Foreign fuel helps meet demand in rural Alaska
Rena Delbridge |
Sep 13, 2009
Crowley Maritime Corp. photo
Alaskans have heard plenty in recent years about Venezuela President Hugo Chavez's government supplying far-flung Alaskans with oil subsidies, but the South Korea connection adds a new twist to fuel sales in America's oil province. Crowley Maritime Corp., one of the largest fuel shippers operating in the state, has imported up to a third of its fuel -- 24 million gallons -- from South Korea this year to supply rural Alaska communities. At this time of year, the last fuel barges are making their way to villages across western and northern Alaska before winter hits. The communities are unconnected to roads, with no links to the urban power grid. Small diesel plants operate in each village to supply power. Crowley and other shippers come once or twice a year via barge to replenish village storage tanks. But on occasion, Crowley's fleet fails against building ice and can't make their deliveries. Vessels managed to break ice to within about 200 feet of shore last fall, but couldn't make the connection to the Lower Kuskokwim village of Napaskiak. The failure was tough to swallow; the village had already paid its annual fuel bill and was left in a bad way, but sometimes there's no trumping Mother Nature. From the time ice breaks in rivers and shallow coastal waters each spring until freeze-up as early as October, the clock is ticking for Crowley to haul millions of gallons of fuel across Bush Alaska. A seemingly small glitch can throw the proverbial wrench in a work plan meticulously calculated to take advantage of every moment of ice-free water. In spring, the glitch was a delay in Tesoro's Nikiski refinery resuming operations after an annual maintenance break. That led to a domino effect, disrupting Crowley's fuel distribution across the state, said Crowley Vice President Craig Tornga. Crowley couldn't wait for the Nikiski refinery to come back online, he said, so it contracted three separate fuel buys, via an international broker, from Ulsan, a bustling metropolis in southeast South Korea. Charter tankers transported shipments from South Korea to Alaska totaling 570,000 barrels -- equal to about three-fourths the daily throughput of the trans-Alaska oil pipeline. The tankers held steady in the deep waters off the Seward Peninsula as Crowley barges lightered cargo for transport into the shallow ports along the Alaska coastline. As many as three barges are needed to offload the fuel under optimum conditions - but as Crowley is well aware, that's not a scenario to be counted on offshore Alaska. A storm could hit and pound the waters for seven days straight, trapping the fuel ship at a cost of $50,000 or more a day while barges linger at port. And such costs weigh into the final prices rural Alaskans pay for their fuel, Tornga says. "The story (in the media) is usually the high price (of fuel), and it's been outrageously high," he says. "But there's also the service provided, which I would argue is a difficult service. There is the capital cost of getting this product out to markets." Although some fuel comes from South Korea, as well as West Coast refineries, most of the fuel Crowley distributes in Alaska comes from Flint Hills Resources' North Pole refinery and Tesoro's Kenai facility. Still, even getting Alaska fuel to those who need it most is a never-ending challenge. Fuel from Flint Hills' refinery in North Pole begins its journey to the Bush on rail tankers, ending up at the shores of Cook Inlet, where it's loaded on barges. From barges the fuel is transferred to offshore vessels, and then to terminals. In Kotzebue, for example, fuel may be shifted to a river barge destined for communities up the Koyuk River, and then possibly trucked before it ends up in village fuel tanks.
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