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Port MacKenzie Poised For Post-Oil Economy

by Phillip Manning ~ July 30th, 2014

By: Ellen Lockyer, KSKA – Anchorage

Earlier this month, the Matanuska Susitna Borough’s Port MacKenzie took on a load of sixteen miles of cement-coated pipe from a foreign vessel.  The pipe now rests at the Port, awaiting shipment to Nikiski to be used in construction of a new Cook Inlet oil platform. As KSKA’s Ellen Lockyer reports, although the pipe shipment has boosted Borough revenues,  some are asking questions about whether the port will ever be profitable.

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Port MacKenzie director Marc VanDongen says the load of cement – coated pipe proves the Port’s heavy lifting capabilities:

“Each piece of pipe is 42 feet long and it weighs 10,500 pounds. So we were lifting four pieces of pipe at a time off the ship, 42, 000 pounds at a time, and placing them on flatbed trucks. “

In March of this year, VanDongen told the Matanuska Susitna Borough Assembly that he wants more than 915 thousand dollars to run the Port this year. [fy15starts this month] That figure includes 135 thousand dollars for work on existing infrastructure that is to be paid for with a state grant. This year’s Port Mac operating budget is about the same as last year’s – close to 800 thousand dollars.  Through advertisements on its webpage and elsewhere, the Borough has been promoting the Port as a necessity for the economic development of the area.   Borough manager John Moosey says,

“We have a tremendous opportunity, and we are really looking for being the answer to our post – oil economy here in Alaska. We want to take a lead in that and a partnership with the state of Alaska.”

 Moosey says this year, because of federal accounting system changes, the Port budget will be paid for with the Borough’s operating funds.  Before that, Port expenses were paid out of an enterprise fund, which meets expenses through user fees.

“Traditionally, Port MacKenzie had an enterprise fund. With the new GASB, which is the new accounting rules, for 2015, we are funding this out of our general operations, our general tax levy. When we can return the operations to cover expenses versus revenues, we will be flipping this back to an enterprise fund operation.”

 But, Moosey says, the Port’s profitability depends on a rail link to the Port from Houston. That link is under construction, but won’t be completed for some time… possibly not before 2018.

 Port MacKenzie has not turned a profit since 2008, when 451 tons of gravel was off loaded there. Van Dongen says that activity generated 832 thousand dollars profit in royalties, wharfage and dockage fees. Van Dongen says this month’s load of cement pipe is generating income, too.

”It’s going to depend on how long the pipe is sitting on the dock. There’s a monthly charger per square foot that they are leasing the dock. They’re leasing an office in our terminal building. There’s wharfage, there’s dockage for when the pipe comes in and there is a different rate for when it goes out. Roughly, I’m estimating between 60 and 70 thousand dollars from this one operation. “

 He, too, says that the rail link is vital to the Port’s continued economic health.

 But some have questioned whether or not the Borough is throwing money into a ditch.

“It’s not feasible. It’s not economically viable.”

That’s a comment from  Grace Whedbee, a  Big Lake homeowner.  Whedbee is a contractor who works in ppost – disaster infrastructure recovery.  She  has written a report critical of Port MacKenzie, and has also has sided with local environmental groups in a lawsuit against construction of the rail link. Whedbee, who is a contractor, says it is unlikely that Port MacKenzie will ever make money, because of its location.

 Whedbee says currents at Port MacKenzie are too fast for the safety of big freighters, and that the ships have to travel further to get there than they do to get to the port in Seward. And she says if Alaska products are to be shipped out of state, it’s cheaper to ship them by railroad to Seward.

”As taxpayers, we are going to continue to pay on this until someone wises up and says ‘How much more money are we going to put into it?’ I do not think that, long run, that port will ever be able to be a world port, that is used to ship around the world.”

 Let’s look at the recent shipment of cement covered pipe delivered to Port MacKenzie this month. The pipe was built in Korea, then sent to Mexico for the cement coating, before it was shipped to Alaska on a Panamanian flagged ship with a Chinese crew. Van Dongen says Port MacKenzie was the optimal destination because of the space available there for storing the pipe. He says near term plans are to expand the port’s customer base to include a fuel tank farm, and that negotiations are in the works with two companies interested in starting an LNG export operation at the Port.

Borough manager Moosey says the Borough’s long term plan regarding the Port includes asking the state for money for a second dock.

“That plan sits right in our capital improvement program. Essentially, we are planning that when the rail line is complete, activity will pick up greatly at Port MacKenzie and there will eventually be a need for additional dock space and transportation coming in. We don’t anticipate this happening for at least three or four years, and at that time, we’ll bring forth a plan to the state legislature or look at bonding options to make that happen. But that is farther out in the future.”

Moosey says that that request won’t be made until the railroad link is complete. At that time, the Borough will firm up a marketing plan to attract more business to the Port.

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