Raw water may be shipped out of Sitka within the next three years. At least, that’s the promise of two bulk water contracts — approved by the Sitka Assembly Tuesday night (09-12-17). One came from start-up in the business of bottling, while the other is a repeat customer who has spent decades trying to sell bulk water to countries around the world.
You’ve probably heard of Fiji or Evian.
(Sound: 1980s Evian Commercial, “Rain, melted snow…you don’t have to go to the Alps to drink it”)
But what about Eckert Fine Beverages? That’s the company that wants to package Sitka’s raw water as a luxury good. Their plan is to pump water at Gary Paxton Industrial Park into 40-foot containers bound for treatment and bottling in California. Under the contract (Eckert Fine Beverages), Eckert would be required to design and construct new water loading infrastructure that the City of Sitka would own and maintain.
Eckert is the first company to propose shipping water in small volumes and that idea proved tantalizing for several members of the Sitka Assembly.
Mayor Matthew Hunter wished Eckert success in his venture. “I hope you’re buying 100 million gallons from us because that means you’re giving us a million dollars. We’re both happy out of that. So may we have a long, happy relationship here,” Hunter said.
The water would be shipped at 1-cent a gallon.
Over the phone, owner Michael Eckert said his family-run business has been around since 1984. This would be their first attempt at selling beverages.
“We’re more marketers than we are beverage people. This is going to be luxury brand. We’ve done that before, in other industries, so that’s why we’re going to start small and build it as best we can,” Eckert said.
During persons to be heard, Dr. Richard Wein asked how the Assembly plans to protect Sitka’s brand should local water be sold in high-end markets.
Garry White, Director of the Gary Paxton Industrial Park, said there’s wisdom in staying away from quality-control as that exposes the city to liability. “We have no control over it downstream. If we start taking too much control, I don’t know if people would want to do business with us,” White said.
Eckert has a lot to prove in a short amount of time: The company has to ship 75,000 gallons in the next three years in order to keep their contract.
Paley has been trying to break into the bulk water business for decades without shipping a single drop so far. He first approached Sitka in 1996. “I think we were a bit early. We were focused strictly on China on that point,” he told the Sitka Assembly over the phone.
That was before there was any water pipeline or to speak of. With infrastructure at the dock and new business partner in Alaska Fresh – which has committed $20 million to the project – Paley thinks this time will be different. He told the Assembly ABWAI has interest from a potential buyer in Mexico.
“They’re talking about building a tank farm in Manzanillo and taking the water from there,” Paley said. “I think this time, the timing could be right for the bulk water export. I know we’ve all been a bit frustrated with it and put a lot of money and time and effort into it. After 30 years, I’m not giving up,” he added.
Under this new contract, ABWAI plans to ship 50 million gallons of raw water over the next 20 years at 1-cent a gallon.
Assembly member Steven Eisenbeisz had some reservations. “To me, I’ve seen a lot of speculation come and go with our water — trying to tie it up, trying to get exclusive rights — only to watch it fizzle out and disappear,” he said.
Eisenbeisz is referring to Alaska Bulk Water (ABW). CEO Terry Trapp had exclusive rights to Sitka’s water from 2006 to 2015 before a series of missed payment deadlines ended his contract. Trapp put forward a brand new 20-year purchase agreement in 2016, with ABWAI as a co-signee promising $1.1 million of that deal, but his deal fell through. Both companies were unable to deliver the necessary payments and the agreement was nullified.
Assembly member Bob Potrzuski reasoned it was worth another try with Arctic Blue. “If we pass the contract, there’s a chance water is going to be produced. If we don’t pass the contract, there’s no chance water will be produced. It’s a simple one for me. I’m going to vote for it.
Both purchase agreements were ultimately approved by the Assembly. They are good for 20 years, with several benchmarks along the way, and recommended by the Gary Paxton Industrial Park Board.
The Arctic Blue contract has a clause that says local needs for drinking water and hydroelectric energy are first priority. The Administrator can limit or stop commercial sale if need be. If other customers come knocking, the city still has over 75% of it’s water available for sale.
Update 5-1-18: The contract with Arctic Blue Water Inc. was cancelled when the company failed to make a $90,000 payment within 120 days of signing. According to Gary Paxton Industrial Park director Garry White the ABWAI has offered to renegotiate a new contract.