BC revives northern power line project

Vancouver — British Columbia Premier Gordon Campbell has resuscitated the Northwest Transmission Line (NTL), a project that would see at least 335 km of new, 287-kilovolt, power lines extended into the heart of prime mineral exploration and mine development country, north of Terrace, B. C.

In late September, Campbell announced $10 million in new funding to go towards the project’s environmental assessment and First Nations consultation. The Office of the Premier called these steps the first stage of the NTL project before construction.

“We’ve already spent $10 million on environmental work and First Nations consultation and this will add to it,” says B. C.’s Minister of Energy, Mines and Petroleum Resources, Richard Neufeld.

Just under a year ago, the government had announced publicprivate funding with NovaGold Resources (NG-T, NG-x) and Teck Cominco (TCK. B-T, TCK-n) to pay for the roughly $400-million line. NovaGold and Teck, which needed power for their Galore Creek copper-gold project, would have paid around $158 million, while the government would have picked up the rest of the tab.

Neufeld says that at the time, he convinced NovaGold and Teck to go in on a larger, publicprivate line rather than having the two companies build their own, smaller line, so that other potential mine developments in the area might benefit.

But when construction on Galore Creek halted at the end of 2007, so did plans for the power line.

Now, with Teck and NovaGold working on an updated feasibility study for Galore Creek and a re- cent report playing up the economic potential of the region’s mining industry — if only power would flow north — Neufeld says that the B. C. government decided it was time to drum up private interest in the power line again.

Pierre Gratton, president and CEO of the Mining Association of British Columbia (MABC) says the announcement is a relief to those with exploration and mine development projects in the area. “Prior to (Campbell’s announcement) it put companies in a very difficult situation,” he says, primarily because it was hard to raise capital with access to power in limbo.

The announcement comes on the heels of a MABC study highlighting the potential for a 517-km, $600-million line from Terrace to Dease Lake (about 200 km north of Bob Quinn) to attract up to $15 billion in investments in the region from both the mining and energy sector.

The MABC report describes the future for the area between Terrace and the Yukon border — with at least 10 early to advanced-stage, mineral projects — as one that is, and will be, starving for energy and electrical infrastructure.

The estimated energy appetites of the mining projects range between 10 and 150 megawatts. Three of the projects would need as much as 150 megawatts to go forward: NovaGold and Teck’s Galore Creek (100-145 megawatts); Copper Fox Metals’ (CUU-V, CPFXF-o) Schaft Creek (93-140 megawatts) and Seabridge Gold’s (SEA-T, SA-x) Kerr-Sulphurets-Mitchell (150 megawatts). One, Hard Creek Nickel’s (HNC-T, HNCKF-o) Turnagain needs between 78 and 105 megawatts. Three projects come in at 37 megawatts: Imperial Metals’ (III-T, IPMLF-o) Red Chris, Canadian Gold Hunter’s (CGH-T, CGHLFO) GJ-Kinaskan and Silver Standard Resources’ (SSO-T, SSRI-q) Snowfields. Another three need 20 megawatts or less: Skyline Gold’s (SK-V, SYGCF-o) Bronson (20 megawatts), Sherwood Copper’s (SWC-V, SWOPF-o) Kutcho (10-15 megawatts), and Fortune Minerals’ (FT-T, FTMDF-o)Mount Klappan (8-10 megawatts).

Assuming all 10 projects break ground and use the line, the MABC estimates almost 20 years of 400-to 600-megawatt demand from the year 2015 onward.

The 335-km line the government proposes isn’t quite as long as the one the MABC outlines, however.

“I think we’re going a long stretch here to finish the consultation to Bob Quinn,” Neufeld says. But he adds: “The only thing holding that back (from going farther north) is money.”

As it stands, the government is essentially hoping to revive interest in a public-private partnership.

“I don’t think it’s up to the ratepayer, meaning every British Columbian that is on the electrical grid, to pay the whole cost of it,” Neufeld says.

Gratton agrees a public-private partnership is the most likely route –though he says some in the mining and exploration industry feel it should be up to the provincial government to build the infrastructure. If it did, the MABC study suggests it would still get a good return on its investment.

This not only includes revenue streams from potential mining projects but also from energy generation. The MABC study depicts a region with more than 2,000 megawatts of energy potential from a variety of sources, including hydro, wind and geothermal energy.

But despite those feelings, Gratton says the industry understands that when it comes to power lines, people expect it to help pay.

Although no one in the mining industry has come knocking at his door yet, Neufeld expects someone will soon. He suggests that if there is $15 billion of possible capital investment in the area, that $158 million (what Teck and NovaGold were to ante up in 2007) out of an estimated $400-million capital cost for the 337-km line would be “peanuts.”

“You know what $158 million is?” He asks. “It’s a couple of crumbs on Friday night off the kitchen table. So I would say the pressure is on the industry.”

This time, however, if or when someone does come knocking, Gratton doesn’t think it will be one or two mining companies. With so many projects in the region, he says, it’s likely a formula including a consortium of companies pitching in as they get closer to possible commission dates would apply, “rather than one silver-bullet project.”

Neufeld couldn’t say when the environmental assessment and consultations with First Nations and communities in the area will be complete. Ultimately, construction would be timed with positive developments of mining projects in the region.

“The idea is not to have the power in, with lines floating around in the wind and with nobody to take electricity,” he says.