Wednesday, February 2, 2011

Northwest Powerline

The Northwest Poweline project has now passed through the BC Environmental Assessment process and is awaiting approval from the Minister.   I would be very surprising to have it turned down.   The next step is to get Federal approval for the project, one would hope this would happen quickly.  Given that the feds have offered money for the project, one would expect them to approve, the problem is that nothing will happen if a federal election is under way.

How important is the powerline to BC?   The Northwest Transmission Line is the single most important piece of infrastructure in BC but it has taken years to get to where it is now.

The transmission line will make a number of advanced mineral projects economically viable. Among these are Cooper Fox's Schaft Creek. Imperial Metals' Red Chris, NovaGold's Galore Creek, Capstone's Kutcho Creek, and Hard Creek Nickel's Turnagain project. If only a couple of these projects come into production, BC's mineral exports will be significantly boosted. Within several years of completion of the line it is reasonable for BC to expect more than $1,000,000,000 in new mineral exports, this is worth more than the BC film industry. $3,000,000,000 in new exports in ten years is a very reasonable expectation. The total new tax revenues for the government are very significant and more than pay for the cost of the construction of the line.

There is also one coal mine under consideration in the area, Fortunes Minerals Mount Klappan Anthracite Coal project. Anthracite coal is the highest value coal available.   The mine would have annual revenues of around half a billion.

The Northwest Transmission Line also opens up a large area of BC for the production of green power. There are about 25 potential run-of-river projects that would be economically feasible if the NTL is built. These projects would provide about 1,200 GWh per year, a quarter of what Site C would provide. This new power would also provide another $100 million in new revenues in BC. It is not only run of the river that is possible, there is also some very significant potential for geothermal power and wind power as well in the region.

In Wrangell Alaska there is a strong interest in the NTL because it makes it possible for them to be connected to the Western Interconnection.  There is a local group there advocating for the line, the Alaska-Canada Energy Coalition.   They should be able to offer some power into the grid should there be a connection built to them.

The NTL will also make it possible for sawmills to be developed along Highway #37. There is an annual allowable cut in the Cassiar and Nass timber supply areas of more than 1.2 million cubic metres of timber but this timber can not be processed locally. In the Cassiar TSA, the lack of milling facilities dramatically reduces the area of forest that is economically harvestable. A single sawmill somewhere around Iskut would make it possible to have a higher annual allowable cut.

You would think that with all these strong economic, job and tax benefits to the province, this transmission line would have been the number one infrastructure project in BC years ago. Unfortunately the Northwest Transmission Line has long suffered from its location.

Governments in BC are driven by the voters and the majority of the voters are located in the Lower Mainland. Spending several billion dollars on infrastructure in the south west of BC is an easy political sell, convincing government to spend money on new infrastructure in the Northwest is just not very easy at all. Even though the NTL will clearly have a significant impact on the GDP of BC and provide the provincial government with significant tax revenues, there has never been a strong and vocal support of the project in Victoria.

As it stands, the scope and scale of the NTL is much smaller than is needed.  If half the mines open the line will be beyond capacity.  Realistically the government should be looking at a minimum 500kV line and should be looking at extending all the way to Yukon connecting with the grid in the territory at Watson Lake which then makes the case for a transmission line from there to Teslin, another 272 kilometers.  Connecting Yukon then makes connecting Alaska a reasonable expansion.

The government is willing to fund the Gateway project and transit expansion, but it seems unwilling to put much effort into infrastructure needed for the resource industries.   There is a fairly quick return on investment for government from infrastructure for the resource industries.  

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