The Alaska Department of Law today published a report on rural fuel prices with a detailed discussion about prices in the Bristol Bay region and the recent efforts by an Alaska Native-owned Pebble contractor to begin a fuel delivery business. (The contractor, Iliamna Development Corp. received a $2 million bridge loan from the Pebble Partnership, according to state records).

Here's what the report says:

There are several villages around the Illiamna Lake area that receive fuel from Crowley. Fuel was historically barged up the Kvichak River from Bristol Bay and stored in a facility owned by Yukon Fuel Company. Crowley purchased this facility in 2005 as part of its acquisition of Yukon. In the last couple of years, the water level in the river has been too low for barge deliveries, and Crowley has been flying fuel to Illiamna from Homer. One village located just off Illiamna Lake reported a retail sales price for heating fuel of $8.11 in July 2009. The cost of air delivery appears to account for most of this expense, and our review of Crowley’s confidential financial statements suggests the cost was not excessive.

In 2009, the Illiamna Development Corporation (IDC) started a fuel delivery operation that has significantly reduced the price of fuel. IDC purchases fuel from Petro Marine in Homer and transports it to Williamsport. IDC loads fuel trucks in Homer and drives them on to a landing craft vessel that takes them to a barge landing in Williamsport. IDC then drives the fuel over the Pile Bay Road to Illiamna. The primary customer of IDC, which makes this operation feasible, is the Pebble Mine.

IDC has experienced some difficulties in its first year of operation. The Pile Bay Road is a narrow right-of-way, and there is inadequate space for a staging area at the dock, where IDC had a 2,200 gallon fuel spill on its very first delivery. (See photo below)

The old gravel road was not intended for transporting heavy loads of fuel, and there are few areas on the road for two-way traffic. The Department of Transportation continues to work on improving access to the road. This corridor is an important access route that allows fuel to be delivered at much lower prices than Crowley’s current delivery via air. The Pile Bay Road is also an important transportation route for fishermen who haul boats across the road to Illiamna Lake, then down the Kvichak River to Bristol Bay. This avoids several days of travel for fishing boats accessing the Bristol Bay Fishery.

DOT is currently working on a land swap that would allow development of a staging area at Williamsport, a key to making access to the road easier and safer. With some improvement to the port and road, delivery of fuel to this area via truck would become reliable, safe, and cost-effective.

Pile Bay Road spill