Yukon Electrical Company Ltd. is pleased to have the first liquefied natural gas facility licence in the territory, said general manager Dwight Redden.
“That was some pretty good news for us.”
The Yukon government amended its Oil and Gas Act a year ago to allow for the regulation of LNG.
Yukon Electrical recently received the first permit under that amended legislation.
“Being the first ones through, we weren’t sure of all the steps to be taken,” said Redden.
But regulators and assessors were all supportive through the process, he said.
The plan is to retrofit Watson Lake’s six diesel generators so that they instead burn a mix of diesel and natural gas.
It could displace two million litres of diesel fuel per year, said Redden.
The capital costs for the upgrade is a little over $1 million, he said.
Because natural gas is cheaper than diesel, the utility expects to see a return on that investment in six or seven years.
Retrofitting the generators is relatively simple, he said.
It involves installing piping to the generators so that natural gas can be piped in and then mixed with air and diesel for combustion.
Most of the capital costs relate to the storage and vaporization facilities for the gas.
The fuel will be trucked up from an LNG facility in Delta, B.C.
It is supercooled to minus -162 C so that it takes up less room for transport.
Once in Watson Lake the super-cooled fuel will be pumped from the truck into a special storage tank.
“The tank is kind of like your lunch box thermos that you used to take to school,” said Redden.
It would look a bit like a large propane tank for industrial storage, he said. There will be a berm around the area in case of accidental leakage.
It will be double-lined and insulated to keep the LNG cold until it is needed.
At that point, the liquid will be pumped into a vaporization unit, where waste heat from the generators will be used to heat the liquid until it turns back into a gas. Then it will be piped into the power plant and into the generators.
Yukon Electrical hopes to begin construction in the spring, and begin burning natural gas in the fall.
The company will first retrofit only one of the generators. Emissions will be monitored to ensure that they meet guidelines.
Then, if all goes as planned, the remaining five generators will be converted in 2015.
The project has not yet been approved by the Yukon Utilities Board.
It was one of several capital projects proposed in Yukon Electrical’s most recent rate application to the board.
A decision on that is expected in March or April, said Redden.
If the board were to decide that ratepayers’ money was not prudently spent on the Watson Lake LNG project, it could deny the project.
In that case the company would have to halt the project and deal with the costs that have already been spent towards it.
Contact Jacqueline Ronson at
jronson@yukon-news.com