ARCTIC DRILLING:

Coastal towns eager for ports as ice melts, ocean traffic picks up

NOME, Alaska -- On a blustery, cloud-covered day along the Bering Sea coast, Joy Baker, harbormaster for the Port of Nome, scanned her computer screen for a list of the ships lined up in Norton Sound waiting to enter the port.

"Yesterday we had seven vessels offshore waiting," Baker said. "Today's a slower day."

With the cold weather setting in, Nome residents were delighted to see fuel barges arrive the previous day to fill the city's oil holding tanks for the long winter. Last year's fuel shipment was delayed until late in the season, requiring the help of America's only operational icebreaker and a Russian oil tanker to cut a path through the frozen sea to the harbor.

The Port of Nome, the regional transportation hub for more than a dozen Bering Strait villages, was packed all summer. Large barges competed for space at the cargo dock while fishing boats and gold dredgers doubled up at the city dock and berthing facilities.

Nome Mayor Denise Michels said gold hunters descended on the city early this year when the Discovery Channel began broadcasting "Bering Sea Gold," a reality TV show. Over the course of the summer, 124 prospectors sought state permits to dredge along Nome's shores. City officials persuaded the state to close permitting after 88 requests were granted.

"We said we can't handle any more," Michels said. "We're maxed out. If we have a storm, we have nowhere to put them."

The popularity of Nome's port extends well beyond the gold dredgers. As the only U.S. port near the Bering Strait, Nome is becoming a regular stop for ships traveling in the Arctic each summer as higher temperatures keep the North Pole waters ice-free for longer periods.

Now Nome and other coastal communities in Alaska want to expand their ports to capitalize on the expected Arctic oil development, long-haul cargo vessels, military traffic and access to cheaper goods.

Nome is one of a handful of top contenders hoping to get funding for a deepwater port. Other Arctic villages are aiming to build medium-draft summer harbor facilities. The communities anticipate linking up to form a network of service providers for Alaska's expanding business and military ships.

The Coast Guard estimates that 410 vessels traveled through the Bering Strait last year, twice as many as in 2008. This summer, an average of 70 vessels operated in the U.S. Arctic each day, a volume that the Coast Guard predicts will dramatically increase as Royal Dutch Shell PLC and other oil companies explore for oil and gas in Alaska's Beaufort and Chukchi seas.

Alaska has more coastline than all other U.S. states combined. But the Port of Nome is the only harbor along Alaska's north and west shores equipped to handle medium-draft vessels, such as the Coast Guard's buoy tenders.

None of the region's ports can currently accommodate the large drilling vessels, cargo ships and ice cutters that require more than 30 feet of water. Those vessels must refuel in the Aleutian Island port of Dutch Harbor in Unalaska, located 700 miles south of Nome and 1,100 miles south of the energy industry's Arctic oil and gas leases.

Becoming a midcoast rest stop for Bering Sea ships could be big business for Nome, located about 125 miles south of the Bering Strait and home to 3,500 permanent residents, about half of whom are Native Alaskans. Michels estimated that a deepwater port would provide Nome with at least $1 million in revenue each year.

Another top candidate for a deepwater Arctic port is Kotzebue, a city located just north of the Bering Strait. Leaders from Nome and Kotzebue insist they support each other's port plans, arguing that Alaska will eventually need several new port facilities.

Kotzebue's Native leaders stress that a local port would bring long-overdue economic benefits to the city's 3,200 residents, 70 percent of whom are Inupiat Eskimos, as well as to 11 Native villages in their region.

"A port has the potential to reduce the cost of living in our region -- that's the cost of energy, the cost of moving goods," said Elizabeth Moore, community and government affairs manager at the NANA Regional Corp., which owns 38,000 square miles of land in the Northwest Arctic Borough.

Moore noted that the cost of fuel rose to $11 a gallon in some of the region's Native villages last winter. "The whole point of this port is for the shareholders of the region," she said at a breakfast meeting in Kotzebue.

"We want this to happen regardless of whether or not the Coast Guard comes up. We want this to happen regardless of the amount of development that goes on because it can have such a huge benefit for our region."

State-federal regulators' report due soon

Later this month, Alaska state regulators and the Army Corps of Engineers are due to release a preliminary study on where to locate a new deep-draft Arctic port in Alaska.

The report is the first stage of a three-year, $3 million effort to evaluate sites along 3,626 miles of state coastline, from Bethel and the Pribilof Islands in the southwest to the Alaska-Canadian border in the northeast.

That stretch of coastline covers more area than the U.S. Atlantic coastline from Maine to Key West, Fla.

The joint state-federal report is the latest in a long line of state and federal studies that have examined the need for new ports and other transportation infrastructure along Alaska's Arctic coasts.

In addition to the Army Corps report, the state Legislature's Alaskan Northern Waters Task Force early this year proposed 11 potential Arctic port sites. Recently, state lawmakers named a separate commission to narrow down the candidates and research how the ports could be funded.

As the Coast Guard, the Navy, and the National Oceanic and Atmospheric Administration boost their presence along America's Arctic shores, federal government officials acknowledge they'll need additional ports.

The Coast Guard's closest harbor to the Arctic is at Kodiak, along the state's distant southern coast. Dutch Harbor, the only U.S. deepwater port accessible to the Arctic, was built by the U.S. military during World War II as a front-line defense against Japanese forces.

But with the Arctic not seen as a national security threat region and federal money hard to come by, Congress is unlikely to funnel new money into Alaska port construction. Coast Guard and military leaders aren't requesting port funding, although they'd gladly use one if it was built.

Instead of waiting for the federal government to open its wallet, Kotzebue, Nome and other port candidates are pinning their hopes on developing public-private partnerships with the resource extraction industries in their regions.

According to the Alaskan Northern Waters Task Force report, the best port locations would be near exploitable mineral formations. "Natural resources within 100 miles of a coast line typically have a higher probability of development due to shipping proximity," the report said.

To help develop partnerships with industry, the communities hope to work with the Alaska Industrial Development and Export Authority, a state financing corporation that was instrumental in helping build other commercial projects in the state. The authority owns the Delong Mountain Transportation System, which includes a shallow port that services the Red Dog mine, a massive open-pit zinc and lead mine 90 miles north of Kotzebue.

Also mentioned as possible port sites are Wainwright and Barrow, where the Coast Guard mobilized helicopters, ships and other resources for its summer Arctic Shield 2012 operations. Both communities are close to the oil industry's Arctic offshore leases.

The state of Alaska has already provided millions of dollars in seed money for infrastructure planning. On Nov. 6, Alaskan voters approved $453.5 million in general obligation bonds for port and highway projects around the state. Now, the state will transfer $10 million each to Kotzebue and Nome for their port projects.

That's just a drop in the bucket compared with the full cost of a new port. Depending on what facilities are already at the site, a deepwater harbor could carry a price tag of hundreds of millions to billions of dollars. Once a site is selected, the financing, planning, design and construction could take up to 20 years to complete.

'Two harbors serving two different needs'

From the air, the Port of Nome looks like two welcoming arms stretching into the Bering Sea, the only waterfront oasis for hundreds of miles. The port's pair of causeways, built in the 1980s with federal government assistance, reach 2,712 feet into the Norton Sound waters and can accommodate ships that are up to 22 feet deep.

Now Mayor Michels wants to extend the causeway into deeper water to allow the port to service vessels with 35-foot drafts. "Port development and expansion is our No. 1 priority for the community right now," she said.

Nome is also proposing to link up with Port Clarence, a natural harbor located 70 miles north at the town of Teller. The former site of a Coast Guard radio navigation facility, Port Clarence could handle the Navy's deepest-hulled ships and serve as a port of refuge for large ships during Alaska's fierce storms.

"We're looking at this as a region," Michels explained. "We would see the two harbors serving two different needs. Port Clarence has a natural deep harbor. But they don't have the infrastructure in place to handle all the shipping. We have everything here."

Nome currently boasts two docks and mooring space for small and medium-sized vessels, as well as storage and fueling facilities. The port is moving forward with plans to add a third dock and install lights that will allow ships to operate during the late fall days when daylight is scarce.

Eventually, local Bering Strait leaders would like to tie the port facility to a cross-state road or rail system. Alaska Gov. Sean Parnell (R) is proposing an ambitious plan to build a "Road to Resources" in Alaska, linking the state's remote mineral-rich regions to the state's population centers in Fairbanks and Anchorage.

But that intermodal blueprint has been slow to materialize, Gail Schubert, president of the Bering Straits Native Corp., said at this summer's Arctic Imperative Summit in Girdwood.

"If we were asked," she said, "a concise statement describing our regional infrastructure would read: No current regional power grid. No current regional transportation system or long-term plan. No developed deepwater port. Few roads and no current infrastructure integration with the rest of the state."

A difficult financial sell

Building a deepwater port near Kotzebue would mean starting from scratch.

Most of the region's supplies arrive in Kotzebue on ocean barges, which come to town during the ice-free days between June and September. There are no roads or railroads to the city.

Because of Kotzebue's shallow coastline, the barges must anchor well offshore and transfer their cargo to smaller vessels. Those ships ferry it to Kotzebue's gravel shoreline. That process, called lightering, dramatically hikes the cost of shipping fuel and other goods to town.

State and local leaders want to eliminate that lightering by building a deepwater port at Cape Blossom, a coastal site 12 miles south of Kotzebue. Studies suggest the cape waters could be anywhere from 24 feet to 50 feet deep.

As with all construction in the Arctic, each phase of the project would carry a hefty price tag. Just building a gravel road from Kotzebue to Cape Blossom across rivers and permafrost on the Baldwin Peninsula would cost $30 million. The port itself could require $100 million or more, depending on its size.

Local government officials hope to partner with mining companies to build roads or rail lines from the mineral-rich Ambler mining district and the Red Dog mine.

A proposed Kotzebue-Cape Blossom deepwater port would need at least three separate piers, explained Cole Schaeffer, head of the Kikiktagruk Inupiat Corp., Kotzebue's village corporation.

"We have a mining district that wants to move into our area, so we're going to have to accommodate that," Schaeffer said. "Then the Coast Guard came up here and said they'd lease a port spot for 30 years if we build one. But they want a private port."

City Mayor Eugene Smith suggested a Kotzebue port could also serve as a port of refuge for oil industry ships operating in the Arctic. "If you have oil companies out there doing exploration and we have a big storm or we have ice conditions and floating ice coming down fast, they have to get out of there," he said. "If they have to transit to Nome, that's an extra two days' worth of transit time beyond Kotzebue."

Smith acknowledged that attracting the funding needed to build the port is a daunting task. "We're not in the business of 'build it and hope they will come,'" he said. "We're just too far north. And our investors are not going to agree to that, either."

Even if the communities can find investors, they face serious economic and weather-related problems in operating a commercial port in the Arctic, warned retired Adm. Thomas Barrett, president of the Alyeska Pipeline Service Co., which manages the 800-mile oil pipeline from Prudhoe Bay to Valdez.

Although the Arctic is warming each summer, the local winter temperatures stay well below zero. Along the northwest coast, winds can hit 100 mph, and thick, fast-moving ice can scrape huge gouges in the seabed along the shoreline.

"You have some of the worst weather on the planet," Barrett noted at the Arctic Imperative Summit. "You have huge distances. You have a climate-changing Arctic, and you have virtually no infrastructure."

He asked, "How do you get from that to a viable economic infrastructure model for the state?"

But with Arctic ship traffic increasing, if the Alaskan communities fail to provide ports and services for international shippers, those companies could bring their business to future Russian ports on the Arctic coastline and along the Bering and Chukchi seas.

"We've just never had the need for ports in the way we're going to now," argued Northwest Arctic Borough mayor Reggie Joule. "With the mining industry, with the marine industry, potentially with the fishing industry growing in the Arctic, we're going to need that infrastructure up and down the coast. [Selecting a] location is only a matter of time."