HomeMy WebLinkAboutWestern Arctic Coal Development Preproduction Program Proposal 1983COA Alaska Energy Authority
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arctic slope consulting engineers
‘A SUBSIDIARY OF ARCTIC SLOPE REGIONAL CORPORATION
COA
BORROWER’S NAME
ROOM
NUMBER
WESTERN ARCTIC COAL DEVELOPMENT
PREPRODUCTION PROGRAM PROPOSAL
Cape Beaufort, Alaska
for
Representative Albert P. Adams
Chairman, House Finance Committee
State of Alaska
Division of Legislative Finance
Prepared by
Arctic Slope Regional Corporation
Barrow, Alaska
January 24, 1983
CoA o44
January 24, 1983
Representative Albert P. Adams
Chairman, House Finance Committee
State of Alaska
Division of Legislative Finance
Pouch WF
Juneau, Alaska 99811
Subject: Western Arctic Coal Development Preproduction Program Proposal
Dear Representative Adams:
The Arctic Slope Regional Corporation (ASRC) is pleased to submit this
proposal for funding consideration by you and the State of Alaska for a
Preproduction Program to commercially develop the Cape Beaufort, Alaska, coal
resource. The AERC has an exceptional interest in this program because of the
energy dilemma that many of its shareholders face today and that an objective
of the Corporation is to utilize its land in a wise and prudent manner. We
see this development as a unique opportunity to develop corporate lands and to
thereby serve the energy needs of its shareholders and the people of other
energy impoverished regions of the State.
This proposal was prepared at your request and as follow-on work called for in
Task 4 of the contract agreement between the State of Alaska, Division of
Legislative Finance and Arctic Slope Consulting Engineers for the Western
Arctic Coal Resource Assessment Study. The proposal consists of eight major
tasks to be performed over a period of 12 months at a cost of $2.9 million
dollars. Completion of the proposed Preproduction Program will result in a
scope of work that would be necessary to proceed to the construction phase of
the project.
We look forward to further discussing your needs concerning this important
program.
Very truly yours,
ARCTIC SLOPE REGIONAL CORPORATION
Lawrence A. Dinneen
Executive Vice President
cc: Senator Frank Furgeson
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WESTERN ARCTIC COAL DEVELOPMENT
PREPRODUCTION PROGRAM PROPOSAL
Cape Beaufort, Alaska
TABLE OF CONTENTS
Page
Cover Letter
TOENCOMCE TORS. soos. eae ele cecct ee tseseceeusetnd 1-1
Description of Program Activities..............00. -2-1
Program Schedule........cccescceccsceccccseecceeees 3-1
Program Cost Estimate... ......c eee eee eee eee eee 4-1
WESTERN ARCTIC COAL DEVELOPMENT
PREPRODUCTION PROGRAM PROPOSAL
Cape Beaufort, Alaska
1.0 INTRODUCTION
An assessment of the commercial development of coal resources in the
western arctic region underlying lands owned by the Arctic Slope
Regional Corporation (ASRC) was prepared for the State of Alaska,
Division of Legislative Finance, by Arctic Slope Consulting Engineers
(ASCE), a wholly-owned subsidiary of ASRC, in December, 1982.
Pertinent information regarding geology, coal quantity, coal quality,
and mineability of five selected sites in the western arctic were
investigated and summarized in the report. The coal resources were
found to be vast in quantity and high in quality and in some cases has
the potential for use as coking coal, the quality of which is compar-
able to the western United States and Australian coking coals.
The past exploration efforts identified in the report can best be
characterized as preliminary in nature. In spite of this, two of the
sites, Cape Beaufort and Howard Syncline were found to be both
technically and economically feasible for commercial coal development.
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This proposal presents a Preproduction Program for the commercial
development of the Cape Beaufort coal resources for the Alaskan
market. The proposal consists of several separate tasks:
Task 1 Project Management
Task 2 Delineate Mining Site
Task 3 Transportation Evaluation
Task 4 Preliminary Design & Economic Evaluation
Task 5 Marketability & End Use Evaluation
Task 6 Environmental Base Line Study
Task 7 Permitting Program
Task 8 Final Mine & Plant Design
These tasks are conceptually described in the following Description of
Program Activities section and are scheduled and costed in the
subsequent Program Schedule and Program Cost sections of this pro-
posal.
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WESTERN ARCTIC COAL DEVELOPMENT
PREPRODUCTION PROGRAM PROPOSAL
Cape Beaufort, Alaska
2.0 DESCRIPTION OF PROGRAM ACTIVITIES
The following is a program outline of major tasks proposed to be per-
formed in the Preproduction Program to commercially develop the Cape
Beaufort, Alaska, coal resource.
Task 1 - Project Management
Task 2 - Delineate Mining Site
Task 3 - Transportation Evaluation
Task 4 - Preliminary Design & Economic Evaluation
Task 5 - Marketability & End Use Evaluation
Task 6 - Environmental Base Line Study
Task 7 - Permitting Program
Task 8 - Final Mine & Plant Design
The comments on the following pages provide a brief description of each
of the proposed program tasks.
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Task 1 - Project Management
There would be several technical, sociological, geotechnical, and
consulting engineering organizations involved in the proposed
program. In order to coordinate and integrate the program tasks
being performed by the various organizations, selection of a project
management group would be necessary.
Task 2 - Delineate Mining Site
The first Task in the program is to identify and delineate a mining
site to determine the quantity, quality, and method of mining the
coal reserve. This task would consist of the following sub-tasks:
Subtask 2.1 - Geologic Reconnaissance
The initial step in delineating the mining site would be a
geologic reconnaissance of existing field data prepared by the
U. S. Bureau of Mines and the U. S. Geological Survey from
their past exploration activities in the area. These data would
be used to establish a preproduction drilling program.
Subtask 2.2 - Preproduction Drilling Program
Based on the data researched in Subtask 2.1, a preproduction
drilling program would be developed. This would consist of
laying out a closely spaced, grid-like drilling pattern. The
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drilling activity would accurately determine the mining
parameters such as coal thickness, continuity, strike length,
overburden depth, and an estimate of mineable tonnage.
Subtask 2.3 - Coal Sample Analysis
The preproduction drilling activities would also make coal
samples available for testing. The analysis would accurately
determine the quality of the coal reserve such as heating
value, moisture, sulfur, ash content, coking value, etc.
Subtask 2.4 - Mine Method Selection
Based on the results of the preproduction drilling program,
coal sample analysis, and potential marketability, a mining
method and "Base Case" production rate would be determined.
This would allow the program to proceed to Tasks 3 through 8.
As substantial costs and more complete marketing information
becomes available, comparative evaluation of the production
rates to the "Base Case" would be done and adjustments made as
necessary.
Task 3 - Transportation Evaluation
The transportation evaluation would depend on mine location, market
location, coal production, and environmental constraints. This task
would consist of the following three subtasks:
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Subtask 3.1 - Coal Transport - Mine to Port
Facility
This portion of the program would evaluate various types of
transportation modes in order to develop an economical trans-
portation system to move coal from the mine to the coast, and
construction and operating materials to the mine site. This
would be accomplished to minimize socio-economic and environ-
mental impact. Alternatives to be considered include roads and
haulage by large trucks and trailers, slurry pipeline, conveyor
belt, railroad, hovercraft barge, and other possibilities.
Subtask 3.2 - Coal Transport - Port Facility to
Market
This portion of the study would evaluate various types of
transportation modes in order to develop an economical trans-
portation system to move coal from the coast to the market and
bring construction and operating materials to the port faci-
lity. Alternatives to be considered include ocean tug barges,
lash ships, Dome Petroleum's year-round ice breaker operation
and road or rail to Red Dog mining operation.
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Subtask 3.3 - Mine Mouth Coal-Fired Power Genera- tion and Electric Transmission
This portion of the study would evaluate the use of mine mouth
coal-fired electricity production for transmission to the Red
Dog mining operation and/or nearby communities.
Task 4 - Preliminary Design & Economic Evaluation
Based on the site selection, mining method, and base case production
rate, a composite site plan, preliminary design, and preliminary
cost estimate would be generated by combining the preliminary
designs and anticipated budgets of each of the following subtasks:
Subtask 4.1 - Mining Operation Plan
The various factors which affect the design and operation of
the mine would be developed during this subtask. The design of
the open pit, if required, would be accomplished by noting the
coal reserves and developing the optimum open pit design to
recover those reserves. Among the design factors to be
considered are surface drainage diversion, road alignment,
maximum pit wall slope, stripping ratio, solid and liquid waste
disposal, land reclamation and revegetation.
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Subtask 4.2 - Surface Geology
This subtask would consist of gathering geotechnical data
relating to potential building sites, gravel sources for
construction, foundation design, road routing, and similar
considerations.
Subtask 4.3 - Port Facilities
The port facilities design would be based on the selected
method of handling coal, length of shipping season, volume of
coal to be shipped, physical oceanography, and handling of
incoming supplies. Port facility site selection is critical
and would be performed in close consultation with the land
owner and local residents. Its evaluation would consist of a
close examination of the local environmental, subsistence
species (sea mammals in particular), geotechnical, ice, wind,
tidal, and sea depth conditions. Alternative port designs to be
evaluated would include building a causeway, off-shore island,
and dredging a channel inshore and building a dock.
Subtask 4.4 - Local Service Roads
The development of roads would consist of a detailed study of
possible routes with much consideration given to road building
material, and environmental and social impact. It is antici-
pated that road development would consist of permanent gravel
roads as opposed to seasonal ice roads or other construction.
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Subtask 4.5 - Equipment Selection
Selection of all major pieces of equipment such as dragline,
drilling, loading, hauling, bulldozers, pickups, emergency and
fire vehicles, and maintenance vehicles would be selected based
on the required productivities, economics, operating exper-
jence, isolation of site, and the severe environmental condi-
tions found in the arctic.
Subtask 4.6 - Washing/Processing Plant
Based on coal sample analysis and market assessment, the
required processing facilities would be identified and de-
signed. There may be a need for a washing, drying, crushing,
or other processing facilities. Alternative layouts of the
selected process plant and service facilities and equipment
would be made and evaluated in order to produce a practical and
functional plant design. Conservation of energy and water would
be considered in the design of all facilities throughout this
program.
Subtask 4.7 - Power Plant
There are several alternatives for supplying power to the mine
site. An evaluation of diesel-powered generation, coal-fired
generation, or other sources of economical, reliable power
would be performed.
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The economics of supplying power to the Red Dog mine and/or
other communities via power line transmission and mine-mouth
power production would be evaluated in Subtask 3.3 - Mine-Mouth
Coal-Fired Power Generation and Electric Transmission.
The total site electrical requirements would be based on
information gathered from the preliminary designs of the mine,
port, utility, camp, processing, maintenance and support
facilities. Preliminary load projections and designs would then
be made of the entire electrical system including the power
plant, power distribution lines, and back-up power systems.
Subtask 4.8 - Utility and Camp Facilities
Utility and camp facility development is complex and warrants
close coordination with the owner prior to design in order to
determine local needs and appropriate utility and camp facili-
ties for the arctic. To initiate the planning and design work,
an initial estimate of the number of people would be estab-
lished. Requirements for water, sewer, solid waste, communi-
cations, accommodations, recreation, etc. could then be
defined. Alternative plans would be evaluated to derive the
most economical yet functional and comfortable facilities
necessary to meet the needs of the employees.
Surface water sources for process and domestic water would be
identified and evaluated. The design would consider available
processes and technologies which would conserve water consump-
2-8
tion significantly. Water treatment, distribution and storage
systems would be designed to ensure an adequate supply of
water to meet normal and emergency needs.
Sewage treatment design would meet Environmental Protection
Agency and Division of Environmental Conservation require-
ments. It would include the design of sewage treatment,
transport, and discharge facilities.
Solid waste handling and disposal would be evaluated consider-
ing alternatives such as a burn cage, compaction, back haul by
barge, or direct bury in coal mine open pit where reclamation
would soon follow.
Subtask 4.9 - Airstrip
An investigation of the existing air strip at Cape Beaufort
would be performed. Its use temporarily or permanently by
upgrading and/or adding facilities would be identified.
If the existing airport cannot be used permanently, plans to
design a permanent runway would be made. It would be designed
to meet the landing requirements of any aircraft to be used,
and would include a landing runway, taxiway, necessary guidance
systems, runway lighting, power back-up, a passenger/freight
terminal building and associated support services and safety
facilities.
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Subtask 4.10 - Shop & Service Facilities
Since the shop and service facilities would serve all phases of
the operation, its planning and design efforts would be based
on the selected mining operation, coal transport method, camp
size and type, processing plant, utilities, and other support
services. When this information is known, an assessment of
trades personnel required and the size, location, and complex-
ity of the shop facilities can be determined for the design
effort. With conservation in mind, the shop facilities would
be integrated with the mine, processing, port, warehouse,
airport, and other service structures. An itemized list of the
major tools, cranes, service vehicles, and equipment for the
services function would be compiled.
Subtask 4.11 - Construction Methods
Based on the preliminary design, an effort would be made to
identify the most economical method and schedule for construc-
ting the facilities. The method and seasons of transporting
materials to the construction site, on-site construction
methods, pre-fab and/or total fabrication in the lower 48 and
shipment by barge to construction site would be evaluated along
with other methods of construction used in the arctic. A well
planned construction effort based on experience in arctic
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construction and design would greatly improve the potential of
a successful construction phase and would reduce the risk of
cost overruns.
Subtask 4.12 - Scope Review
With the preliminary design and economic analysis completed,
the study team would submit and review the entire results with
the appropriate state agency or agencies, and the ASRC to
ensure the following: that the most appropriate facilities and
equipment have been specified, all environmental and social
issues have been addressed, and that the costs and schedule are
realistic. Upon general agreement, the program would proceed
as outlined.
Task 5 - Marketability & End Use Evaluation
In general, this evaluation would identify potential market loca-
tions and would determine the quantity and quality required. It
would also consider the social acceptance of coal utilization by the
communities, and the end use technologies required to convert the
communities from oil to coal. This task would consist of the
following subtasks:
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Subtask 5.1 - Regional Assessment
At an early stage, a marketability assessment would be made to
establish the potential coal markets in Alaska. An assessment
of each market in terms of energy needs, product delivery, and
storage, would be performed.
Subtask 5.2 - Community Utilization
A program to evaluate potential communities as users of coal
would be undertaken. This program would consist of a survey of
community acceptance and concerns about coal utilization ,
potential end use technologies, and financing scenarios needed
for the energy conversion. Various technologies for coal
heating and power production would be evaluated. Alternatives
for heating purposes could include dual fuel furnaces (o0i1/
coal), coal-fired stoves, and central district heating.
Electrical power may be produced by coal-fired power plants in
larger communities with power transmission lines to adjacent
smaller communities. Stirling engines, cogeneration and other
innovative coal burning technologies for power production would
also be considered for the various communities. Key to the
regional market is the involvement and contact of the local
residents who would use the coal. Every effort would be made
to identify local concerns together with a strategy to resolve
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those concerns. It is most important that those who would
receive and use the coal would also have a comfort level with
the concept before the first load arrives.
Subtask 5.3 - Out-of-State Assessment
It should be noted that any development of an out-of-state
market would substantially reduce the unit cost of coal to the
regional Alaskan market because of the added economy available
to larger scale developments. A marketability assessment would
therefore consider potential foreign or western U.S. markets.
It would include consideration of the longer term potential for
coking and/or steam coal in the world market. An analysis of
production, benefication, consumption, and long term price
trending would be a part of the export market assessment.
Task 6 - Environmental Base Line Study
As assessment of environmental constraints would be made. Some of
the factors to be addressed include impacts that a new mine could
have on the existing environment, socio-economic considerations,
operational problems inherent in the arctic, reclamation of mining
lands, (particularly in permafrost soils), identification of any
areas important for subsistence and endangered species habitat,
archaeological sites, etc. A biological assessment of the fish and
marine mammal life at potential port sites would be performed to aid
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in the evaluation of environmental impact of port construction and
operation. Also important are the establishment of sociological
concerns of the local residents in the area who would be affected by
the development.
Task 7 - Permitting Program
All necessary permits would be obtained prior to mining and as
required in some cases before drilling. The Cape Beaufort area lies
within ASRC lands which would help reduce the amount of government
involvement. However, at a minimum, any work must comply with the
Coastal Zone Management Standards Act. Mining and environmental
regulatory permits are required at the federal, state, and local
government levels. To avoid a departure from scheduling caused by
permit or regulation filing requirements, a permitting program would
be developed. Such a program would consist of permit and regulation
research into the specific requirements of federal, state, and local
agencies. Scheduling of permits, rights-of-way, and/or regulatory
filings or other such requirements would be based on the needs of
the overall project schedule.
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Task 8 - Final Mine and Plant Design
Based on the results of the scope review in Task 4, and Subtasks 4
through 11 therein, and additional data obtained in the various
studies and evaluations, the preliminary site plan, design, and cost
estimates would be reviewed and revised as necessary leading to the
development of the final mine and plant design and cost estimate.
The final cost estimate would be reviewed with special attention
paid to schedule sensitive items so as to ensure that appropriate
monetary and schedule contingencies have been included in the
overall project program.
A comprehensive report would be prepared documenting the design
criteria, project scope, capital cost, operating requirements and
costs, site plan, schedule, and related information. This report,
along with the design, would be submitted to the state agency or
agencies and to the ASRC for review and comment. It would also be
used as a control document if the development program is to con-
tinue.
The program outline and brief description for the commercial
development of the Cape Beaufort coal resources presented above
would require extensive travel, especially to the site in almost all
the tasks described. The ASRC and local residents who would be
impacted by the mine development and operation would be consulted
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for input on a regular basis from program initiation to project
completion and operation. Further, local residents would be kept
informed of potential job opportunities throughout the planning,
development, and operational phases of the project development. As
the project evolves from the Preproduction Program to construction
and operation, a job training program should be developed to provide
local residents with the necessary background and skills to qualify
for specific jobs. The key to success in this type of program is
the selection of a project team with past proven experience,
knowledge, and awareness of the arctic, its people, and their needs.
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WESTERN ARCTIC COAL DEVELOPMENT
PREPRODUCTION PROGRAM PROPOSAL
Cape Beaufort, Alaska
3.0 PROGRAM SCHEDULE
The Project Schedule is represented in Table I. It summarizes the
basic plan for the Preproduction Program portion of the overall
commercial development of the Cape Beaufort coal resources. This will
address all tasks outlined in the program description and has a
proposed start-up date of July 1983.
The schedule is based on preliminary information. The detail of each
task could change, thus altering the program schedule if subsequent
approvals and/or permitting activities are expedited or delayed, or if
unforeseen technical problems arise.
The program is a comprehensive look at coal development at Cape
Beaufort and it is scheduled for 12 calendar months of activities.
Successful completion of the program as scheduled will lead to a scope
of work to begin the construction portion of the commercial develop-
ment program.
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WESTERN ARCTIC COAL DEVELOPMENT
PREPRODUCTION PROGRAM PROPOSAL
Cape Beaufort, Alaska
4.0 PROGRAM COST ESTIMATE
A cost estimate for the Preproduction Program is presented in Table
II. The scope of the work as outlined in this proposal will provide
the specific hard data sufficient for accurate construction and
operation cost estimating. Time and budget are included in this
proposal to allow for the research of actual comparable experience in
the same geographic area, develop a plan for construction, explore and
evaluate site conditions, and obtain local desires and concerns as
they pertain to the program.
Completion of all tasks as shown in Table II will allow the project to
proceed to the construction phase.
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WESTERN ARCTIC COAL DEVELOPMENT
PREPRODUCTION PROGRAM PROPOSAL
Cape Beaufort, Alaska
DESCRIPTION cosT
Project Management..........cce ccc ee ccc eeeeeeee 214,000
Delineate Mining Site........ cece cece ween eee 467,000
Transportation Evaluation.............eeeeee ¢..216, 000,
Preliminary Design & Economic Evaluation..... 1,103,000
Marketability & End Use Evaluation............. 211,000
Environmental Base Line Study..........-..eeee- 210,000
Permitting Program............- aisle cal elelelsleislelaleie 79,000
Final Mine & Plant Design.................2000- 394,000
TOTAL $2,894,000
TABLE II