Minister calls cost of northern BC power line “peanuts”

Vancouver – The Premier of BC, Gordon Campbell, has resuscitated the Northwest Transmission Line (NTL) 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, BC.

Campbell announced Friday, Sept. 26, $10 million of 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,” the BC Minister of Energy, Mines and Petroleum Resources Richard Neufeld says.

Just under a year ago the government had announced public-private funding with NovaGold (NG-T, NG-X) and Teck Cominco (TCK. B-T, TCK-N) to pay for the roughly $400 million line. NovaGold and Teck, who needed power for their Galore Creek 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, public-private 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 recent report playing up the economic potential of the region’s mining industry if only power would flow north Neufeld says that the BC government decided it was time to drum up private interest in the power line again.

The announcement comes on the heels of a Mining Association of British Columbia (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 ten 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 MW. Three of the projects would need as much as 150 MW to go forward: NovaGold and Teck’s Galore Creek (100-145 MW), Copper Fox Metals‘ (CUU-V) Schaft Creek (93-140 MW) and Seabridge‘s (SEA-T, SA-N) KSM (150 MW). One, Hard Creek Nickel‘s (HNC-T) Turnagain needs between 78 and 105 MW. Three projects come in at 37 MW: Imperial Metals‘ (III-T) Red Chris, Canadian Gold Hunter‘s GJ and Silver Standard Resources‘ (SSO-T) Snowfields. And another three need 20 MW or less: Skyline Gold’s (SK-V) Bronson (20 MW), Sherwood Copper‘s (SWC-V) Kutcho (10-15 MW) and Fortune Minerals‘ (FT-T) Mount Klappan (8-10 MW).

Assuming all ten projects break ground and use the line, the MABC estimates almost 20 years of 400 to 600 MW 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 further 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 rate payer, meaning every British Columbian that is on the electrical grid, to pay the whole cost of it,” Neufeld says.

Although no one in the mining industry has come knocking yet, he 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 will 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.”

He almost but no quite rules out the possibility of full public financing of the project. “Likely not,” he says in response to the suggestion.

He 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.