The companies behind two major Yukon mining projects have signed a memorandum of understanding to supply the proposed mines with liquefied natural gas.
Calgary-based Ferus Natural Gas Fuels Inc. plans to build a two-phase LNG plant in Fort Nelson, British Columbia, to supply the Casino copper and gold mine starting in 2020 and the Selwyn lead-zinc mine starting in 2022.
Each phase of the plant would produce more than 1.1 million litres per day of LNG. The company estimates it will send 15 to 20 truckloads of LNG each day up the Alaska Highway into the Yukon.
And Ferus has set its sights beyond the two mines. It hopes to sell excess LNG to other communities and industrial operations in the Yukon, northeastern B.C. and the Northwest Territories.
“As long as there’s road access, we can deliver LNG anywhere in the Yukon,” said Blaire Lancaster, Ferus’s vice-president of communications.
She said construction of the LNG plant is contingent on at least one of the mines getting approved.
“As soon as they get approval, we’ll pull the trigger on ours,” she said. “In the meantime, the idea is that we will have developed the market around the mine.”
The construction cost is estimated at $200 million. Ferus will pay the upfront cost, though Maurice Albert, vice-president of external affairs for Selwyn Chihong, said the mining companies will pay that back through tolls on the LNG they buy.
Western Copper and Gold, the company that owns the Casino project, expects that using LNG instead of diesel will reduce its greenhouse gas emissions by 140,000 tonnes per year, while Selwyn Chihong estimates that figure at 115,000 tonnes per year.
Albert said diesel and LNG were the only viable options for powering the Selwyn mine.
“For a project of our size, renewable energy is not an option,” he said. “The generating capacity that we need at our site is about the same total generating capacity that (the Yukon Energy Corporation) has right now on board. Wind and solar cannot meet our needs.”
Building a hydro plant also isn’t feasible, he said, because it generally takes 50 or 60 years to recoup the cost of a dam, and these mines may only last for 10 or 20 years.
Western Copper and Gold president Paul West-Sells echoed those sentiments. “We need a backbone of firm energy,” he said, adding that wind capacity around the Casino project is “marginal.”
Albert said the new LNG plant could be a boon for diesel-dependent communities in the Yukon.
“All of a sudden to be able to switch to LNG, that’s going to make a huge difference in their cost and their CO2 emissions.”
Yukon Energy spokesperson Janet Patterson said the corporation is in talks with Ferus to supply LNG to its power plant in Whitehorse. Currently, Yukon Energy pays for two to four truckloads of LNG a month from Vancouver.
“We would benefit from the mines purchasing LNG because it would mean we would get a better price for the LNG,” she said.
ATCO Electric Yukon spokesperson Carla Howard said the company hasn’t had any talks with Ferus yet. But it is planning to upgrade its Watson Lake power plant to use LNG as well as diesel in the next few years, with the aim of reducing diesel use by 50 per cent.
“We would be open to communication with (Ferus),” she said.
Lewis Rifkind, with the Yukon Conservation Society, said he’s concerned the new plant might lock the Yukon into emitting more carbon.
“When you create the capacity for a cheap fossil fuel, they’re reducing the opportunity to use other forms of energy,” he said. “We would like to think that LNG is not going to be the fuel of the future.”
But he acknowledged that there isn’t a simple solution for mines that have to set up their own fuel sources.
“There’s no point in building a huge hydro dam system just to build a mine that’s going to last less than a decade,” he said.
Still, both he and Don Roberts, chair of Yukoners Concerned About Oil & Gas Development/Exploration, questioned whether LNG is actually better than diesel in terms of emissions. Though LNG burns more cleanly than diesel, there is debate about how much methane leaks into the atmosphere during LNG production and transportation.
“The footprint of LNG is probably worse than even diesel,” Roberts said. “I think it completely undermines … the future, when we really have to look at what we’re doing to our environment.”
All of this is dependent on Casino or Selwyn actually being built, which is far from a sure thing.
The Yukon Environmental and Socio-economic Assessment Board bumped the Casino project up to the territory’s highest level of assessment earlier this year, over concerns about the proposed tailings pond and impacts on caribou.
And Selwyn Chihong put its project on hold in February, after scaling its exploration program way back last summer. It completed no new exploration this year.
Albert said the Chinese-owned company has been affected by the slowing of the Chinese economy.
“That’s what’s holding back the investment decision,” he said. “They’re still fully committed to this project. There’s no intent of stopping the project or selling it.”
Contact Maura Forrest at maura.forrest@yukon-news.com