AIDEA board weighs Wrangell shipyard loans and a stake in Augustine geothermal

The Alaska Industrial Development and Export Authority's board will decide Wednesday whether to lend Wrangell up to $22.8 million toward a large-vessel shipyard and to buy a stake of up to $10 million in a company exploring for geothermal power on Augustine, the volcanic island in lower Cook Inlet.

The Wrangell shipyard is meant to repair and build vessels including state ferries, fishing and freight boats and Coast Guard ships, on a 42-acre former sawmill site six miles south of town. Under a resolution before the board, AIDEA would put up about $7.8 million, to be repaid as a loan, for the borough's local match on a $39 million project to develop the site, most of it paid by a $31.2 million federal grant. It would lend up to $15 million more to take the shipyard's design from about 30% to finished and to get its permits.

Repayment on the $7.8 million would be put off to give the Coast Guard time to commit to homeporting icebreakers in Wrangell or to help pay for a homeport or shipyard there, a commitment the resolution calls critical to the project. The Coast Guard has announced plans to homeport three new icebreakers in Kodiak and Seward.

The $15 million loan is tied to a data center. Wrangell's electric utility, which gets hydropower through the Southeast Alaska Power Agency, would sell AIDEA 2 megawatts of steady power for an AIDEA subsidiary, the Alaska Data Corporation, to help develop data center capacity in Wrangell. Revenue from those sales would help secure the loan. AIDEA has told the borough the power use shouldn't raise costs for other customers on the shared grid, according to the resolution.

No payments would be due for two years. If money to build the shipyard's first phase isn't committed by then, Wrangell would still owe the loan from any revenue it has. AIDEA could also hold back either loan until the Legislature, Congress, the Coast Guard or another source commits enough money to make it likely the shipyard gets built.

The resolution points to the November 2023 landslide that killed six Wrangell residents, on top of a declining timber industry and struggles in fishing and seafood processing. Wrangell and JAG Marine Group, which took over the state-owned Ketchikan Shipyard last year, split $750,000 to start designing the shipyard in March, according to a borough manager's report.

On Augustine, the second resolution would let AIDEA's executive director negotiate an investment in GeoAlaska LLC, an Anchorage company, after legal, financial and technical review. AIDEA's ownership share and other terms would be settled later.

Citing utility leaders' warnings that Southcentral could run short of natural gas as soon as this winter, the resolution says Augustine could produce an estimated 224 megawatts of continuous power for decades, equal to about 10% of Cook Inlet gas. That is about three times the estimate in a 2024 paper by GeoAlaska, Ignis Energy and Texas A&M researchers, which put the resource at about 70 megawatts and cautioned that "these numbers will change as GeoAlaska collects additional quantitative data."

In September, the U.S. Department of Energy selected GeoAlaska for negotiations on federal money to drill a test well on the volcano's southern flank. The resolution says power from Augustine could reach the Railbelt through the Alaska Energy Authority's Cook Inlet PowerLink, a proposed $413 million subsea cable between Nikiski and Beluga.

Wrangell Borough Manager Mason Villarma and GeoAlaska CEO Paul Craig are scheduled to present to the board before the votes.