Yukon Energy bullish on natural gas

Yukon Energy wants to shift our backup power supply from diesel to natural gas. "We don't like diesel. We like it because it provides a cheap backup system from a capital point of view, because diesel's cheap to build.

Yukon Energy wants to shift our backup power supply from diesel to natural gas.

“We don’t like diesel. We like it because it provides a cheap backup system from a capital point of view, because diesel’s cheap to build, but we don’t like it because it costs about 30 cents a kilowatt hour to operate,” said David Morrison, president of the Yukon Energy Corporation.

As energy demands grow on Yukon’s grid, the corporation is looking towards expanding capacity not only for residential and commercial users, but potentially for new mining operations that could come on the grid over the coming years.

Western Copper and Gold’s proposed Casino mine would alone use twice as much energy as is currently available from all of the Yukon’s hydro dams.

Because of that, both Western Copper and Yukon Energy understand that putting the Casino mine on the grid is not an option.

Instead, the two groups are collaborating on feasibility studies to bring natural gas power to the Yukon.

Liquefied natural gas is one of the options being explored by Yukon Energy to expand capacity for industrial development in the short term, said Morrison this week at the Yukon Geoscience Forum.

This could allow for smaller mining projects to come on the system.

The idea would be to truck liquefied natural gas from Outside, likely Calgary, store it here and use it in backup generators, much as diesel is used today.

Proposed changes to the territory’s Oil and Gas Act contain provisions to allow for the handling, storage and vaporization of the fuel.

Feasibility studies are still underway, but if the plan proves economical, it could come to the Yukon at soon as 2014, said Hector Campbell, a senior manager with Yukon Energy.

All of the Yukon’s seven diesel generators will be retired in the next decade. Two large units expire within the next two to three years.

It is very likely that these first two units will be replaced with generators that can burn natural gas and this will be the first stage in the territory’s adoption of the fuel, said Campbell.

Yukon Energy is in talks with the Ta’an Kwach’an Council and Whitehorse over locating a new facility along Robert Service Way.

The project would require specially-designed tractor trailers to transport the fuel and a storage and handling site here in the Yukon.

Still, the operating price of natural gas here is estimated to be one-half to two-thirds the price of diesel, said Campbell.

In the long term, Yukon Energy would like to see the natural gas sourced locally.

All talks with potential suppliers have emphasized the need to be able to switch to a local supply, if one becomes available, said Campbell.

If we could pump natural gas here through a pipeline, it would be a quarter of the cost of diesel, he said.

Northern Cross has ambitious plans to service not only the Yukon, but the overseas market as well, with gas from the Eagle Plain Basin.

“We’re going to supply all the natural gas that the Yukon needs,” said Don Stachiw, the company’s vice-president of exploration.

The most recent survey has estimated 6,000 billion cubic feet of conventional natural gas resources, and 450 million barrels of conventional crude oil.

“It’s quite a prize that needs to be exploited,” said Stachiw.

Conservation groups have expressed concern that natural gas development will lead to hydraulic fracturing, or fracking, a practice where pressurized water and chemicals are blasted into the ground to release gas trapped in shale rock.

Northern Cross is still in the exploratory phase, and does not have specific plans to go ahead with fracking, but it is measuring both the conventional and unconventional natural gas resources in the area.

It is the unconventional gas reserves that may require fracking to facilitate extraction.

The time to commercial development depends on the success of exploration projects, and it is measured in years, not months, said Stachiw.

If the Eagle Plain Basin proves as fruitful for oil and gas as Northern Cross hopes, it will be able to supply fuel well beyond what the Yukon could ever have use for.

“Considering what we think is the potential of the reserve basin, if it’s large enough, there have been many discussions about a pipeline out to the coast, into deepwater ports on the West Coast and then moving it overseas where there’s a more favourable price for natural gas.”

Contact Jacqueline Ronson at