Legislature(2025 - 2026)GRUENBERG 120
02/25/2025 01:30 PM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Energy Requirements for the Donlin Gold Project | |
| Presentation(s): U.s. Gold Mining Whistler Gold-copper Project | |
| Presentation(s): Contango Ore Building Alaska's Next Gold Mines | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
February 25, 2025
1:31 p.m.
DRAFT
MEMBERS PRESENT
Representative Ky Holland, Co-Chair
Representative Donna Mears, Co-Chair
Representative Bryce Edgmon
Representative Chuck Kopp
Representative George Rauscher
Representative Mia Costello (via teleconference)
MEMBERS ABSENT
Representative Cathy Tilton
COMMITTEE CALENDAR
PRESENTATION(S): ENERGY REQUIREMENTS FOR THE DONLIN GOLD PROJECT
- HEARD
PRESENTATION(S): U.S. GOLD MINING WHISTLER GOLD-COPPER PROJECT
- HEARD
PRESENTATION(S): CONTANGO ORE BUILDING ALASKA'S NEXT GOLD MINES
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ENRIC FERNANDEZ, Interim General Manager
Donlin Gold
Anchorage, Alaska
POSITION STATEMENT: Gave a PowerPoint presentation on the
energy requirements for the Donlin Gold Project.
TIM SMITH, CEO
U.S. GoldMining
Vancouver, BC, Canada
POSITION STATEMENT: Gave a PowerPoint presentation on U.S.
GoldMining.
RICK VAN NIEUWENHUYSE, President and CEO
Contango Ore, Inc.
Fairbanks, Alaska
POSITION STATEMENT: Gave a PowerPoint presentation on Contango
Ore, Inc.
ACTION NARRATIVE
1:31:30 PM
CO-CHAIR MEARS called the House Special Committee on Energy
meeting to order at 1:31 p.m. Representatives Holland, Mears.
Edgmon, Kopp, Rauscher, and Costello were present at the call to
order.
^PRESENTATION(S): Energy Requirements for the Donlin Gold
Project
PRESENTATION(S): Energy Requirements for the Donlin Gold Project
1:33:28 PM
CO-CHAIR MEARS announced that the first order of business would
be a presentation regarding the energy requirements for the
Donlin Gold Project.
1:33:59 PM
ENRIC FERNANDEZ, Interim General Manager, Donlin Gold, gave a
PowerPoint presentation on the energy requirements for the
Donlin Gold Project [hard copy included in the committee
packet]. On slide 2, he stated that the Donlin Mine site is on
lands owned by the Calista Corporation and the Kuskokwim
Corporation. He stated that there is no energy supply or road
access to support the mining operation on the land. He
explained that Donlin has designed a 360-mile natural gas
pipeline that could service the area and generate electricity,
while barges up the Kuskokwim River could provide the needed
transportation and supplies. He stated that a new port would be
built close to Cooper Creek, and it would connect to the mine
site with a 30-mile road.
MR. FERNANDEZ moved to slide 3 and discussed the project
benefits. He stated that the project has a reserve of 33.9
million ounces of gold, with a mine life of around 27 years. He
pointed out that this would be an open pit mine operation. He
asserted that the project would bring economic benefits to the
Yukon-Kuskokwim region and to the state, noting that the
construction phase would be 3-to-4 years, with $1.7 billion in
payroll, and in full operation, there would be $118 million in
payroll per year. He continued that the Native corporations in
the area would receive royalties per the Alaska Native Claims
Settlement Act. In addition, there would be the state license
fees and corporate income taxes. He asserted that during
operations 1,000 rotational jobs would be added to the state.
MR. FERNANDEZ moved to slide 4 and discussed the energy needs
for the mine project. He stated that the key energy drivers
would be the throughput, which is the milling of the materials,
and the mining equipment. He noted that the equipment would
include around 69 large trucks. He stated that these trucks
would be powered with diesel fuel; however, there is the
possibility that they could be run by liquified natural gas
(LNG). To generate electricity, he said the plan is to have a
dual-fueled power plant, using natural gas as the primary fuel
with a diesel backup. He discussed the breakdown of the fuel
consumption, as seen on the slide.
1:40:50 PM
MR. FERNANDEZ, in response to a question from Representative
Rauscher, stated that the throughput would use trucks carrying
multiple loads. In response to a follow-up question, he stated
that 400 tons would be the capacity of one truck, but this would
not be the limit of what each truck could do in one day.
MR. FERNANDEZ moved to slide 5 and discussed the construction of
the proposed natural gas pipeline. He explained that ENSTAR
Natural Gas Company would facilitate the pipeline. He discussed
the infrastructure needed for the pipeline, including a
compressor station, a metering station, pigging stations, check
valves, and other safety features. He discussed the projected
natural gas usage, as seen on the slide.
MR. FERNANDEZ, on slide 6, further discussed the source of the
natural gas needed for the project. He stated that the current
declines in the Cook Inlet natural gas supply was noted during
the feasibility phase of the project, so the project was
designed assuming that the needed natural gas would be imported.
However, he expressed the opinion that using gas from the North
Slope would be more cost effective, and he opined that using
North Slope gas would create demand and reduce the price of gas
delivered to Southcentral Alaska.
MR. FERNANDEZ, in response to a question from Co-Chair Mears,
stated that for project feasibility, the price of natural gas
was projected at $11.2 million per BTU. In response to a
follow-up question concerning other possible energy scenarios,
he stated that for the financial practicability of the project
other factors would need to be considered. Concerning a
question on electrifying equipment with affordable electricity,
he stated that Donlin Gold is a mining company, not a utility
company. He asserted that the pipeline has been proposed
because there is no other infrastructure on site. He stated
that if an electric supply were on site, this would be
leveraged. He argued that a pipeline "makes the most sense."
He responded that using electricity at this point would change
the project, and it would not preclude the need for a backup
energy supply.
CO-CHAIR MEARS pointed out that some of the committee's core
interest concerns the potential demand of energy, as this could
involve other possible projects.
1:49:37 PM
CO-CHAIR HOLLAND suggested that this is "a chicken and the egg
problem," as the unknown gas price is holding up making a
decision on the project, while not having more demand for the
gas holds up the decision to supply the gas. He questioned how
the "stalemate" should be broken. He questioned whether
prospective LNG import projects could supply an alternative
solution.
MR. FERNANDEZ, in response, expressed the opinion that the way
to move forward would be through dialogue. He stated that there
are many factors to be considered before making a final decision
on the project, and the price of gas would be one of these
factors. He expressed the understanding that Donlin would need
to rely on the natural gas solution for the benefit of
Southcentral Alaska; therefore, Donlin would need to be part of
this dialogue. Concerning the potential gas pipeline schedule,
he responded that Donlin is working to make a final investment
decision on building the mine; however, there is no final date.
He stated that there may be a feasibility update in a couple of
years, and then the board would be making a choice. If this
decision is positive, he said there would be around two years of
engineering and then around three-to-four years of construction
to build the mine.
1:54:35 PM
MR. FERNANDEZ, in response to a question from Representative
Rauscher, stated that currently Donlin has a "sizable" camp,
employing about 100 people. He stated that the camp has just
opened, and it would begin drilling this year, lasting through
the end of July.
MR. FERNANDEZ, in response to a question from Representative
Costello, asserted that continuing the dialogue within the
legislature would help the process. He stated that one of the
biggest costs would be to bring natural gas to the project, and
he expressed the importance of having this conversation.
MR. FERNANDEZ, in response to a question from Representative
Kopp, reiterated that the cost of energy would be one of the
most significant aspects. In response to a follow-up question,
he expressed the opinion that transporting natural gas would be
more efficient than transporting coal from West Susitna. In
explanation, he moved to slide 7 and pointed out the additional
benefits of using a gas pipeline. He pointed out that the
pipeline would be designed with extra capacity for the Yukon-
Kuskokwim area. He noted that currently this area is mostly
reliant on diesel for its energy needs, and he expressed the
understanding that this is very expensive. He reiterated that
this project could bring natural gas into the region, phasing
out the diesel usage. He suggested that smaller pipelines could
be extended to the communities.
REPRESENTATIVE KOPP expressed appreciation for any relief on the
price of energy in this area.
2:01:08 PM
CO-CHAIR HOLLAND questioned whether other projects in the Yukon-
Kuskokwim area could be promoted by the mine infrastructure.
MR. FERNANDEZ expressed uncertainty on any other specific
shovel-ready projects; however, he noted that energy would be a
key for economic development in the region.
2:04:34 PM
^PRESENTATION(S): U.S. Gold Mining Whistler Gold-Copper Project
PRESENTATION(S): U.S. Gold Mining Whistler Gold-Copper Project
CO-CHAIR MEARS announced that the next order of business would
be a presentation by U.S. GoldMining, Inc.
2:04:59 PM
TIM SMITH, CEO, U.S. GoldMining, Inc., gave a PowerPoint
presentation on U.S. GoldMining, Inc. [hard copy included in the
committee packet]. He stated that the presentation would
concern the Whistler Gold-Copper Project in the Susitna mineral
district in Southcentral Alaska. On slide 2, he provided a
disclaimer that concerns the status of U.S. GoldMining Inc., as
it is a publicly listed company that is traded on the stock
market. On slide 3, he described the Whistler Gold-Copper
Project as prospective, and he pointed out its location on the
slide. He pointed out that this land is entirely state owned.
He noted that there are three gold-rich porphyry deposits. He
stated that U.S. GoldMining is fully permitted for exploration,
with the intention to drill in 2025. He explained that this
would be possible because there is a state program that would
unlock the mineral potential in the district.
MR. SMITH moved to slide 4 and stated that each stage would be
an exploration stage, as no formal mining studies have been made
because benchmarking was used. He explained that the
benchmarking method compares this mine with similar mines of the
same type and scale. He noted that the information in the
presentation should not be confused with any potential future
study, adding that there is no timeline available for any future
mining study. He informed the committee that he would not be
able to provide any nonpublic information.
MR. SMITH moved to slide 5 and addressed the location of the
mine, which is around 100 miles northwest of Anchorage. He
noted that an access winter road has been permitted and could be
used for heavy equipment. He pointed out that because of the
flat terrain, exploration could be performed throughout the
year. He noted that U.S. GoldMining owns all mining claims in
the 53,700 acres, and the company is fully permitted.
MR. SMITH moved to slide 6, which showed the Whistler Project
mining claims and the mineral resource estimate. He pointed out
the three main deposits: Whistler, Raintree, and Island
Mountain. He stated that the tonnage listed on the slide is
mainly from these three deposits. He pointed out on the slide
the inferred and indicated classifications of deposits and the
amount of metal in each, and he explained that this cluster of
mines makes "a large deposit."
MR. SMITH moved to slide 7 and discussed the proposed Whistler
Project's energy needs. He stated that the benchmarking method
was used for determining the approximate energy requirement for
any potential mining opportunity. He stated that an open pit
mining method would be used, but the details have not been
developed. He added that the resource estimate has been
constrained within the open pit mining method. Based on this
scale, he stated that an order-of-magnitude estimate was run,
and 75 megawatts of energy would be needed for the low end of
the projected production rate, while the high end would be 100
megawatts. He explained that this would be the site-wide
requirement using a conventional diesel-powered mining fleet for
the crushing, milling, floatation, and other processing of the
ore.
2:16:46 PM
MR. SMITH, in response to a question from Co-Chair Mears, stated
that these energy estimates include crushing, grinding, and
floating the concentrate at the site. The estimates also
include the trucking of the concentrate to Port MacKenzie for
shipping. He added that these details would still need to be
worked out in a feasibility study, and he discussed the
importance of a clean concentrate. In response to a follow-up
question concerning the possibility of using in-state
processing, he said this has not been studied, but it could be a
potential economic assessment. He noted that the current
strategy is based on exploration, as this would give a better
idea of the metal content in the area. He suggested that this
could take around two years. In response to a question
concerning the effect of the cost of energy on further in-state
processing, he said that this has not been studied, but with the
right critical mass, an assessment could be made. He stated
that the current strategy is exploration, and one-to-two more
years would be needed before any studies are undertaken. In
projecting any potential in-state operating cost, he said that
the cost of energy would be a significant part of this.
CO-CHAIR MEARS noted that in-state processing would create the
potential for more in-state energy developers. She opined that
the more energy growth a project could provide, the higher the
likelihood the project would be pursued by the state.
2:21:41 PM
MR. SMITH moved to slide 8 and addressed the potential Whistler
Mine power sources. He listed the following options: a
conventional on-site power plant; diesel or liquefied natural
gas trucked to the mine; a transmission line from existing grid
power; a transmission line from a future potential coal-fired
power plant; and the potential to tap into the proposed Donlin
Gas pipeline. He stated that to truck fuel, a road would need
to be built. Concerning the various suggested energy sources,
he stated that there would have to be enough power capacity for
these sources to be considered.
2:25:36 PM
CO-CHAIR HOLLAND expressed the understanding that U.S.
GoldMining would be the project developer, and he questioned its
goals concerning the potential sources of energy. He questioned
whether renewable energy has been considered.
MR. SMITH aknowledged that emissions have not been represented
in the potential energy sources; however, in the formal mining
study phase this could be considered. He expressed the opinion
that using renewable energy would be considered additive, but
not primary. He suggested that renewable energy would be
intermittent, and he asserted that maintaining consistent energy
for throughput would be a goal.
MR. SMITH pointed out that slide 9 maps out the proposed West
Susitna Access Road. He noted that along this access road, from
the Whistler Mine to Port Mackenzie, there would also be a
proposed transmission line. He pointed out that the proposed
Donlin gas pipeline could meet with the proposed road and
transmission line. He moved to slide 10 and summarized the
Whistler Gold-Copper Project, stating that it is a large
resource stage project. He reiterated that the deposit is near
the surface, and it contains gold-copper porphyry. He stated
that currently the mine is in exploration mode, but there is a
potential for development to begin while exploration continues.
He said that drilling has been successful, but U.S. GoldMining
would continue to add to the overall economy of scale. In
regard to energy requirements, he said that it has benchmarked
75 megawatts to 100 megawatts of energy, which would support
crushing, milling, flotation, and ancillary mine infrastructure.
He reiterated that the identified power sources would be
attached to the construction of the proposed West Susitna Access
Road. In conclusion, he stated that future mining studies would
include trade-off studies to optimize cost and efficiency.
CO-CHAIR HOLLAND questioned the energy needs concerning any
future community development built around the mine.
MR. SMITH expressed the understanding that for the prospective
mine there would be a campsite, with some workers flying in and
others driving. He suggested that accommodations could be
created in the future for more permanent lodging. The
prospective mining road would pass by several undeveloped
private allotments, and he suggested that these could be
developed. He opined that if the road is built, it could create
opportunities for other mines, opening up the western and
southern part of the Matanuska-Susitna Valley for mineral
exploration. He noted that there is already a mine in
development just west of the Whistler Mine.
^PRESENTATION(S): Contango Ore Building Alaska's Next Gold Mines
PRESENTATION(S): Contango Ore Building Alaska's Next Gold Mines
2:34:53 PM
CO-CHAIR MEARS announced that the final order of business would
be a presentation from Contango Ore, Inc.
2:35:15 PM
RICK VAN NIEUWENHUYSE, President and CEO, Contango Ore, Inc.,
gave a PowerPoint presentation on Contango Ore, Inc. [hard copy
included in the committee packet]. He stated that Contango is
based in Fairbanks, and it is listed on the New York Stock
Exchange. He pointed out that Contango has three projects: Manh
Choh, Lucky Shot Mine, and the Johnson Tract Project, as seen on
slide 2. He stated that Manh Choh is in production; therefore,
the discussion on energy needs would concentrate on the other
two projects. On slide 3, he noted that Contango owns a 30
percent interest in the Manh Choh mine, which was developed
using the direct ship ore model (DSO). He stated that the mine
produced approximately 42,000 ounces of gold in 2024, and the
plan is to produce about 60,000 ounces in 2025. He noted that
this would be Contango's share. He stated that around 420 local
people are transported to work onsite, and the mine uses around
1 megawatt of power.
MR. VAN NIEUWENHUYSE, on slide 5, explained the DSO model. He
pointed out that Manh Choh is an open pit mine, and the ore is
transported to Fort Knox, where it is processed into gold bars
on a quarterly basis. He explained that the DSO approach was
taken because of the difficulty with the permitting process. He
added that the DSO process also minimalizes the environmental
impact, and it reduces costs. He asserted that Manh Choh is a
successful mine, adding that it was created in a three-year time
frame. He expressed the desire to replicate the timeframe and
process in Contango's other two projects.
MR. VAN NIEUWENHUYSE moved to slide 6 and discussed the Lucky
Shot Project, which is located two hours from Anchorage, near
Willow. He noted that this is a small resource, but it has a
high grade of gold. He stated that it is about 20 miles from
any existing power grid. He explained that the goal is to drill
in the next two-to-three years, targeting an extraction of
around 30,000 to 50,000 ounces of gold annually. He noted that
it would employ 50-to-90 people, and it would have a low power
requirement at around one-half of a megawatt. He stated that
Contango is currently attempting to locate a processing facility
for this mine, as it would operate as a DOS mine, as seen on
slide 7. He pointed out that this has been a historically
active mine. He discussed the details of the Lucky Shot mine,
as seen on the slide. To produce the one-half of megawatt
power, he expressed the anticipation that a diesel power plant
would be created, and this would use around 250,000 gallons of
fuel a year.
MR. VAN NIEUWENHUYSE moved to slide 8 and continued discussing
the development of the Lucky Shot Project and the DSO process.
He suggested that the containers of ore could be taken to Seward
or to Port MacKenzie; however, he noted that currently the
railroad does not go to Port MacKenzie. He opined that because
of the high grade of the gold, there would be a business
arrangement to have the ore milled, as this has been the past
experience.
2:44:24 PM
CO-CHAIR HOLLAND noted that the mine would not be far from an
electric transmission line, and he questioned the reasoning for
the diesel power plant. He also questioned whether processing
the ore on the [Parks Highway] would still be an option.
MR. VAN NIEUWENHUYSE responded that the previous operator had
planned to put a processing facility near Willow; however, he
explained that it would require a large amount of time and money
to permit a new tailings facility. He pointed out that it costs
Contango around a gram of gold to transport the ore to a
processing facility, such as Fort Knox, and he asserted that
"time is money."
MR. VAN NIEUWENHUYSE moved from slide 9 to slide 12 and
discussed the Johnson Tract Project. He stated that the DSO
approach would be used in the Johnson Tract Project, and he
noted that it has a high-grade asset as well. He pointed out
that it is located about 100 miles southwest of Anchorage,
outside of Cook Inlet. He stated that this is a polymetallic
deposit consisting of mostly gold and silver, with some value in
copper, lead, and zinc. He stated that the project is currently
in the permitting process, and it would be five years from a
feasibility study. He further discussed the expectation for the
value of the project.
MR. VAN NIEUWENHUYSE continued that an engineering assessment on
the economic viability would be available next month. He noted
that the mine would employ up to 100 people, and it would
require 2 megawatts of power. He pointed out that this would
require a remote campsite, and employees would have to be flown
in and out. On the next slide, he pointed out that Cook Inlet
Regional, Inc. (CIRI) owns the land, and it is close to the
tidewater. He added that the land is an inholding in the Lake
Clark National Park and Preserve. He stated that through the
Alaska Native Claims Settlement Act, CIRI has received an
easement from the federal government through the park to the
tidewater, so a road could be built there. He stated that the
plan would be to barge the ore from there to a processing
facility located on the water.
MR. VAN NIEUWENHUYSE noted that the Johnson Tract Project is in
mountainous terrain, where there is about a 50-person camp that
is run on diesel. He stated that with the mine there would be
about 1 million gallons of fuel transported to the site. He
noted that the access road has been permitted. He further
discussed the development, as seen on slide 12. He pointed out
that this is a modest-sized project, reiterating that it has a
"very good grade." He moved to slide 13, which showed the
timeline for the advancement of each project.
MR. VAN NIEUWENHUYSE moved to slide 14 and discussed small
modular reactors (SMRs). He expressed the opinion that using
SMRs would be a way to have reliable and sustainable power for
remote projects and for remote communities. He stated that SMRs
are not yet commercially available, but one company has had
their model approved by the Nuclear Regulatory Commission. He
pointed out that a microreactor is being used at Eielson
Airforce Base. He noted that if SMRs become commercially
available, using these for an energy source would be considered.
He reiterated that this could be a solution for reliable and
sustainable power for remote communities and projects.
2:54:18 PM
MR. VAN NIEUWENHUYSE, in response to a question from
Representative Kopp, stated that in 1942, the War Production
Board ordered closures during World War II, and the Lucky Shot
mine was closed. Before this, he said that the mine had
operated for 15 years. He explained that the ore body
continues, but more drilling is needed. In response to a
follow-up question, he stated that the Johnson Tract was an
outcome of CIRI's exploration, and it was a "grassroots
discovery" in the 1970s.
MR. VAN NIEUWENHUYSE, in response to a question from Co-Chair
Holland, stated that Contango has been tracking the various
geothermal projects that have been proposed. He discussed
several of these projects, noting that the power consumption for
the Johnson Track mine would be on a smaller scale. Concerning
the timeframe, he added that projects would need power from
sources that already exist. He expressed hope that the SMRs
become commercial, as they could be used as a good source of
power for remote projects.
2:58:44 PM
CO-CHAIR MEARS expressed appreciation to the presenters and made
closing comments.
2:59:19 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 2:59 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2.21.25_Donlin Gold Letter to GovDunleavy 2025.pdf |
HENE 2/25/2025 1:30:00 PM |
Railbelt Energy |
| Contango Presentation to House Energy Committee Update.pdf |
HENE 2/25/2025 1:30:00 PM |
Railbelt Energy |
| US GoldMining_ Presentation to AK House Energy Committee_Feb25_vF.pdf |
HENE 2/25/2025 1:30:00 PM |
Railbelt Energy |
| Donlin Gold Legislature - Project Energy Needs 01.pdf |
HENE 2/25/2025 1:30:00 PM |
Railbelt Energy |