March 22, 2012 | Vol. 42, No. 12

Report says import LNG for Yukon mines

The potential for shipping ore from the Yukon Territory through Haines is slim unless trucks can back-haul liquid natural gas from here on return trips to help power mines, according to a recent Haines Borough report.

Residents Darsie Culbeck and Debra Schnabel returned from the Mineral Exploration Roundup in Vancouver with the message that liquid natural gas might help the borough compete with lower shipping costs between Whitehorse and Skagway.

“Skagway is very aggressive,” said Culbeck, a borough consultant. “They’re not going to leave one inch of space available over there, in my opinion, and they’re not going to leave some crumbs for us.”

Culbeck and Schnabel, a Haines Borough Assembly member who serves on the Haines Port Development Steering Committee, gave a report on the January Roundup at a port committee meeting last month.

“Unless Haines can help supply energy to the mines, our only hope for shipping ore is when Skagway runs out of capacity, which may never happen,” Culbeck and Schnabel said in their written report.

Culbeck said shipping from Whitehorse to Haines costs $20 more per ton than the route from Whitehorse to Skagway, equivalent to about $1,000 per truck, and “that’s why Skagway is getting all the business right now.”

“I was under the impression if we build the ore dock, they will come, and that isn’t the case right now,” said Chip Lende, committee chair.

The Roundup primarily drew representatives from Alaska, British Columbia and the Yukon, and the Haines delegation’s aim was to promote the community and Lutak Dock as a potential hub for ore and mining-related supplies, Schnabel said.

“Everyone knows about what we’ve got,” Culbeck said. “They’re happy to hear that we’ve got a steering committee and that we’re making some forward motion and saying we want to be included at the table, but they already know our resources.”

He said Yukon mines are seeking liquid natural gas (LNG) for their energy needs.

“If LNG is available in Haines, ore trucks will use our port because they can leave the mine with ore, and return with LNG, provisional on tractor trailers being interchangeable or modified for dual applications,” the report said. “Even prior to any mine shipping ore, LNG could be barged up in modified shipping containers, loaded on trucks and shipped to the mines to supply energy needed in development.”

Culbeck and Schnabel noted borough leaders “do not need to expand the Lutak Dock to make this happen on a manageable scale,” and “once industry is here and they need more room, we can make the expansion happen in a partnership” including the Alaska Industrial Development and Export Authority.

According to the report, some of the benefits of importing LNG would be creating jobs, development and additional sales tax revenue; boosting competition for service and price that might lead to lower energy and heating costs for residents; and potentially using LNG locally as a fuel or energy source.

Cons included environmental risks and possibly spurring “pressure for more development than desirable if limits are not set from the beginning,” Culbeck and Schnabel wrote.

The report quotes Liz Cornejo of Constantine Metal Resources saying that “Haines is the only negative for the Palmer project.” Constantine is exploring a potential mine in the Haines Borough near 40 Mile.

“When Cornejo reported (that), she repeated a theme that seemed to shroud us throughout the convention. The industry as a whole was impacted by the Canadian, the U.S. federal and the community’s reaction to the possibility of the Windy Craggy mine development in the 1980s. Constantine acknowledges that the industry had much to learn about how to work with communities in mine development and has adjusted to ‘think local,’” Culbeck and Schnabel wrote.

Among Haines’ overall strengths listed in the report were a moderate highway grade connecting the Yukon to deep-water access; a year-round road with a truck route to the port terminal; a non-congested marine environment that is segregated from the cruise industry; upland area for development; and town space for housing workers.

“We do think that there are a lot of things about Skagway that are disadvantageous that might come up in the future – the fact that its port is narrow, the fact that it doesn’t have a lot of uplands, and they seem to be very committed to the tourism business,” Schnabel said. “Whether or not that will become problematic or competitive with ore is only something that we could watch for.”

Borough leaders in recent years have cited the surge in Yukon mining and shipment through the Haines port as a potential economic boon to the community.