Large industrial, energy projects planned for leased UA land at Port MacKenzie

What you need to know:

• Terra Energy has leased 829 acres of University of Alaska land near Mat-Su's Port MacKenzie for large-scale industrial and energy developments.
• Borough officials said they expect Terra to pursue similar projects on nearby borough land.
• The development is tied to parent company Flatlands Energy’s proposed coal-fired power plant near Skwentna.
• Short on time but need the local news scoop? Get free weekly news in your inbox for Mat-Su, from Mat-Su.

A company planning a new coal project in western Mat-Su has leased more than 800 acres of University of Alaska land near Port MacKenzie to build a large-scale industrial park and energy facilities.

Terra Energy signed a 20-year lease with UA in late May, according to university officials.

The lease could be in addition to nearby borough land that Terra said it intends to lease for similar projects, including data centers. The Matanuska-Susitna Borough Assembly approved a permit for that lease early this year, then voted to override Borough Mayor Edna DeVries’ veto of the measure.

Information UA released about Terra’s projects does not highlight data centers.

Officials with Terra Energy did not respond to a request for comment.

Terra’s projects near the port are part of its parent company, Flatlands Energy’s, plans to build a new coal-fired power plant near Skwentna, with carbon emissions piped more than 60 miles to Cook Inlet for underground storage.

The company received an $89 million grant from the U.S. Department of Energy this summer to help study the coal plant’s viability.

But to make the plant financially possible, the company needs to source major energy users, such as an industrial park or data center, to provide a large customer and attract investors, Terra officials told the Matanuska-Susitna Borough early last year.

The 829 acres of newly leased university land could host a wide range of activities that fit that need, according to information about UA released about the deal.

“The lease authorizes the development of the Terra Energy Center Campus, which is described in the lease as a large-scale industrial park. Permitted uses include the development, construction and operation and maintenance of facilities supporting industrial and commercial tenants, energy generation, transmission, storage and distribution,” Adrienne Stolpe, director of the University of Alaska Land Management Office, said in an email.

The plans also include transportation facilities, logistics and staging areas, warehousing and materials handling facilities.

“The lease also authorizes subleasing to future tenants consistent with these permitted uses,” Stolpe said.

While the state requires a best interest finding — an analysis of public benefits and costs that factors in public comment — for major actions on state lands, projects on university lands are exempt from that requirement.

Site development and construction would begin in 2029, the fourth year of the lease, with operation of facilities in the following years.

Payment terms include a first-year payment to the university of $20,000, increasing to $60,000 annually in the second and third years.

When operations begin, which is targeted for 2030, the payment would increase to $586,000 per year, with a 2% annual inflation adjustment through the end of the 20-year lease.

A full preliminary development plan provided by Terra to the university is confidential, Stolpe said.

Matanuska-Susitna Borough officials were not informed before the university leased the land, an inholding within the borough’s 8,000-acre port district.

Borough officials at Port MacKenzie said they expect Terra will also continue to pursue plans to lease about 1,000 acres of borough land for similar projects near the port. The permit approved early by the Assembly early this year functions as a placeholder ahead of any official lease agreement, they said. 

If Terra requests that lease and the Assembly approves it, Terra would hold leases on about a quarter of the land in the port district. 

While borough officials support Terra’s plans to develop in the area, they said they were blindsided by the university’s decision to lease all of its port district holdings without coordinating with the borough. A large portion of the land abuts the terminus of the port’s unfinished rail spur, and the borough was actively seeking a land swap or agreement that would have allowed them to utilize it, they said.

“The fact that the university leased it without any sort of conversation with the borough — it blows my mind,” Mat-Su Borough Port Manager Dave Griffin said in an interview.

UA owns about 150,000 acres across the state, including the four parcels at Port MacKenzie. The university leases or otherwise uses the land to support its operations and programs, such as scholarships.

The Terra Energy plan is the latest of several development projects proposed in the port area.

Borough officials are planning several projects using money from a federal transportation grant announced earlier this year. Many are related to a hoped-for large federal grant to complete a rail link connecting the port to the Alaska Railroad at Houston.

In a separate development, mining company Nova Minerals is building a pilot plant on leased port land to demonstrate new technology for refining antimony ore from a deposit under exploration in western Mat-Su. The company expects to complete the plant by September 2027, they said.

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