Ur-Energy Initiates Aggressive 2007 Drilling Program at Lost Creek

21 April 2007 | 07:40 Code : 13409 Geoscience events
When Fred Shusterich looks around the harbor on Lake Superior, he sees things....
When Fred Shusterich looks around the harbor on Lake Superior, he sees things he hasn't seen in years -- little islands poking out of the water.Shusterich is concerned, like many others connected to the shipping industry, about what those islands signify off the city of Superior in far northern Wisconsin."I think it may be another very poor year if this drought continues as far as water levels," he said.Now's the time when harbors along the Great Lakes -- Superior, Michigan, Huron, Ontario and Erie -- thaw and shipping begins, carrying 10 percent of the country's waterborne cargo.However, excitement over the shipping season is being replaced with frustration over low water levels, which is forcing shippers to lighten their loads so they can move safely into harbors.The lighter loads -- sometimes hundreds of tons per ship -- turn into headaches for suppliers that send their goods on vessels, shippers and companies whose orders come up short.Midwest Energy Resources, the coal supplier where Shusterich is president, just sent out its first vessel of the season with a load just under 60,000 tons, shy of a typical 62,000-ton shipment, he said.Shippers don't expect the situation to improve soon. A warmer-than-normal winter this year means more evaporation because the lakes aren't protected by ice cover. They also worry about dredging -- the process by which sand, silt and other debris are removed from harbors. Dredging doesn't solve the problem of low water levels. But it does give ships wiggle room to carry more weight.Unfortunately, the federal government, which pays for most of the harbor dredging, can't keep up with demand, said Glen Nekvasil, vice president of corporate communications for the Lake Carriers' Association, a trade group for shippers on the Great Lakes.For every inch the lakes recede, ships must reduce their loads between 50 and 270 tons, he said. At the end of last season, with waters particularly low on Lake Superior, ships lost about 8,000 tons per trip -- about 11 percent of their carrying capacity, he said."Every ton has an impact. These companies, they earn their living carrying cargo, so every lost ton of cargo is lost revenue," Nekvasil said.Shipping is big business. Last year, a little more than 1 billion tons of goods such as iron ore, coal and limestone, were waterborne in the U.S., he said. Shippers on the Great Lakes hauled 110 million tons of cargo, with more than half of that iron ore.Back in the late 1990s, shippers hauled as much as 125 million tons of cargo a year on the Great Lakes. Last year's numbers are at least partially due to the low water levels, but the steel industry -- which uses iron ore -- has been slow, too, Nekvasil said. The coal trade has been steady and the roughly 70 ships in the U.S. fleet regularly sail, he said.Water levels have slipped for years and the forecast isn't getting any better. Lakes Erie and Ontario are faring better than the others this year, said Scott Thieme, chief of the U.S. Army Corps of Engineers' hydraulics and hydrology office in Detroit. But numbers show they're still lower than last year.Lake Superior is within a few inches of its record low -- 599.5 feet deep, set in 1926. It's now about a foot lower than last year and projections for this summer are that it'll get even lower.It's unclear how long the other areas will maintain levels above record lows, because all the lakes are connected, Thieme said."The lakes are so large that there's such a huge volume of water. It takes a long time for some of these impacts to move through the system with them all being linked," he said.One way to combat it is to dredge so vessels can get in. This year the Corps of Engineers will spend $20 million on dredging projects in the Great Lakes region, up from $19 million last year. But that increase is due to projects on Chicago commercial ports, which are not dredged as often, said Angie Mundell, project manager for operations for the corps in Detroit.Nekvasil's group argues the government should spending more."This is a major issue for the industry. It's our primary focus right now," he said.Grain exporter Chicago and Illinois River Marketing isn't waiting for the government to dredge its harbor in Milwaukee. Richard Blaylock, manager at the company's site, said the company spent $200,000 in two years to dredge its own spot off the Milwaukee Harbor.With shipping season just under way, he's not sure if the company will have to dredge for a third year in a row."Dredging is expensive and I'd like not to have to do it," Blaylock said.Iron ore mining company Cleveland Cliffs will simply hire more ships to carry its ore to customers like steel plants throughout the region, said Dana Byrne, vice president of public affairs for the Cleveland-based company.The dwindling water levels mean a typical vessel carrying between 25,000 and 30,000 tons will have to reduce its load by 1,000 tons per trip, he said."We're going to move the tons we need to move and we'll just have to do it," Byrne said. "It's just going to take more trips and added cost."Shusterich's company, Midwest Energy Resources, plans to contract to have 450 ships again this year. He said it'll continue to serve customers, like electric utilities and industrial companies, by rail and truck when it can."When we're running at the levels we're running, it means you need more vessels to carry the same amount of cargo," he said. "But at some point you run out of vessels."

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