SI Online
Posted: July 2, 2008
Bernie Karl - Prospector
Bernie Karl may be regarded now as some kind of Green Guru of the Alaskan bush. But his business reputation in the Greater Pacific Northwest has been three decades in the making as a deal-making, high-volume, high-energy entrepreneur with a large collection of one-liners like, “My mom raised ugly kids, not dumb ones.”
Follow him on his daily travels, and it seems like everyone in Alaska knows him, and, like “Elvis,” he’s known by a single name, “Bernie” and the story of how he became a geothermal power pioneer is an amazing tale of the Last Frontier.
He was raised in Peoria, Illinois, home base of Caterpillar, where his dad worked. He worked briefly at the Caterpillar plant after high school, then headed to Alaska in 1974 to make his fortune on the pipeline project as a 20-year-old mechanic.
Working on the pipeline, he met his wife, Connie, who drove a bus that transported pipeline construction workers.
By the time the pipeline was completed, Bernie and Connie had saved a considerable nest egg, which they used to start a gold mining company. Bernie worked the gold claims during the warm months of the year and spent the long winters back on the North Slope, working as a maintenance manager and mechanic for a succession of oil service companies.
As the equipment began to wear out on the North Slope, a large volume of worn, but relatively new heavy equipment became available for sale at bargain prices. In 1982, Bernie was working for a service company that put up four Caterpillar 998 Lifters for sale, for $40,000 each.
“I was working at the company as the utility maintenance manager, literally scrubbing toilets and managing the water and sewer systems,” Bernie said. “When I went to buy the lifters, the manager didn’t believe I could get the money. But I did.”
Bernie fixed the machines and shipped them south, selling two of them and keeping two..
Bernie began buying additional equipment while he continued to mine for gold, often selling the equipment to his fellow miners. “We learned what a lot of people learn about mining – the real money is in supplying the miners, not the mining”
Eventually, Bernie and Connie bought into a second company, K&K Recycling, which they now own. The company is based in Fairbanks where it operates a 106-acre scrap yard crammed full of mounds of scrap metal and rows of used vehicles and heavy equipment, nearly all of it from the North Slope.
Prudhoe Bay was the largest oil field ever discovered in North America and even though it is past its peak for oil production, its remaining magnitude is made manifest by the steady flow into the K&K yard of rusted drill equipment, boilers, giant valves, engines, trucks, buses and earth movers. Bernie decides which equipment should be repaired and sold, and which should be cut up into scrap, baled and shipped south to steel mills that recycle the scrap into new products.
During a recent visit to the scrap yard, Alaska’s business ties with Seattle were demonstrated in one corner of the yard where workers were baling up scrap metal and loading the bales into a container for Seattle-based Alaska Marine Lines, which would transport the bales south to the Nucor Steel plant in West Seattle. Bernie estimates that Nucor recycles about one third of his scrap. The rest goes to Asia.
During the tour, Bernie also posed next to one of the Caterpillar 998 lifters that he bought back in 1982. It’s deployed at the scrap yard to move heavy items. “It can still lift 35,000, 40,000 pounds,” Bernie said. “It was made in 1974 and it still runs great.”
While continuing to mine gold, Bernie worked a claim near the Circle Hot Springs in the Alaskan interior. He began using the warm water from the hot springs to wash his gold, the process by which miners use water in large tubs to separate the gold flake and nuggets from dirt and gravel. The warm water worked better to wash gold than Alaskan stream water, which was (and is) extremely cold.
It was during this mining experience that Bernie came up with the idea of buying a small resort that was built around the Circle Hot Springs. The resort was far removed from the electric grid, and Bernie planned to use the hot water to generate electricity, thus eliminating the need for diesel generators to produce electricity and avoiding a major operating expense.
The Circle Hot Springs resort was never put up for sale but, in 1998, the Chena Hot Springs Resort was put on the market and Bernie and Connie bought it. The 100-year-old resort is located 56 miles outside Fairbanks, and it's off the grid with the nearest electrical line 32 miles away.
Within a week after closing on the deal, Bernie had drilled a hole and was using water from the hot springs to heat the resort’s indoor swimming pool.
But it proved far harder to generate electricity with the hot springs water because it simply wasn’t hot enough. The water runs about 165 degrees, far too cool to turn a turbine. It took half a decade for Bernie to turn his dream into a reality and the story of how he did it will be explained in the fall issue of Seattle Industry magazine, available in September.
The geothermal power system now meets all the electrical needs of the sprawling 80-room resort. It also powers two industrial-sized greenhouses in which the resort grows lettuce, tomatoes and other produce 12 months of the year. It also provides the power necessary to refrigerate an all-ice Ice Museum that has stood up to the surprising heat of the Alaska summer for the past four years.
Bernie presently saves about $650,000 per year that he’s not paying to fuel the resort’s old diesel electrical generators and he’ll pay off his debt for the geothermal system in about two years. From then on, the hot springs water will provide clean power to the resort dirt cheap.
Bernie developed the energy system with the help of a remarkable young scientist, Gwen Holdman, and United Technologies, a top tier US manufacturer. Gwen, researchers from UT and others figured out how to create a generating system that could create electricity from Chena's relatively cool water. Their work may well prove revolutionary because it may make it feasible to greatly expand the portions of the globe that can take advantage of geothermal power to generate electricity.
Which could make Bernie Karl a highly unlikely hero of the renewable energy movement. Then again, "unlikely" is about the only thing that is likely in the Alaskan bush. From its weather to its people, Alaska's frontier is notoriously unpredictable.
Bernie is not your usual environmental hero. He favors drilling for oil in the Arctic National Wildlife Refuge (ANWR). “They should have done it 20 years ago.” He also doesn’t seem comfortable being associated with the “green” movement. In his business and social circle, being known as “green” is not often a complement.
“I’m a greenie all right,” he said, reaching into a pocket and producing a wad of dollar bills bound by a thick rubber band. “There’s my green.”
But this is mostly Bernie bluster. Bernie believes the US needs to transform from oil to alternative fuels ASAP to help the environment and to become more energy self sufficient. He’s also not through as an alternative energy pioneer. He hopes to create new power plants and recycling operations based on hydrogen and biomass fuel sources.
“This country has the brains and the money to develop new fuel resources,” he said. “We need to get it done. Everybody I know wants clean air and clean water for their kids and grandkids.”
