-

tional crude. Thiswould not only in-crease oil produc-tion, but it wouldefficiently sequestera gas that some folksargue may con-tribute to climatechange.

The Agrium proj-ect would require anew, coal-firedpower plant, one ofthree coal plantsbeing discussed forSouthcentral Alaska.

Even though these plants are barelyinto the planning stages, some critics arereacting with pronouncements of envi-ronmental doom.

Southcentral Alaska now relies onnatural gas to generate the bulk of itselectricity, and much of the current gen-erating equipment is approaching re-tirement. Replacing gas generation withcoal generation diversifies our powersupply, better controls the price of elec-tricity and releases increasingly scarceCook Inlet gas for home and businessheating.

We can make this switch without ad-verse impact to the environment.Today, we have a new generation of en-ergy processes that sharply reduce airemissions and other pollutants whencompared with the older coal-burningsystems. These technologies are in usearound the world. Coal is the world’smost abundant fossil fuel and theUnited States has lots of it.

Coal is Alaska’s largest untapped re-source, but until recently natural gasprices were so low, our coal had virtu-ally no market. All that is changing – atthe same time technology is movingcoal generation into the zero emissionscolumn.

All this adds up to a win-win situa-tion for Alaska. Coal could give uscompetitive new power sources, a newfeedstock for our fertilizer plant, a newindustry that would create hundreds ofgood-paying jobs, low environmentalimpact, and stable economic develop-ment for many Alaskan communities.

Steve Borell is the Executive Director of the AlaskaMiners Association.

GUEST OPINIONSTEVE BORELL

Alaska Clean Coal In Our Future

“All this adds up to a win-win-win situation for Alaska.Coal could give us competitive new power sources, a newfeedstock for our fertilizer plant, a new industry thatwould create hundreds of good-paying jobs, low environ-mental impact, and stable economic development formany Alaskan communities.”

Coal seams are seen here running through a bluff at the Usibelli Coal Mine.

Page 10 June 2007 Resource Review www.akrdc.org

The Alaska Gasline Inducement Act (AGIA) and thePetroleum Production Tax (PPT) are obviously two issuesaffecting the oil and gas industry in our state, but other linksbetween the two may be more important than some peoplerealize.

With regard to AGIA, RDC strongly supported two majoraspects of Governor Palin’s proposal. We thought that aRequest for Applications (RFA) process to solicit proposalsfrom a number of parties was a good idea. We also believedthe transparency built into the process was the responsibleway to go.

However, we parted ways with the governor and her ad-ministration over the issue of flexibility of the terms in theproposal. RDC believed that if the terms were moreflexible there would be more applicants.

In the end, the legislature supported the governor. It is im-portant to understand the governor and her key gaslineadvisors (DNR Commissioner Tom Irwin, Department ofRevenue Commissioner Pat Galvin and Department ofNatural Resources Deputy Commissioner Marty Rutherford)are strongly committed to getting a gasline for Alaska andequally they strongly believe in their approach.

We should be able to make some preliminary observationsabout AGIA’s strengths by this fall and have some feel for itsfuture direction after the end of next year’s legislative session.Under the current plan, the state will issue the RFA some timein early July. Those entities wishing to respond will have todo so by early October.

The proposals will be made public sometime late in the yearand the administration hopes to be ready to recommend alicensee to the legislature in January. The legislature will needto approve the successful applicant. If all goes as planned bythe administration, the winning applicant will begin its fieldseason next summer.

Who might respond to the RFA? The North Slope pro-ducers have indicated it is likely they will not bid. Other pos-sible bidders include several pipeline companies and the PortAuthority.

Assuming the process proceeds as expected, the next majorstep in the AGIA process will be the licensee’s decision as towhen to hold an open season, which is the point at whichowners of gas will have to make the long term, binding com-mitments to ship gas on the proposed line. Most observersagree this commitment is the key to getting the line financed.

There is no set time line for the open season. It is likely itwill take place somewhere between two and four years afterthe license has been issued to the winning bidder.

There is no question the open season is where the rubbermeets the road. Many familiar with the oil industry believethe open season will not be successful. The state is requiringthe licensee to proceed to Federal Energy Regulatory

Commission (FERC) certification, even if the open seasonfails. The state is willing to pay 80 percent of the costs for thatactivity up to $500 million.

The administration believes if the proposal to the producersis reasonable, their board and shareholders will insist the com-panies proceed to monetize their gas assets. Others are not sosure.

One thing I will say for the administration is that they havedeveloped their strategy and have stuck to it. Although thereare many, including the producers, who feel the state’s strat-egy is flawed and highly risky, I believe the administration’stheory is not without merit, and I know it is committed tomake it work.

One concept virtually any reasonable person can agree withis that sooner or later the producers have to come to the party.When (or, in a worst case scenario, if) they come to the partyand what the party will look like are still the great unknownsof the elusive gas line project.

If it is unclear what the producers will do with AGIA, it isequally clear the role they are playing with PPT. They paidthe state almost $1 billion in new taxes for a nine month pe-riod in 2006. Now the oil industry is facing a special sessionthis fall that one can only assume is being called to see if thestate can hike the tax further. In addition, some legislators areproposing to change the methodology for calculating the taxand to exempt certain expenses from being credited against it.

And some legislators seem surprised the producers feelcompelled to seek some fiscal certainty before they committheir gas to any pipeline project. However, to be fair, some inthe industry agreed to a change in the PPT last year – as partof a contract on fiscal terms related to construction and oper-ation of the gasline. But the industry ended up with no con-tract, and was left with a significant increase in the PPT.

Taking more will hurt not only the “big three,” whom somepublic officials seem to love to hate, but it will also send thewrong message to those companies who are new to the stateor who have returned after an absence. The wrong decisionon PPT will not only increase the rate of decline for NorthSlope production, (now under 800,000 barrels per day), it willalso put a damper on any enthusiasm the industry has forAGIA or any other approach to getting a gas line.

The state needs to be very careful as it proceeds with bothAGIA and PPT. Our future is at stake.

A MESSAGE FROM THE PRESIDENT

JOHN SHIVELY

AGIA AND PPT: OUR FUTURE AT STAKE

“The state needs to be very careful as itproceeds with both AGIA and PPT. Ourfuture is at stake.”

(907) 276-0700 June 2007 Resource Review Page 11

MARLEANNA SOTO JOINS RDC STAFF

Life-long Alaskan Marleanna Soto has assumed the position ofRDC Projects Coordinator/AMEREF Development Director. Theposition was modified after Jason Brune wasselected as Executive Director of RDC, andLee Clune as Executive Director ofAMEREF. Soto was born in Nome andearned a Bachelor’s degree in BusinessAdministration from the University ofAlaska-Anchorage.

Soto worked previously for Tesoro in retailoperations, and at the Arc of Anchorage inbusiness and administration. Soto will beworking on issues for RDC, and fundraisingfor AMEREF. Contact Soto at msoto@akrdc.org or 276-0700 ext. 4.

Kensington Mine Permit Struck Down By Court

The Kensington gold mine project near Juneau is in jeopardy afterthe Ninth Circuit Court of Appeals struck down a lower court rul-ing that had upheld a key U.S. Army Corps of Engineers permitthat would have allowed Coeur Alaska to use Lower Slate Lake fortailings disposal.

The appeals court said the tailings would contain concentrationsof potentially hazardous materials and that the EnvironmentalProtection Agency, not the Corps, has jurisdiction over the permit.

The decision sets a precedent in potentially denying mining oper-ations from storing tailings in ponds, lakes and other water bodies.It could have severe implications for other major mining prospectsacross Alaska.

Before the appeal was filed by the Southeast Alaska ConservationCouncil and other environmental groups, the mine was expected toopen later this year, employing hundreds of local residents and giv-ing a significant boost to the Southeast Alaska economy.Construction had been underway at the proposed mine with some400 people working on the project.

The appeals court also overturned a Native corporation’s permitfor a dock to ferry workers to and from the mine and the ForestService Record of Decision authorizing the mine.

An appeal to the U.S. Supreme Court is being considered by themining company. The state intervened in the case last year in sup-port of the Corps’ permit. That permit would have allowed for thedischarge of processed water into the 23-acre lake. Coeur said thetailings would not cause long-term harm to resident fish in the lake,which would ultimately be restored to a more productive condition.

The Corps and the Forest Service had both found in their initialdecision that Lower Slate Lake was the environmentally-preferredalternative over a much more expensive dry-stack tailings option.

Coeur has been working to develop the Kensington mine fornearly two decades and has spent over $200 million on the project.The approved plan struck down by the court reflected the collectiveexpertise of dozens of independent scientists and engineers whosework went into more than 900 studies.

At this point, construction at the mine is 85 percent completedwith the mill standing at 95 percent completion.

PETITION SEEKS TO LIST YELLOW-BILLED LOON ON ESA

The U.S. Fish and Wildlife Service (FWS) announced that a peti-tion to list the Yellow-billed Loon (YBLO) under the EndangeredSpecies Act (ESA) might be justified.

The petition, submitted in 2004, has resulted in the developmentand implementation of a Conservation Agreement for the YBLO.The findings are based on research done primarily in Alaska.

Roughly only one quarter of the world population of YBLOsbreed in Alaska, primarily in northern, coastal and low-lying areas,especially in the National Petroleum Reserve where 75 percent ofthe Alaska breeding population is found.

An ESA listing of the YBLO could severely restrict and reducedevelopment of natural resources across Alaska. Data supportingthe petition, provided mainly by the Center for Biological Diversityand other environmental groups, indicate the decline in YBLO pop-ulation is partly due to resource development in breeding grounds.

However, records indicate an increase of over 25% in the numberof nests in the Colville River Delta was observed from 1983 to 2003,despite development in that area.

FWS is seeking additional information from interested parties.The comment period ends on August 28, 2007.

BRADY TO RETIRE; CROCKETT TO LEAD AOGA

Judy Brady, Executive Director of the Alaska Oil and GasAssociation (AOGA), has announced her retirement after 14 yearswith the association.

AOGA’s Board of Directors has named Deputy Director MarilynCrockett to the position of Executive Director effective July 1, 2007,which will be 37 years to the day she was hired by the association.

“Marilyn will be an outstanding spokesperson for the Oil and GasAssociation,” Brady said. “She has extensive knowledge of the in-dustry and the State of Alaska and is highly respected.”

Brady started her career as a news editor for the Fairbanks DailyNews-Miner in 1963. Since then she has held policy managementpositions with the federal and state governments, as well as the pri-vate sector. In 1973 she was named Chief Administrative Judge forthe Alaska Native Claims Appeals Board in the U.S. Department ofthe Interior. She was the Commissioner of the Alaska Departmentof Natural Resources under Governor Steve Cowper and led theAlaska Bond Bank Authority.

COAL CLASSIC GOLF TOURNAMENT RAISES FUNDS

RDC Board member Jeff Foley, CalistaCorporation, participates in the 15thAnnual Alaska Coal Classic GolfTournament June 13 at the AnchorageGolf Course in support of AMEREF. Theevent raised funds for resource educa-tion in Alaska schools. A list of themany generous sponsors and picturesof the event may be found at:www.ameref.org/coalclassic/

RDC NEWS DIGEST

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