September 2, 2010

Alaska Dispatch

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Tundra Telegraph

Powering Pebble

| Dec 4, 2009

The proposed Pebble Mine in southwest Alaska, which would tap one of the world's biggest copper deposits, will require about as much electricity as the city of Anchorage. The mine's developers are considering three possible plans to generate that much power, all of which involve natural gas.

Executives at the Pebble Limited Partnership (which is comprised of two companies, Anglo American PLC and Northern Dynasty Minerals Ltd.) estimate that production at the mine is still eight or nine years away. The state will first have to approve the partnership's development plan, of which energy will be a crucial component. One aspect of that energy plan is the possibility of providing low-cost power to communities in the region. The high price of energy in rural Alaska is a heavy burden for many residents, and has forced some rural Alaskans to move to urban centers.

"It seems to me that if we're going to get relatively inexpensive power into the region, then we have a responsibility to try and get that power to other people," said John Shively, CEO of the Pebble Partnership.

Some of those people, however, say they will oppose the mine no matter how much power it gives away.

"They're looking at the needs of the community in order to buy them out," said Bobby Andrew, a Yup'ik elder who lives in Dillingham and opposes the mine.

Andrew grew up in Aleknagik, upriver from Dillingham, hunting moose and caribou and eating salmon in the summer and trout and grayling all year long. He's now approaching 70, and he said his opposition to Pebble stems from the fact that he wants future generations to grow up with the same resources he and other elders enjoyed when they were young.

A mine would kill the fish and poison the land, he said.

Andrew is a leader in the fight against Pebble. He traveled to London in April to meet with Anglo American executives and tell them villages in the region don't want the mine built. He also doesn't buy the idea that the mine would end up providing power to communities in the region.

"Are they going to be providing enough power for themselves, plus the power needs of the entire region? I don't think so," Andrew said. "I doubt that they would be willing to spend that much money."

The most important part of the mine won't be the power it might produce for nearby villages, Shively said, but the jobs and economic impact it will generate. He is aware of the opposition to the mine, but said he would ask Pebble's critics what other options they have for people in the area.

People will make their own decision on the mine, Shively said, based on the partnership's plans and whether people believe them.

"I don't think you can co-opt people in rural Alaska," Shively said.

Mining has come a long way since the day of the pickaxe-toting prospector; modern mining operations are machine-driven and energy-intensive. At Pebble, ore will be blown out of the ground, loaded into trucks and driven to a crusher, which breaks the ore up into chunks the size of softballs. Those chunks are milled into a powder that is then mixed with chemicals that cause valuable minerals (copper, gold, and molybdenum) to rise to the surface, where they are scraped off. The minerals are mixed with water so they can flow through a pipeline to the coast. Pebble's proposed port is on the western side of Cook Inlet near Williamsport, almost directly across the inlet from Homer. Pumps will have to power the minerals through the pipeline to the port and send the water back to the mine so it can be reused.

Although copper comprises about 90 percent of the mine's valuable mineral content, it's expected to account for 60 percent of Pebble's financial value. Gold will generate about 30 percent of the mine's revenue, and molybdenum 10 percent.

According to Shively, the Pebble Partnership is considering three methods of generating power for the mine:

-- Using gas from Cook Inlet. This option would require the discovery of new gas deposits under the inlet's waters.

-- Building a spur line from the proposed natural gas pipeline. This option is feasible only if an in-state gas line is built. Shively envisions a line that would run either across Cook Inlet from the Kenai Peninsula, or down the west coast of the inlet. The Pebble Partnership would pay for the spur line, Shively said, either directly or through a utility company.

-- Importing liquefied natural gas. One possibility Shively mentioned is converting the Nikiski LNG-export terminal into an import terminal. "It seems weird, importing energy into Alaska, but it's not outside the realm of possibility," Shively said.

All three plans call for the use of natural gas, partly because the mine would use the waste heat generated when the gas is converted to electricity in the course of mining operations.

Shively estimates that Pebble's total energy needs will be about 300 megawatts, although that number will change depending on the rate of mining and whether the partnership decides on an underground mine, which requires more power.

The problem of getting power to remote mines is a common one in Alaska. Red Dog Mine, which extracts zinc and lead in northwest Alaska, solved its problem with eight 7,000 horsepower diesel engines, each of which is capable of producing about 4.5 megawatts of power, according to Jim Kulas, the mine's spokesman. Red Dog uses about 22 megawatts.

Red Dog is looking at natural gas to supplement its power supply, and Kulas said they've been studying the methane gas held in the shale near the mine. The mine is also considering using wind power, and is in its second year of monitoring the wind's strength and consistency near the mine site.

Red Dog has about 19.5 million gallons of diesel shipped in every year, all of it during the summer shipping months when the Bering Sea has less ice. The Pebble Partnership made the decision not to use diesel for a variety of reasons, Shively said, including the fuel's price volatility.

"When you look at Alaska, and mining in Alaska, power is one of the challenges that people face," Kulas said.

Contact Joshua Saul at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Discuss
Member Comments
Posted By: Vernstor @ 12.09.2009 10:14 AM
bgkeithley, can that work the other way? What if Pebble jacks up energy prices for Southcentral residents because of competition? I understand your thinking that if Pebble helps create a spur line to the Anchorage area, it could be good for those in Anchorage. But if Pebble is willing to pay more and use more of the energy for Southcentral residents, there would be no incentive for the energy companies to give cheaper prices to consumers in Anchorage etc. Thus Pebble could potentially hurt consumers in the long run, especially now that we are seeing natural gas supplies from Cook Inlet dwindle.
Posted By: littleblanket @ 12.07.2009 1:07 PM
bg and kai,
I have seen wind power used on a large scale in Europe. It is not unreasonable to think that wind power couldn't be used for this proposed project. Also, the sun doesn't need to shine in order for solar panels to be charged. They only daylight to get power, although actual sunshine is preferred.

kai, why are you so opposed to alternative energy?

I'm not opposed to the project, I'd like to see oversight and management that has never been required to this point in a mine. Too much is at stake.
Posted By: kaigun @ 12.07.2009 6:46 AM
bgkeithley-I think it's pretty obvious from littleblanket's last line that s/he is is opposed to Pebble and has therefore thrown out the 45% number because s/he knows that would be impossible for wind/solar to generate that kind of power. It's funny in a way because it's really a confession that deep down littleblanket knows that wind/solar is an unrealistic source of power on an large scale. Littlblanket doesn't care one whit if the sun isn't shining or the wind stops blowing at Pebble or if Pebble can lower energy rates for the rest of southcentral by lowering the unit cost of a bullet line because littleblanket doesn't want Pebble to begin with.
Posted By: bgkeithley @ 12.06.2009 11:02 AM
Littleblanket ... Using renewables where they make economic sense is important. However, it is not clear that would be the case with Pebble. Out of curiosity, three questions.

First, why 45%? Second, what would Pebble do for power when the sun isn't shining and the wind stops blowing? Third, assuming for the moment that Pebble ultimately used the Bullet Line, would your opinion be different if requiring Pebble to derive its energy from other sources (and reducing its use of the Bullet Line) resulted in increasing energy costs to Southcentral by an additional 10%?
Posted By: littleblanket @ 12.06.2009 9:39 AM
If this thing gets approval, why not make it a requirement that they MUST develop and use alternative green energy??? Why must these bureaucrats think only of petroleum products? Wind and solar should be considered and required for at least 45% of the power needed to operate this unwanted mine.
Posted By: kaigun @ 12.05.2009 5:56 PM
bgkeithley that's exactly what I was thinking too.
Posted By: bgkeithley @ 12.05.2009 11:33 AM
The potential for including Pebble as part of the Bullet Line could be a substantial plus for Southcentral. Even without factoring in additional demand (e.g., a GTL or LNG export project), including Pebble would significantly lower the unit cost of a Bullet Line to Anchorage. Combined with other industrial demands, the addition of Pebble would lower the costs to Southcentral and increase the netbacks (and, thus, royalties and tax take on the Slope) even more.

This potentially creates as much an interest in Southcentral for a successful outcome of Pebble as any other location.

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