Sitka keeps Alaska Bulk Water afloat with 6th contract extension

Though not a single drop of raw water has been exported, the Sitka Assembly is offering Alaska Bulk Water Incorporated another chance to deliver on their promises. At the company’s request, the Sitka Assembly on Tuesday (10-27-15) agreed to extend their contract for the sixth time. (Emily Kwong/KCAW photo)
Though not a single drop of raw water has been exported, the Sitka Assembly is offering Alaska Bulk Water Incorporated another chance to deliver on their promises. At the company’s request, the Sitka Assembly on Tuesday (10-27-15) agreed to extend their contract for the sixth time. (Emily Kwong/KCAW photo)

For nearly a decade, Alaska Bulk Water Incorporated has been setting up shop in Sitka – at the site of the city’s once pulp mill. The former bottling company is trying to send raw water to customers around the world, from drought stricken California to beer manufacturers in Mexico.

Not a single drop has been exported so far, but the Sitka Assembly is offering the company another chance to deliver on their promises. At the company’s request, the Sitka Assembly on Tuesday (10-27-15) agreed to extend their contract for the sixth time.

With this extension, Alaska Bulk will have 36 more months to export Sitka’s most abundant natural resource. The company, formally called True Alaska Bottling, drew up a purchase agreement with the city in 2006. As the venture slowly took shape, the company requested – and was awarded – five deadline extensions. And on Tuesday (10-27-15), Terry Trapp, the CEO of Alaska Bulk Water, asked the Assembly for yet another grace period.

“Moving water from Alaska to other parts of the world sounds easy. But it isn’t,” Trapp said before the Assembly. “We’ve spent nine years in a learning curve, in understanding the things that we have to do in order to make this happen.”

And a lot of the grunt work, at least on the supply side, has happened in the last three years. Alaska Bulk spent $1.5 million on a new water station on the tidelands of the Gary Paxton Industrial Park. The company has also bought 12,000 feet of floating pipeline, purchased a tidelands lease to allow ships into Silver Bay, and installed a dual mooring buoy system for anchoring those ships, which are too large to dock.

Over the years, Alaska Bulk has also paid the city $1.35 million dollars in non-refundable credits to hold on to the contract. With this latest extension, the company is shelling out another million.

Assembly member Matthew Hunter said that swayed his vote three years ago, and clinches his vote now.

“We’re looking at another million dollars we get, whether you ship water or not. That’s a lot of pressure on you. You’re already $1.3 million, plus your infrastructure and all the other stuff for marketing. It’s got to be a big investment, so I trust that your goal here is to ship water and to pay us for it. So, sounds good. Right now it’s pouring over the dam, so it’s not doing us any good.”

Hunter said the worst case scenario was that Alaska Bulk asked for another extension in three years. Best case scenario? In three years, water business is booming.

Assembly member Bob Potrzuski was more skeptical. He thought it wasn’t prudent to lock out competitors. With the contract amendment, Alaska Bulk will have access to 92 percent of Sitka’s commercial water and plans to sell it for one cent a gallon.

“Personally I would like to see this contract for significantly less water,” Potrzuski said. “I would get rid of the whole idea of exclusivity and I would give others the opportunity and see what they could do with Sitka’s water.”

Trapp responded by saying that there wasn’t enough space in Silver Bay for multiple companies to build their own loading stations, and that when it comes to marketing water, customers prefer to see one salesman.

“You have one product to sell. That’s water. You can’t differentiate it. It’s bulk water,” Trapp said. “If you introduce competition, it’s going to wind up in a competitive battle and a downward pressure on price. We’re holding the line at  a penny a gallon, as to what we have to pay the city. And I know that other people would like to come in here and offer you less and promise you they can deliver the whole world. And that’s just not reality.”

The Assembly seemed convinced, throwing their weight behind the company in the hope they will literally deliver. Trapp said he’ll be shifting gears these next three years to focus on the demand side of bulk water. He claims the company has potential customers in Mexico, the Middle East, China, and South America. Alaska Bulk also has a corporate office in Seattle and is marketing directly to Southern California.