Alaska Deep Draft Arctic Port System Feasibility Study Economics Appendix B

252 Pages·2015·7.2 MB·English

by  Emily J. Morrison

Alaska Deep Draft Arctic Port System
Feasibility Study
A Subset of the Alaska Regional Ports Study
Economics Appendix B

Nome & Port Clarence, Alaska

January 2015

U.S. Army Corps
of Engineers
Alaska District
ALASKA DEEP DRAFT ARCTIC PORT SYSTEM FEASIBILITY STUDY
ECONOMICS APPENDIX B
NOME & PORT CLARENCE, ALASKA

CONTENTS

I. Introduction ............................................................................................................................ 1
II. Overview of Region and Communities.................................................................................. 2
A. Physical Location and Description of the Study Area .................................................... 2
1. Nome ........................................................................................................................... 3
2. Port Clarence ............................................................................................................... 4
B. Climate ............................................................................................................................ 6
C. Demographics ................................................................................................................. 6
1. Population Characteristics .......................................................................................... 6
2. Employment and Income ............................................................................................ 7
D. Existing Marine Facilities ............................................................................................... 8
1. Nome ........................................................................................................................... 8
2. Port Clarence ............................................................................................................. 10
E. Airports ......................................................................................................................... 11
1. Nome ......................................................................................................................... 11
2. Point Spencer ............................................................................................................ 12
3. Teller ......................................................................................................................... 12
4. Brevig Mission .......................................................................................................... 12
F. Roads............................................................................................................................. 12
1. Nome ......................................................................................................................... 12
2. Teller ......................................................................................................................... 12
3. Brevig Mission .......................................................................................................... 12
4. Cape Riley ................................................................................................................. 12
5. Point Spencer ............................................................................................................ 12
G. Government................................................................................................................... 13
1. Nome ......................................................................................................................... 13
2. Teller ......................................................................................................................... 13
3. Brevig Mission .......................................................................................................... 13
III. Potential Deep Draft Port Users ........................................................................................... 14
A. Offshore Oil and Gas Activity ...................................................................................... 15
B. Mining ........................................................................................................................... 16
1. Graphite One Mining Operations ............................................................................. 16
C. Barges – Fuel and Freight ............................................................................................. 16
D. Government Ships ......................................................................................................... 17
1. Coast Guard .............................................................................................................. 17
2. Navy .......................................................................................................................... 19
3. NOAA ....................................................................................................................... 20
E. Research Vessels ........................................................................................................... 20
F. Cruise Ships .................................................................................................................. 21
G. Other Vessel Types ....................................................................................................... 21
B-ii
1. Gold Dredges ........................................................................................................... 21
2. Commercial Fishing Vessels .................................................................................... 22
3. Sailboats, Yachts, and Pleasure Boats ..................................................................... 23
4. Other Vessels ........................................................................................................... 23
IV. Additional Arctic Background Information ......................................................................... 24
A. Sea Ice .......................................................................................................................... 24
B. Regional Vessel Traffic................................................................................................ 25
C. Port Governance and Coast Guard Presence ................................................................ 28
D. Other Conditions and Issues......................................................................................... 29
V. Existing Conditions .............................................................................................................. 31
A. Facilities and Infrastructure ......................................................................................... 31
B. Historical Commerce ................................................................................................... 31
C. Existing Fleet ............................................................................................................... 37
1. Vessel Classes .......................................................................................................... 38
2. Vessel Flags ............................................................................................................. 40
D. Shipping Operations ..................................................................................................... 40
1. Landside Operations ................................................................................................ 41
2. Dock Usage .............................................................................................................. 41
3. Rafting ...................................................................................................................... 43
4. Commodity Transfers .............................................................................................. 45
VI. HarborSym Modeling – Existing Condition Base Case ....................................................... 47
A. Use of HarborSym Model ............................................................................................ 47
B. Facilities ....................................................................................................................... 47
1. Link/Node Network ................................................................................................. 48
2. Dock Definitions ...................................................................................................... 49
3. Port Operating Restrictions ...................................................................................... 49
4. Tidal Impacts............................................................................................................ 50
5. Docking/Undocking Times ...................................................................................... 51
6. Sailing Drafts ........................................................................................................... 52
7. Underkeel Clearance ................................................................................................ 52
8. Vessel Speeds ........................................................................................................... 53
9. Vessel Turning Times .............................................................................................. 53
10. Vessel Capacities ................................................................................................. 54
11. Vessel TPI Factors ............................................................................................... 54
12. Vessel Operating Costs ........................................................................................ 55
C. Route Groups ............................................................................................................... 56
1. West Coast US – Nome ........................................................................................... 57
2. Nome Service Area .................................................................................................. 58
3. Nome Lightering ...................................................................................................... 58
4. Bering Sea Patrol ..................................................................................................... 58
5. Bering Sea Research ................................................................................................ 59
6. Bering Sea Cruise..................................................................................................... 59
D. Commodity Transfers................................................................................................... 59
1. Commodity Transfer Rates ...................................................................................... 59
2. Layberth ................................................................................................................... 60
B-iii
3. Estimated Total Trip Cargo ...................................................................................... 61
E. Dock Constraints ........................................................................................................... 61
1. Defining Dock VSU Capacity .................................................................................. 61
2. Dock Capacity Summary .......................................................................................... 62
F. Existing Condition Model Outputs ............................................................................... 63
VII. Future Without Project Condition – Base Case Scenario .................................................... 64
A. Facilities ........................................................................................................................ 64
B. Commodity Forecast ..................................................................................................... 64
1. Fuel ........................................................................................................................... 65
2. Dry Cargo ................................................................................................................. 66
3. Gravel ........................................................................................................................ 67
4. Commodity Forecast Summary ................................................................................ 69
C. Fleet Forecast ................................................................................................................ 69
1. Dock Usage ............................................................................................................... 70
2. Vessel Call Dates ...................................................................................................... 71
D. Other Changes to Future Conditions, Shipping Operations.......................................... 72
1. Vessel Speeds at Sea ................................................................................................. 72
2. Route Groups ............................................................................................................ 73
E. Base Case Model Outputs – Future Without Project Condition ................................... 74
VIII. Future With Project Condition – Base Case Scenario ......................................................... 76
A. Alternatives Considered ................................................................................................ 76
B. Future With Project Modeling ...................................................................................... 76
C. Changes from the Without Project Condition ............................................................... 77
1. Potential Benefits Not Quantified for this Phase of study ........................................ 79
D. Base Case Model Outputs – Future With Project Condition ........................................ 79
IX. Project Benefits – Base Case Scenario ................................................................................ 81
X. Future Conditions – High Scenario...................................................................................... 83
A. Offshore Oil and Gas Development .............................................................................. 83
1. Vessel Fleet ............................................................................................................... 85
B. Mining Potential............................................................................................................ 88
C. Vessel Traffic Associated with the development of Graphite One Mine near Nome .. 89
1. Vessel Fleet ............................................................................................................... 90
D. Growth in Arctic Research Vessel Traffic .................................................................... 91
1. Vessel Fleet ............................................................................................................... 93
E. Growth in Arctic Cruise Ship Traffic ........................................................................... 93
1. Vessel Fleet ............................................................................................................... 94
F. Additional Government Vessel Trips ........................................................................... 94
XI. Future Without Project Condition Modeling – High Scenario ............................................ 96
A. Facilities ........................................................................................................................ 96
B. Offshore Oil and Gas .................................................................................................... 96
1. Vessel Fleet Movement ............................................................................................ 96
2. Dock Usage ............................................................................................................... 97
3. Docking/Undocking Times ....................................................................................... 97
4. Sailing Drafts ............................................................................................................ 97
5. Underkeel Clearance ................................................................................................. 97
B-iv
6. Vessel Speeds ........................................................................................................... 97
7. Vessel Turning Times .............................................................................................. 98
8. Vessel Capacities ..................................................................................................... 99
9. Vessel TPI Factors ................................................................................................... 99
10. Vessel Operating Costs ...................................................................................... 100
11. Route Groups ..................................................................................................... 100
12. Cargo Transfers .................................................................................................. 101
13. Cargo Transfer Rates .......................................................................................... 101
14. Estimated Total Trip Cargo ................................................................................ 101
C. Graphite One Vessel Traffic ...................................................................................... 102
1. Cargo Transfers ...................................................................................................... 102
2. Cargo Transfer Rates ............................................................................................. 102
3. Estimated Total Trip Cargo.................................................................................... 103
D. Additional Research Vessel Traffic ........................................................................... 103
E. Additional Cruise Ship Traffic ................................................................................... 103
F. Additional Government Vessel Trips ........................................................................ 103
G. Model Outputs ............................................................................................................ 103
XII. Future With Project Condition – High Scenario ................................................................ 105
A. Facilities ..................................................................................................................... 105
B. Offshore Oil and Gas ................................................................................................. 105
1. Vessel Fleet Movement and Staging Location ...................................................... 105
2. Cargo Movements .................................................................................................. 106
3. Vessel Fleet ............................................................................................................ 106
4. Dock Usage ............................................................................................................ 107
5. Vessel Speeds ......................................................................................................... 108
6. Route Groups ......................................................................................................... 108
7. Cargo Transfers ...................................................................................................... 109
8. Cargo Transfer Rates ............................................................................................. 110
9. Estimated Total Trip Cargo.................................................................................... 111
C. Graphite One Vessel Traffic ...................................................................................... 111
D. Additional Research, Cruise, and Government Vessel Traffic .................................. 111
E. Model Outputs ............................................................................................................ 112
XIII. Project Benefits – High Scenario ....................................................................................... 113
XIV. Project Costs ...................................................................................................................... 116
XV. Summary of Benefits and Costs ......................................................................................... 117
XVI. Regional Economic Development...................................................................................... 119
XVII. Other Social Effects .................................................................................................... 120
XVIII. Summary ..................................................................................................................... 122
Attachment 1 – Deep Draft Arctic Port Personal Interview Form .............................................. 123
Attachment 2 – Investigation of Applicability of PL 09-13 Section 6009 Benefits for the Deep
draft Arctic Port Study ................................................................................................................ 124
Attachment 3 – Offshore Oil and Gas Background and Assumptions ....................................... 125
Attachment 4 – Regional Economic Development Evaluation................................................... 126
Attachment 5 – Other Social Effects Evaluation ........................................................................ 127

B-v
FIGURES

Figure 1. Map of study area ....................................................................................................... 2
Figure 2. Aerial view of Nome and Nome Harbor ..................................................................... 3
Figure 3. Nome Harbor Bathymetry (feet) ................................................................................. 4
Figure 4. Port Clarence bathymetry, in fathoms (1 fathom = 6 feet) .......................................... 5
Figure 5. Nome Population, 2000-2012 ...................................................................................... 6
Figure 6. Teller and Brevig Mission Populations, 2000-2012 .................................................... 7
Figure 7. Port of Nome Aerial Image ......................................................................................... 9
Figure 8. Point Spencer aerial photograph ................................................................................ 11
Figure 9. 800-mile comparison ................................................................................................. 15
Figure 10. Northwest Passage and Northern Sea Route, in comparison to current shipping
routes ......................................................................................................................................... 25
Figure 11. Historic Vessel Traffic in the Nome/Port Clarence Area, by unique vessels and
number of vessel trips, per year ................................................................................................ 26
Figure 12. Historical Inbound and Outbound Cargo at the Port of Nome (short tons)............. 33
Figure 13. Historical Inbound and Outbound Fuel at the Port of Nome (in gallons) ............... 34
Figure 14. Historical Outbound Gravel at the Port of Nome (in short tons) ............................ 35
Figure 15. Vessel Calls by Type, 2012 ..................................................................................... 40
Figure 16. Nome Vessel Calls by Dock, 2012 .......................................................................... 42
Figure 17. Typical rafting behavior at Nome ............................................................................ 44
Figure 18. Commodity Transfers by Type ................................................................................ 45
Figure 19. Commodity Percent by Dock .................................................................................. 46
Figure 20. Port of Nome, Alaska .............................................................................................. 48
Figure 21. Historic Inbound and Outbound Fuel ...................................................................... 65
Figure 22. Historic Inbound and Outbound Dry Cargo ............................................................ 67
Figure 23. Historic Outbound Gravel at the Port of Nome ....................................................... 68
Figure 24. Nome Future With-Project Diagram, with HarborSym Link/Node Network ......... 77
Figure 25. No Growth and Base Case Vessel Calls, by Year ................................................... 81
Figure 26. Outer Continental Shelf Oil and Gas Leasing Program, Alaska Planning Areas .... 84
Figure 27. Nome and Port Clarence Area Map including mining locations ............................. 89
Figure 28. Research Vessel calls at the Port of Nome, 2010-2013........................................... 92
Figure 29. Research Vessel Trips and Number of Unique Vessels, Nome Region, 2009-2013
................................................................................................................................................... 92
Figure 30. Passenger Vessel Trips and Number of Unique Vessels, Nome Region, 2009-2013
................................................................................................................................................... 93
Figure 31. Vessel Call Comparison, by scenario .................................................................... 113

B-vi
TABLES

Table 1. Nome, Teller, Brevig Mission, and Point Spencer Employment and Income
Estimates, 2012 .......................................................................................................................... 7
Table 2. Barge Company Vessels which would Utilize Deep Draft Facilities at Nome and Port
Clarence.................................................................................................................................... 17
Table 3. Research Vessels which called upon the Port of Nome in 2012 ................................ 20
Table 4. Research Vessels which transited through the Bering Strait in 2011 ........................ 20
Table 5. Cruise Ships which called upon the Port of Nome in 2013 ....................................... 21
Table 6. Commercial Fishing Vessels, by Community, 2012 ................................................. 22
Table 7. Historic Vessel Traffic - Nome/Port Clarence Area, unique vessels, by type of vessel
.................................................................................................................................................. 27
Table 8. 2012 Nome/Port Clarence Vessel Characteristics, by all vessel trips ....................... 27
Table 9. Historic Northern Sea Route Traffic .......................................................................... 28
Table 10. Historical Commodity Movements at the Port of Nome ......................................... 32
Table 11. Fuel Type Assumptions using Waterborne Commerce Data ................................... 36
Table 12. Fuel Conversion, Gallons to Pounds ........................................................................ 36
Table 13. Total Baseline Commerce amounts, in metric tons, 2009-2013 .............................. 37
Table 14. Vessel Calls by vessel type, 2010-2013 ................................................................... 37
Table 15. Vessel Calls and Characteristics by Vessel Class .................................................... 39
Table 16. Vessel Calls Depth-Constrained at Nome, 2012 ...................................................... 43
Table 17: Existing Condition Docking Times ........................................................................ 52
Table 18: Vessel Speeds at Sea, by vessel class ..................................................................... 53
Table 19. Vessel Turning Times, by vessel type, for all turning basins .................................. 54
Table 20: Estimated Vessel Operating Costs ........................................................................... 56
Table 21: Route Group Definitions ......................................................................................... 57
Table 22: Cargo Transfer Rates ............................................................................................... 60
Table 23. Fuel Commodity Forecast Summary ....................................................................... 66
Table 24. Dry Cargo Commodity Forecast Summary ............................................................. 67
Table 25. Gravel Commodity Forecast Summary.................................................................... 68
Table 26. Nome Base Case Commodity Forecast Summary ................................................... 69
Table 27: Nome, Alaska Fleet Forecast .................................................................................. 70
Table 28. Vessel Calls depth-constrained at Nome, Future Without Project Condition Base
Case .......................................................................................................................................... 71
Table 29. Number of Vessels and Speed at Sea, by vessel class, FWOP 2020 ....................... 73
Table 30. Revised Route Groups ............................................................................................. 74
Table 31. Depth-constrained vessel calls at Nome, Future With Project Condition Base Case
.................................................................................................................................................. 78
Table 32. Base Case Transportation Costs Allocated to the Port of Nome ............................. 81
Table 33. Representative Offshore Oil and Gas Exploration Fleet, per company ................... 86
Table 34. Vessel Description and Assigned Class for HarborSym modeling.......................... 87
Table 35. Large Tug & Barge Capacity, Future Without-Project Condition, 2020 ................. 91
Table 36. Research Vessel Fleet, High Scenario ..................................................................... 93
Table 37. Cruise Vessel Fleet, High Scenario.......................................................................... 94
B-vii
Table 38. Government vessel calls at Nome, high scenario ..................................................... 95
Table 39. Maximum Vessel Speeds, by type, Oil and Gas Vessels.......................................... 98
Table 40. Future Without Project Vessel Turning Times, Base Case and High Scenario
comparison ................................................................................................................................ 99
Table 41. Future Without Project High Scenario Route Groups for Oil and Gas Vessels ..... 101
Table 42. High Case Scenario Graphite Cargo Amounts per vessel assumptions.................. 102
Table 43. Future With-project Oil and Gas Vessel exploration fleet, per company ............... 107
Table 44. Future With Project Condition High Scenario Route Groups for Oil and Gas Vessels
................................................................................................................................................. 109
Table 45. High Scenario Transportation Costs Allocated to the Port of Nome ...................... 113
Table 46. High Scenario Transportation Costs – Values for Interpolation............................. 114
Table 47. Benefits for Oil and Gas Vessels in Exploration and Production Comparison ...... 114
Table 48. Total Project Cost Summary, Evaluated Alternative .............................................. 116
Table 49. Summary Present Value Transportation Costs and Benefits, by Scenario ............. 117
Table 50. Summary of Costs for the Evaluated Alternative ................................................... 117
Table 51. Summary of Benefits and Costs, for the evaluated alternative, by future scenario 117
Table 52. Annual Impacts from Construction......................................................................... 119
Table 53 Nome Alone Social Factors Metrics Evaluation...................................................... 120
Table 54 Four Accounts Summary for the Tentatively Selected Plan .................................... 122

B-viii
Common Naming Convention Used in this Report

Arctic Circle –one of the five major circles of latitude, north of the Bering Strait, it is the
parallel of latitude that runs 66° 33′ 44″ north of the equator.
Bering Strait – Waterway between the Alaska community of Wales and the Russian
shoreline through which all traffic using the Northern Sea Route or the Northwest Passage
must traverse.
Bering Straits Native Corporation - Bering Straits Native Corporation (BSNC), owned by
Alaska Native shareholders, actively pursues responsible development of our resources and
other business opportunities.
Cape Riley – undeveloped land located on the eastern edge of Port Clarence southwest of the
community of Teller.
Kawerak - regional non-profit corporation that contracts with the state and federal
government to provide services to residents of the Bering Strait.
Northern Sea Route – passage through the Arctic Ocean past Russia’s shores.
Northwest Passage – passage through the Arctic Ocean past Canada’s shores.
Offshore Oil and Gas leases – for purposes of this report all offshore oil and gas leases are
referring to those north of the Bering Strait in the Chukchi and Beaufort Seas.
Point Spencer – the spit of land on the western edge of Port Clarence that is a former Coast
Guard Long Range Navigation (LORAN) Station.
Port Clarence – a 10-mile wide body of water northwest of Nome that includes the
communities of Teller and Brevig Mission.
Sitnasuak - largest of the 16 village corporations in the Bering Straits Region, serving to
protect the land and culture of the native shareholders.

B-ix
List of Acronyms

ACEP Alaska Center for Energy and Power
ADCCED Alaska Department of Commerce Community and Economic Development
ADCRA Alaska Department of Commerce and Regional Affairs
ADOL&WD Alaska Department of Labor and Workforce Development
ADOT&PF Alaska Department of Transportation and Public Facilities
AGC Alaska Gold Company, LLC
AIS Automated Identification System
ANSCA Alaska Native Claims Settlement Act
BOEM U.S. Bureau of Ocean Energy Management
BSNC Bering Straits Native Corporation
ETTC Estimated Total Trip Cargo
FWOP Future without-project
FWP Future with-project
IMO International Maritime Organization
LNG Liquefied Natural Gas
LORAN Long Range Navigation
MLLW Mean Lower Low Water
M&O Maintenance and Operations
M/V Motor Vessel
MXAK Marine Exchange of Alaska
MT Metric Tons
MTPH Metric Tons Per Hour
NED National Economic Development
NOAA National Oceanic and Atmospheric Administration
NMFS National Marine Fisheries Service
NSEDC Norton Sound Economic Development Corporation
NSR Northern Sea Route
OCS Outer Continental Shelf
OCT Opportunity Cost of Time
O&G Oil and gas
B-x