INTERMODAL TRANSPORTATION PLANNING ASSISTANCE TO THE STATE OF ALASKA FINAL REPORT. Prepared

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1 INTERMODAL TRANSPORTATION PLANNING ASSISTANCE TO THE STATE OF ALASKA FINAL REPORT Prepared by John T. Gray Institute of Social and Economic Research University of Alaska For The Alaska Department of Transportation and Public Facilities In Cooperation with The United States Department of Transportation Federal Highway Administration Contract# DOT-OS December 1980 Notice: This document is disseminated under the sponsorship of the Department of Transportation in the interest of information exchange. The United States Government assumes no liability for the contents or use thereof.

2 TABLE OF CONTENTS INTRODUCTION.,...,.. TRANSPORT PLANNING AND RESOURCE DEVELOPMENT PROJECTS. The Southcentral Deep-Draft Navigation Study.... The Bureau of Land Management Outer Continental Shelf Office Transport Studies Program.. Coal Transport Infrastructure Requirements The Southcentral Deep-Draft Navigation Study: Project Details.... ANALYTIC METHODS FOR INTERMODAL PLANNING. The Alaska Transportation System Model... The Southeast Region Transportation Model. The United States Maritime Administration Port Model Series. DATA REQUIREMENTS AND SOURCES FOR INTERMODAL PLANNING Economic Data,... Goods Movement and Passenger Travel Data. Transport System Data. Air Data.... Rail Data.... Barge, Railcar-barge, and Ship Data,... Marine Highway Data.. Highway Data... Transfer Data, Tariffs.. A REVIEW OF THE CONCERNS IN THE FUNDING OF INTERMODAL PLANNING PROJECTS... Review of State Policy Plan Outline. Proposal Rating Sheets Used by Federal DOT: Office of University Research. ACTIVITIES IN COOPERATION WITH STATE AND FEDERAL AGENCIES... The Intermodal Planning Committee: Alaska Demonstration Projects. Research Needs in the Areas of Technological Scale and Market Structure. Letter Concerning State Rail Plan Request for Proposals,...,,

3 Introduction In the United States the term intermodal transport is generally used to describe a situation in which carriers of two or more different modes participate in a joint effort, usually on a joint tariff, to deliver a shipment, The most common example, and the one toward which most attention is directed, is that of rail-truck "piggyback" operations. In many respects this makes the term applicable to the exceptional rather than normal transport operations as the vast majority of all shipments move between their origins and destinations without changing modes, In Alaska, one must take a considerably broader perspective of the intermodal concept if the realities of the transport system are to be adequately addressed, Both the geographic and economic nature of the state dictate that intermodal activity will be the general rule rather than an exceptional case, The state's economic base, relying on the export of raw materials and the import of most processed goods with little local manufacturing taking place, insures that there will be little traffic that is strictly intrastate, Geography, which leaves the state almost entirely unconnected to the continental transport system, insures that the interstate movements usually cannot take place on a single mode, These factors, together with the undeveloped nature of much of the transport system dictate that the only appropriate method of analyzing the operation of the system is on an intermodal basis,

4 For the planner these factors indicate that it is appropriate to reassess the traditional methods of the profession to determine their applicability to Alaska. Such a reassessment must include a consideration of developing the proper analytic tools, a data base sufficient to support their use, and a coordination of the transport analysis process with the decision implementation process. A comparative example of intermodal transport in the continental U.S. and Alaska is useful to dimension the planner's problem in this state. Assume a shipment of vegetables from the central valley of California to Chicago. A typical routing would be by truck from the producer to a rail yard with a trailer-on-flatcar loading capability; thence by rail to Chicago where delivery to a wholesaler or local store would again be made by truck. The movement uses the same vehicle, moving on a single tariff for the entire distance, The only public facilities involved are the highways at either end of the operation. The alternatives for the movement are equally simple being either all rail or all highway delivery. The analytic methods for making routing decisions are well developed and relatively simple being based on straightforward comparisons of tariff, carrier reliability, and timeliness. The simplicity of this operation may be contrasted with a similar commodity moving from the same origin to an Alaska point, approximately an equivalent distance. Routing might involve movement by truck either 2

5 to Seattle or to a rail yard and then by rail to Seattle. Upon arrival at that port the shipment will often be unloaded either into a wholesaler's warehouse to await transport north or directly into a marine container. After reloading it will be loaded onto a ship or barge and moved to an Alaska port for unloading. If the debarcation port is its final destination, it will then be delivered by truck. However, if the contents of the container are destined for an inland point the situation is more complex. If it is in the railbelt, it will be forwarded by either truck or rail with a truck delivery to destination. If, however, it is going to a point not served by either of these traditional means, the contents must again break bulk and be reloaded for air transport, either air freight or mail. Upon arrival at their final destination, they must again be reloaded for final delivery. Clearly, the Alaska situation, even in simplest form is much more complex than the U.S. intermodal movement involving, as it does, up to four modes, numerous loadings and unloadings, and various warehousing functions. It also concerns the public sector planner in many more instances as it includes public port, airport, and rail facilities as well as the public highways of the U.S. example. It is also much more difficult to trace as there may or may not be a through tariff applicable to the move. While routing may be straightforward in a few cases, it is usually a much more intricate set of inter- and intramodal choices. However, even though the system is highly intermodal in its operations and the best opportunities for increasing its efficiency are in 3

6 greater intermodalism, it is not organized in an integrated fashion. Individual carriers generally provide service via a single mode and public agencies involved in the transport industry tend to concern themselves with only one mode. Such integration as has developed has come about through operating and tariff agreements between individual carriers and via operations specifically planned as intermodal. This places a great deal of importance on the ability to use the present structure as the basis for developing intermodal capabilities. This project has been designed to explore a number of the aspects of planning an intermodal transportation system for the state, It is necessary to understand that the project is not structured to be a research, analysis, and planning effort itself. Rather, it has directed its attention toward planning efforts (not necessarily transportation) which have already taken place or are underway and analyzed how these relate to intermodal transport planning. It has also examined the analytic methods and data bases necessary to perform intermodal planning and detailed the basis for their use and assembly. To do these tasks required extensive analytic work to insure the validity of the methods and data, Finally, it has looked at funding mechanisms and has served as a basis for making continuing recommendations for improving planning processes, The first section of this report deals with one of the principal influences on Alaska transport demand, resource development, outlines 4

7 the interactions between reso~rce projects and transport and analyzes the methods which are being used to estimate and plan the resulting impacts. The second examines several sets of analytic tools which have been developed both in Alaska and elsewhere to address intermodal questions. After review of basic methodological requirements, modifications of these tools are proposed which might make them more useful or applicable to Alaska situations. The third section provides details of data requirements and sources to support intermodal planning. The fourth section looks at some of the strategic requirements for funding intermodal plans and how the design of funding applications might be improved and made more consistent. The final section summarizes several smaller efforts undertaken within this project and details supplementary services provided. The importance of recognizing and planning for the intermodal aspects of Alaska's transport system cannot be over emphasized, This project has explored a number of important parts of the planning system which need to be developed, However, it is critical that the actions begun with this project be put into continuing practice by the state. To do this, several recommendations have been formulated for an action process to develop and update the intermodal planning. 1, That the Alaska Department of Transportation and Public Facilities (ADOTPF) vigorously pursue the development and maintenance of a statewide transportation policy plan to be used for coordination of in-house planning efforts and to identify conflicts between plans of other agencies and private concerns with consistent, broad based transport programs and policies. 5

8 2, That ADOTPF actively recruit the personnel necessary to develop an in-house capability to monitor all transport related planning concerning the state and to develop and maintain the analytic tools necessary to support detailed planning. 3, That ADOTPF assemble and maintain the data base necessary to support planning activity. This will require a long run commitment to the use of planning as a tool for policy implementation, 6

9 Section I Transport Planning and Resource Development Projects As mentioned in the introduction, a major influence on the structure of transport in Alaska is the economic environment within which it operates, The system has largely shaped itself to conform to the economic opportunities available, In areas where these have been limited, the system is still in a primitive state with most operations being on a small scale and often having only marginal long-term financial prospects, Conversely, areas where outlooks for long-term economic viability are more evident have produced carriers operating in a manner much more consistent with normal North American standards, These features are much of what one would expect for a transport system serving a developing economy, particularly one as uneven as Alaska's. Resource extraction and primary processing projects have been key features in shaping the transport system. Within the next two decades they can be expected to remain as the most important influences on the economic viability of existing transport enterprises and on the creation of any major new systems, It is only after these primary resource activities have become more intense and created a larger basic economy and population base that secondary manufacturing can be expected to emerge, The resource extraction and primary manufacturing types of projects have a number of features which make them a challenge to both the transport system and transport planner, as follows: 1, They involve construction/development periods which may have severe but short-term impacts on the transport system; 7

10 2, After operation of the extraction project begins, it will often involve transport systems which are largely unrelated to those used during the development process; 3, A primary manufacturing process, after operation start-up, may use either exclusive use transport or may change product distribution patterns in ways which dramatically alter the traffic structure of existing transport systems; 4. The projects tend to be large and usually capital intensive when compared to the economy and transport system with which they interact; 5, The residual and subsidiary activity that results from movement from the construction/development phase to the operation phase is incompletely understood both as an economic and transport impact, Before discussing particular types of projects or activities in detail it is useful to explore each of these areas in a bit more depth as they have important implications for the analysis performed by the transport planner. The phenomena of the construction boom is quite well-known in Alaska. Its impacts on transportation usually include a short-term traffic bonanza with these movements causing a substantial change in the composition and character of most carriers' traffic. Frequently, the volume of goods to be moved will exceed the normal capacity of the regular carriers and will force some type of compromise in terms of normal traffic and boom traffic. Such a compromise may often result in serious shortages or delay of goods for long-term customers in preference to the boom movements. It also may result in more costly goods since the development project will usually have the resources to bid up 8

11 the cost of available transport to insure its needs are served, Such activities may often cause a diversion of capacity away from scheduled service into a charter market which can place hardships on those longterm customers relying on scheduled service and new customers who do not generate sufficient volume to warrant exclusive service. If the carrier attempts to expand his capabilities to match the total market, he may be forced to make relatively large investments which require amortization over a short period. Because the texture of this construction boom traffic is often different from that of long-term movements (both preand post-boom), the types of equipment and facilities required to support the boom may be inappropriate for long-term needs, Clearly, there are a variety of benefits and costs accruing to many parties in the boom situation. When analyzing such a situation, it is important for the transport planner to recognize that a perspective beyond that of the logistics system is required to assess the impacts, For the carriers, direct costs may include capita investment, labor turnover and training, customer alienation, equipment scheduling, congestion, increased competition, and changes in revenue mix. Obviously the prinicpal benefits are greater short-term revenue, hopefully a longterm increase in nonboom type traffic and possible long-term operating economies due to improvements in physical plant. For the customer, the potential costs include higher freight rates, service degradation, increased inventory requirements, difficulty in finding carrier capacity, probably higher loss and damage rates, and disruption of normal routings. The customers' benefits include long-term improvements in service quality 9

12 because of carrier plant improvements, possible increased transport competiveness and, of course, increased sales. While these items do not include all possible cost-benefit elements, they do demonstrate the importance of the planner's inspection of a wide range of impacts when examining the effects of resource projects. When a resource extraction project has finally reached a point in its development at which production operations become possible, it is likely that many of its transport requirements will be handled by an exclusive use system rather than the existing system. This is particularly likely to occur in developing areas where the requirements for product transport are either too large to be accommodated on the existing system, or are beyond the geographic extent of the existing network or possible extensions of the existing network. Raw or semi-processed resources tend to move in very large quantities. Since these are usually relatively low value products there is a premium placed on the minimum possible transport cost and in movement in large individual lots to minimize unit costs. Since the transport system of an undeveloped area is usually geared to move processed goods into the area, it is frequently unsuited for transporting large quantities of an extracted resource. The more primitive the transport system the more this tends to be true. For example, the barge-air system of western Alaska would be almost completely useless for supporting the requirements of even a relatively small extraction industry in that area. This is in 10

13 contrast to the railbelt where the rudiments of inland transport and port systems exist to handle some types of resources. However, even in this region, considerable investment in existing facilities would be required to support their large scale use in resource export. There are several effects of the discontinuity of resource transport demands and existing transport availability. These include: 1. Greater total investment requirement for transport since a completely separate system must be developed to handle the resource while existing systems must be upgraded to move construction material and possible increased long-term demand; 2. Inability to use the resource traffic to lower long-term costs of all transport users by spreading fixed cost structures over a larger base; 3. Requiring existing carriers to bear burden of construction/ development and subsequent traffic declines without benefiting from long-term opportunities of the resource movement; 4. In cases where resource and normal goods movement are relatively compatible (for example, fisheries) differences in handling requirements may still dictate extensive empty equipment movements and offer only a limited solution to backhaul problems; 5. Where resource movements and existing traffic are able to share common facilities, the scale of the resource movement may be so large in comparison to normal traffic that it will create congestion problems whose solution requires investments beyond the financial means of specific carriers or agencies. Once again the planner is faced with an interesting array of choices when trying to analyze the impacts of a resource project. Obviously, there are both benefits and penalties associated with resource transport. How the resource movement interacts or does not interact 11

14 with the existing system must be examined not only in terms of the movement itself but also with regard to long-term interaction with existing capacity and with the overall economy. There are several types of primary manufacturing capability which may develop in conjunction with resource extraction. The most common is that which processes the resource and then exports a somewhat higher value product from the economy. The second processes the resource for both the domestic market and export with the production for local consumption supplanting an import. Finally, there is production which serves a domestic market which did not exist prior to the time of production. The three types of primary processing may have very different impacts on various components of the transport system and emphasize the need to analyze that system within its economic context. A major possible impact of all three types of processing is the inbound movement of subsidiary input materials. These are the items used in the manufacturing process in addition to the primary input material. These may constitute a major part of the input and represent important additions to the traffic of existing carriers (as in pulp manufacture) or they may be almost non-existent (as in petroleum refining). In any case these movements will usually move on the existing system and will represent a stable long-term traffic source. 12

15 In the first type of resource processing (all for export) the transport system for the output product will often take a form which is similar to that of the original resource. That is, it will move in large volume, may require specialized handling, and may not be readily adaptable to the use of existing transport. In fact the nature of many output products may make them even more specialized in their handling requirements than are the input resources, If the output has the same types of characteristics as the input resource then the comments previously made concerning the movement of the resource apply. If, however, the product is compatible with existing transport types and capabilities (or expanded capabilities) then the manufacturing process may offer significant opportunities for improving and broadening the traffic base of existing carriers. As such, it provides a mechanism for improved utilization of capacity and a sharing of fixed costs between the resource development/manufacturing process and the remainder of the economy. This feature makes the latter type of resource/processing activity particularly attractive from the transport perspective. In the second type of processing activity (part or none for export, part or all for local consumption) the locally produced product is assumed to replace a portion, or all, or a region's import consumption of that product or its substitutes. It is clear that such a product will be compatible with the existing transport system. Because this is the case and because the new production represents a spatially changed source of supply, it is probable that the processing activity will change the 13

16 internal routing of the product as it moves to consumption points. In fact, location of the processing plant close to principal consumption points may entirely eliminate some aspects of transport, Clearly, this is a major impact with which the planner must deal during his analysis of a resource based project. It is possible that the new activity may cause considerable hardship to some carriers by diverting a major portion of their traffic base, This makes it possible that the result of a new plant may be higher costs of all other goods excepting that produced at that plant as the carrier attempts to replace lost revenue by raising tariffs on the remaining business, Conversely, it is possible that the new plant will increase the traffic available to various carriers with the benefits mentioned previously. The important point in this particular instance is that the planner can effectively note the impacts of the project only through an analytic procedure which goes beyond the transport system and addresses the wider economic interactions. The third type of processing activity (that which produces a new local market) is perhaps the easiest to address in that it always results in increased traffic for at least some components of the transport system, However, even this case is not trivial as it still requires a routing assessment and an understanding of the secondary economic impacts and the resultant transport requirements. However, if the product shares currently available capacity its most likely effect will be to provide a more substantial traffic base for sharing fixed unit costs, 14

17 A common feature of many of the extractive resource and primary manufacturing projects is that they tend to be large in comparison to the economy upon which they are superimposed. This gives them the ability to impose major transport impacts quite apart from the direct impacts of their development and operation. This results from the effects of a major infusion of capital on a small economic base both through direct and indirect payroll and local purchasing. In Alaska's underdeveloped economy such an infusion will usually result in increased demand for goods and services which acts to broaden the existing economic base. For transport this means a short-term heightened demand for construction goods and a long-term increase in the consumer goods. Timing of this change is of critical importance. Most evidence indicates that it reacts on a somewhat delayed basis to the initial development boom of the resource project although it does tend to reinforce and extend the boom. It may also act to dampen the drop in traffic which follows the boom. It is clear that the phenomena noted above occurs on a significant scale in an economy such as Alaska's, However, the dimensions of this activity are not well documented. Particularly uncertain is the type of subsidiary activity which will occur in a region following the end of the development boom, In part, this will be a function of the operations employment of the resource extraction project, with those projects which are most labor intensive being assumed to be the least likely to have dramatic post-boom effects. However, even this relationship is not clear. What is certain, for transportation, is that following the project there 15

18 will be a change in either the quantity or character of traffic and, most likely, both, This implies that different modes may undergo very different types of impacts, For the planner the importance of understanding the relationship of the resource project and its secondary impacts to the remainder of the economy lies in the need to estimate total traffic that can be generated by the project rather than simply the obvious project related traffic, Most analysis has ignored these impacts with the result usually being a misstatement of the project effects, While the magnitude of some errors is not great, in other cases expectations generated by planning estimates are not appropriate, The most obvious case of the latter has been the traffic through the Anchorage port in the post-pipeline years. Prior to the beginning of construction the annual throughput of the port's general cargo berths was about 800,000 tons. Expectations were that following the pipeline boom the traffic level would return to approximately this size, However, after rising to 1,25 million tons in 1976 the decline has been to only about 1.18 million tons or an increase of 48 percent, This has resulted from the broadening of the general economy rather than being simply an increase due to the project alone. Clearly, both the extent and timing on the secondary impacts is of considerable importance, It is also important to realize that as the economy gradually expands the differential effects of large projects will become progressively less. 16

19 The next three parts of this section view the relationship of resource development and transportation in terms of a review of other work dealing with the subject. The first part looks at the U.S. Army, Corps of Engineers (COE) Southcentral Deep-Draft Navigation Study. The second comments on the Bureau of Land Management/Outer Continental Shelf Office (BLM/OCS) series of reports on transport impacts of offshore development, The third briefly reviews the transport infrastructure requirements for movement of Alaska coal. THE SOUTHCENTRAL DEEP-DRAFT NAVIGATION STUDY In 1978 the Corps of Engineers commissioned a study of the southcentral Alaska ports to determine their traffic potential through the year 2030 and thus to estimate requirements for navigation improvements, a COE responsibility, A principal focus of this effort is to identify those Alaska ports which now serve or potentially serve as resource export centers or which are required to support national interest resource development projects, The initial scope of the project included ports from Yakutat to Kodiak, however, following the initial phase the western extent of the work was extended to Unalaska. It should be remembered that the principal focus of this work was not directed toward planning of shoreside facilities, the normal interests of the state government, but was designed to estimate requirements for harbor and channel development and maintenance, the principal marine transport concerns of COE. However, this does not imply that shoreside facilities were not a part of the study effort. Rather, their role was to help determine types and volumes of shipping which could or would use a particular port or channel. 17

20 The study has been structured in three phases, The first of these being an inventory and capacity assessment of present waterways and ports. The second phase involves projection of traffic based on economic change, particularly as related to resource development, and how this will impact port demand. The third phase will be an analysis of critical ports that the second phase indicates require a major continuing involvement of COE in the port's activity or that have the potential for substantial change which may place new demands on COE. The first phase, completed in mid-1979, prepared individual inventories and capacity assessments for the ports of Yakutat, Cordova, Valdez, Whittier, Seward, Homer, Kenai/Nikiski, Anchorage, and Kodiak. These reviews used methods designed by the U.S. Maritime Administration for developing the capacity of various types of port facilities, Capacity was estimated for dry bulk, liquid bulk, neo-bulk, container/roll-on-rolloff, breakbulk, and special cargo. This was then compared to present throughout and very rough economic projection trends to obtain several preliminary estimates of future congestion, The methodology employed in this first phase of the work was basically sound; however, several of the assumptions behind the study limited its usefulness, These assumption problems included the treatment of inland transport, the definition of the study area and the definition of cargo types. In this particular work these problems did not seriously affect 18

21 the validity of the results; however, they will be examined briefly below to assist planners in developing the scope of similar future work, The failure to critically examine and inventory inland transport can have several impacts on the validity of port studies, All ports are to some degree intermodal transfer facilities. Thus, the ability of the inland extensions of a port to adjust to traffic changes can be as important in determining both its capabilities and future potential as can the marine aspects of its activities, This is of particular importance when dealing with extractive resources since the size of movement of the resource can be much larger than an inland link might be capable of accommodating, In such a situation, the selection of an appropriate port might well be based on the inland capabilities rather than superior maritime circumstances. While in may not be necessary to define a study in a broad manner in every case, it is necessary to recognize the limitations of particular assumptions and their possible impact on results. In Alaska, ports are an area which require a fairly broad examination to produce the most usable results. The definition of the study area is a problem closely related to the manner in which inland transport is treated; however, it has somewhat broader implications, In the COE phase one study, two problems appeared in the definition. First, the area under examination did not include the Alaska Peninsula, Aleutian Islands, or Bristol Bay, all areas whose traffic generation, port capacity, future prospects and maritime commerce patterns have a major impact on operations at one of 19

22 the study area ports, Kodiak, This indicates the need to develop at least a basic understanding of the system being investigated prior to dimensioning a planning project, The second definitional problem resulted from the inclusion of the interior and north slope in the hinterland of the southcentral ports while failing to detail inland transport and, more importantly, failing to use economic background data including these areas, The latter was the most important failure of the phase one effort representing a major limitation on the usability of the results, The planner must remember to maintain the consistency between the components of both the data bases and analytic methods, otherwise, the result cannot be accepted as having been produced by a logical, justifiable means. The third problem in the phase one COE work related to the definition of commodity types. It is the least serious of the three. The difficulty comes in the aggregation of various subcargo types into the bulk liquid and dry bulk cargo categories, While it is logical to aggregate into these two groups for most purposes, it is possible to lose a good deal of information if one is not aware of the specific types of movements that make up the categories for a particular port, Many types of both commodity groups require specialized handling facilities which cannot be shared either with other commodities or even within the group, Examples of these inconsistencies might include bulk cement and coal or liquified natural gas and crude oil. These problems are not serious if the planner is aware of them; however, it is important to understand that a port's capacity for a cargo type may be composed of an incompatible set of subcategories, 20

23 The second phase of the COE study resolved several of the difficulties noted above, The important changes involve respecification of the study area to include the western areas of the state and use of an economic baseline more consistent with the geographic area, Additionally, the use of a series of resource project scenarios identified specific inland routes and commodity handling methods necessary to accommodate movements, A complete listing of these projects and the impacts anticipated by the COE are included at the end of this section. While the method employed in this refinement has some weakness (it is not as comprehensive as might be desirable and is not capable of detecting many secondary effects), it is quite adequate to produce analysis at the level of detail necessary to support COE's waterways improvements and maintenance program, A useful feature of the phase two study involved the use of three panels of knowledgeable individuals in economics, transport, and environmental science to address many of the planning issues, This represented an attempt to bring expertise into the analysis more extensive than that available to the COE simply by using a single group of consultants, By fairly close structuring of the meetings of these groups it appears that a good deal of useful input was obtained, particularly from the group on resource development and economics, However, the transportation group (discussing routing probabilities for both resource products and general cargo) appeared to have been composed of too many relatively parochial interests, This resulted in various factions establishing themselves in advocacy positions rather than providing an analysis of 21

24 the broader picture. A more useful group might have resulted from the inclusion of more professionals in transport consumption (nontransport industry traffic personnel) 'rather than individuals associated with particular transport enterprises. The second phase of the report should be available for distribution in The third phase will concentrate on questions related to the ports of Upper Cook Inlet and Kodiak. Special emphasis is being placed on these locations not because they are the only areas expecting large scale change during the next fifty years but because their potential changes probably involve activity types which would require considerable commitment from COE both in the short-term and over an extended time frame, THE BUREAU OF LAND MANAGEMENT OUTER CONTINENTAL SHELF OFFICE TRANSPORT STUDIES PROGRAM The BLM/OCS program is directed toward preparation of the transport portion of the environmental impact statement which is required prior to the leasing of an area for offshore oil exploration and development. As such, it represents a series of planning efforts specifically designed to assess the interaction of transport and the resource development process. Because of the pervasiveness of oil potential along the Alaska coast the series of studies will, when complete, be one of the most comprehensive sets of information on Alaska transport available; second only to the Alaska Department of Transportation's Regional Transportation Studies, To date, five study regions have been completed including the 22

25 Beaufort Sea, eastern Gulf of Alaska, western Gulf of Alaska, Lower Cook Inlet, and Norton Sound. Future reports will deal with the Bristol Bay/Kuskokwim Bay region, the Chukchi Sea, and the eastern parts of the Aleutian Islands, The studies are required to address several aspects of transportation as it relates to offshore petroleum development. These include support during exploration, movement of field development materials, movement of production support goods, and transport of the final product be it crude oil or some form of gas. All modes which interact with a particular study area are included; however, only direct hydrocarbon development effects are considered, The latter point places a serious limitation on the value of the series. Evidence available to date suggests that the long-term impacts, and frequently those with the greatest magnitude, do not occur at the location of actual OCS activity or as a result of direct involvement in the OCS process, Rather, these impacts are created by the secondary growth process and through the location of headquarters activity. This has been most dramatically illustrated in Anchorage where the increase in transport activity since completion of the trans-alaska pipeline has, each year, been equivalent to about one-third of the total traffic generated by pipeline construction. The implication is that the longterm growth generated by a resource project has the potential, particularly over a twenty-year horizon, to have many times the effect of the movements related directly to the development itself. The importance of this 23

26 activity indicates that it should play a much larger role in the impact assessment process, It should be noted that BLM/OCS's present program incorporates some analysis of the impacts of development activity on Anchorage, For the economic studies this includes some assessment of the secondary impacts of remote development, However, the transportation studies include only the direct impacts on OCS movements through Anchorage, particularly air movements, The second deficiency of the study program is the failure to explicitly consider the cumulative impacts due to multiple development sales and the interactive effects of other development activities, This is a less serious methodological problem due to the nature of any projection process, That is, the art of projecting future events and developing impacts of these events is, of necessity, an uncertain one, The process of tracing the effects of a single set of related developments is one which is relatively straightforward even though not simple, Even this type of scenario building can have numerous solutions for a complex project as a variety of decision possibilities occur at points in the project, Adding another set of possible occurrences for another unrelated set of projects increases the number of plausible outcomes considerably, When the additional projects are related to the initial ones (such as two OCS operations) the decision tree may either be simplified 24

27 or become more confusing depending upon the analyst's assumptions, Thus, it is reasonable to carry out an impact analysis for a complex system on the basis of isolation of that system from other activities, However, it is important to recognize that other activity (either directly related or mostly unrelated) may have a major impact on the system under study, It is the failure to adequately perform this type of sensitivity analysis that represents an important deficiency of the BLM/OCS program. While it is unreasonable to expect a complete set of possible futures involving all possible combinations of project types to be studied, it is not improper to suggest that the study series more directly recognize the existence of other development opportunities and estimate rough impacts and directions of expected change of the impacts caused by interaction of the projects, BLM/OCS has recently begun to do this type of background work in relationship to one important area of possible conflict with offshore activities, They have completed an analysis of the interaction of fishing with oil and gas development which deals with a number of impact types and directions including transportation, This report is quite useful in expanding the scope of the issues and the ability of the planner to assess the interrelated impacts. When making these assessments it becomes quite clear that the possible fishing development scenarios make it unrealistic to expect detailed potential conflict analysis to accompany every OCS transportation study, 25

28 Other than the limitations mentioned above the BLM/OCS series of reports provide a useful framework for impact assessment of offshore development. It is important to remember that these are impact assessments and not planning studies, The former simply traces the results of a series of actions and decisions while the latter proposes solutions to the problems evidenced by the analysis of future occurrences or looks for ways to influence outcomes of policy proposals, Within these limitations the reports provide a useful analytic framework. COAL TRANSPORT INFRASTRUCTURE REQUIREMENTS The comments in this section address a specific resource development and the considerations involving transport infrastructure that can be considered both for public or private investment if the resource is to be used, The material is extracted from a paper prepared for the Resource Development Council's Alaska Coal Marketing Conference and was prepared in December The transport infrastructure requirements to move Alaska coal in volume are closely related to the location of both the resource and potential port sites, With the current state of transport technology there are only a limited number of options available. It should be remembered that the development of a resource as extensive as coal, requires a long-term incremental effort and is not a task to be accomplished in a limited time or with a single (or very few) major investments. The nature of coal offers an opportunity to put in place a multi-use transport system 26

29 which can serve the entire economic development process rather than only a limited industrial constituency. To properly assess the opportunities to do this, it is first necessary to understand the requirements for the movement of coal and how various aspects of Alaska's geography and present infrastructure fit into the process. The first, and most important, aspect of any discussion of the movement system is to emphasize that transport structure must be considered only as a part of the overall market system, not independently of it. This points out the importance of matching transport investment to both the demand for coal (utility, industrial) and the supply (the mine(s) production capacity). While this point appears obvious, it is often ignored in the rush to make major capital investments. This emphasizes the incremental nature of the development process. For example, it is usually inappropriate to make the major investment required to move 5 million tons annually if the initially available volume is only 500,000 tons with the remainder being speculative. For any coal export transportation system there are five critical elements. These are the mine production and loading system, the land transport system, the port transfer system, the ship system, and destination port system. Each of these involves a number of subelements, all 27

30 of which must be matched together if the overall operation is to function correctly. It is also in this process that the opportunities will occur for coordination of coal movements with other transport demand. The mine production and loading system is the first point of interface between coal transport and the market, The mine transfer process will be closely tailored to the requirements of the inland transport system but will have several elements in any case, These include movement to a washing and/or grading facility, movement from there to a storage pile or loading tipple and, finally, transfer to the inland transport system. Each of these elements will be present to a greater or lesser degree depending on the quality and grading requirements of the coal, the quantity being mined, and the nature of the inland transport system. Local mine transport usually involves either high capacity trucks and/or conveyors for surface mines and industrial trains for underground operations. The former are usually used for all aspects of movement in smaller operations and from the mine to a central gathering point for larger mines, From there, the conveyor system may be used to get the coal to storage piles or loading tipples, The inland transport system offers the greatest number of movement options. Four technologies have been developed to transport coal over longer distances and will be used based on the distance being moved, the quantity of coal available, availability of in-place infrastructure, 28

31 investment capital availability and, most importantly, the economic objectives of the system, Two possible options are long distance conveyors and coal slurry pipelines, Both are high capital cost options, particularly in cold climates, and both are applicable to high volume movements only, both are exclusive-use systems and neither have attained the status of well tested technology or proven economic feasibility (particularly slurry pipelines). For purposes of this discussion, it would appear that their principal drawbacks are the high movement volumes necessary for their use and the exclusivity of their applicability. The high volume demands imply that 5 to 10 million annual tons must be available even before the technology can be considered. The exclusivity conditions imply that the use of these technologies will preclude the use of the inland coal transport system from being available to help in developing other resources, The other two inland modes do not have this limitation, although they are subject to other types of problems. Highway movement of coal is feasible under conditions where the distances are relatively short and/or the volumes to be transported are small. If adequate highways are existing over the route of movement, large initial capital investments are not required; however, there are significant long-term operational penalties in the form of very high (and inflation prone) labor costs and accelerated highway maintenance expenses, the latter being a direct public expenditure. If the requisite highway is not in place, then there is a major public capital investment required if the resource is to move, Such an investment may or may not be warranted depending on the additional marketable 29

32 development opportunities adjacent to the proposed facility. In Alaska, another major consideration is the relationship that a new facility (or expanded use of an existing one) may have on land use patterns in the vicinity, The final land transport method, rail, is the most flexible means of moving large volumes of coal where direct water alternatives are not available. In many respects, it represents a compromise between the adaptability of highways and the inflexibility of the single use conveyor and pipe systems, Its operation involves a considerably smaller labor component than does trucking although it is larger than that of an exclusive use system, Maintenance costs of rail systems may increase considerably depending on volume moved and the type of equipment used but still tend to be proportional to total tonnage. This puts it in a somewhat middle position in regard to inflation susceptibility. If the physical plant is in place, the capital investment required to upgrade it is fairly closely related to the tonnage to be moved thus making it (like trucking) capable of incremental change. When it is necessary to create new physical facilities, their cost is comparable to that of highways, and usually much less than that of the exclusive systems. Like highways, it can be used as a tool to shape other types of development although it is usually of a considerably different nature than that promoted by highways. It is much more selective in its land use impact than is a highway system. 30

33 The third and fifth elements in the coal transport system are the port transfer. Once again, the characteristics of this system may vary widely both in their operational and long-term effects based on the volume to be moved, the goals of the port's owner, and the degree of integration with other port functions. At one extreme is the single purpose port which serves only to move coal, To justify the investment in such facilities, it is usually necessary to move very large volumes. Clearly, they also contribute very little to other development prospects and cannot be considered for incremental facility development. Next in line would be ports in which the coal facilities are separate but use a common harbor along with other marine users, While this has a good deal in common with the exclusive use port, it does share harbor development (usually a public cost under any circumstance), navigation aids, and also tends to involve use of some common shore-side facilities (utilities, maintenance) and coal transfer systems which have elements in common with other commercial operations, Finally, there is the possibility of using facilities for transferring coal which are shared with other port activities. This is the most appropriate method where volumes are relatively small (say less than 3 to 5 million tons annually) or where there may be considerable fluctuation in demand, Clearly, this maximizes the sharing of fixed costs between coal and a port's other commerce, Much of the decision making involved in the determination of port type (also other transport infrastructure) will be related to the mixture of parties supplying development capital. 31