Rising Tide

Rising Tide
Mactaquac Life Achievement Project | Photo courtesy NB Power/Tony Crawford

THE NATURAL RESOURCES INDUSTRY has long been the backbone of Atlantic Canada’s economy. But where the region once relied on the fishery and forestry sectors; oil and gas, mining, and renewable energy have joined alongside these two traditional industries as beacons of growth. In the following pages, read about eight mega-projects that are not only creating economic prosperity across the region, but allowing the East Coast provinces to be global players in these critical industries.

LOCATION: Newfoundland and Labrador   |   CAPITAL COST: $3.2 billion   |   PEAK PRODUCTION: 75,000 bpd

ON MAY 29, 2017, Calgary-based Husky Energy made a much-anticipated announcement. It sanctioned the West White Rose project.

Husky is a partner in the West White Rose project (a satellite of the White Rose field) along with Suncor Energy and Nalcor Energy. Though they temporarily shelved the project in 2014 when the oil and gas downturn was in full force, it was back on the books almost three years later. It came at a key time for Newfoundland and Labrador with the construction phase of ExxonMobil’s Hebron project winding down (first oil was achieved in November of 2017) and the province in need of a new mega-project to create employment.

The project is doing that. Just over a year after sanctioning, construction is proceeding at the Argentia graving dock (an excavated work site on Newfoundland’s east coast that will allow the completed facility to be floated out to the field). Site work is currently occurring to prepare the graving dock for construction of the concrete gravity supported structure and an integrated topsides facility, which will be built by the SNC Lavalin-Dragados-Pennecon General Partnership. This structure will hold drilling facilities, utilities, support services and accommodations. The platform will transport the oil back to the SeaRose Floating, Production, Storage and Offloading (FPSO) vessel via subsea tiebacks. The project is expected to produce first oil by 2022. Between 600–800 people will be employed in Argentia during the coming months. The platform will require 250 people to operate.

Construction activities have ramped up quickly on West White Rose since the 2017 sanctioning. Husky Energy spokesperson Colleen McConnell says the last few months have seen the installation of various support infrastructure at the graving dock site, including underground services, office buildings and the concrete batch plant. The main tower crane is also being erected. “First steel was cut on the topsides at Ingleside, Texas, in mid-April, and construction continues on the living quarters modules in Marystown,” McConnell says. First steel on that portion of the project was cut in October 2017. There are about 110 personnel on site at the Kiewit Offshore Services yard in Marystown on the province’s southeast coast.

LOCATION: New Brunswick   |   CAPITAL COST: $2.9-$3.6 billion   |   ELECTRICITY CAPACITY: 660 MW

MACTAQUAC IS A 660-MW hydroelectric generating station on the Saint John River. It supplies about 12 per cent of the province’s power, so it’s a vital piece of infrastructure.

Commissioned in 1968, it is the largest of seven dams in New Brunswick. But since the 1980s, concrete portions of the facility have been affected by a chemical reaction that causes the concrete to swell and crack. NB Power was looking for a way to address this problem so the Mactaquac dam would operate for its intended 100- year lifespan. In 2016, after three years of stakeholder engagement and research, NB Power decided the best option to restore the dam and ensure it’s operating until 2068 was through rehabilitation. And so, the Mactaquac Life Achievement Project was born. Part of the rehabilitation work will include the maintenance of concrete structures and mechanical equipment. Six turbines will be removed and replaced, and $100 million will be used for a fish passage.

“The Life Achievement option will help NB Power’s mandate to keep providing safe, reliable and clean energy to New Brunswickers at low and stable rates,” said Gaëtan Thomas, NB Power president and CEO. A project of this size requires considerable planning and study, engineering, consultation with First Nations, and discussions with the public to identify concerns and address them before construction begins. Thomas says NB Power is making steady progress on developing engineering and construction plans. “We continue to work on these areas as the company seeks regulatory approval by 2021 to allow the project to proceed over the subsequent decade, helping the facility to operate using the existing concrete structures until approximately 2068,” Thomas says.

The project is unlike others in that the work will be spread out over a decade-anda- half. Most of the activities will take place between 2020 and 2036 pending regulatory approvals. Besides keeping the province supplied with renewable energy, it will keep people working. The project will require the equivalent of up to 170 full-time employees during construction.

LOCATION: Prince Edward Island   |   CAPITAL COST: $60 million   |   ELECTRICITY CAPACITY: 30 MW

PRINCE EDWARD ISLAND is proud of its record in advancing renewable energy development in the province. And after some delay, the PEI Energy Corporation is moving ahead with its plan to build a 30-megawatt wind farm in the eastern portion of the island.

In the fall of 2017 the Crown corporation, which oversees energy strategy and development on the island, said a municipal bylaw would delay construction of its planned wind farm in Eastern Kings County by a year. The bylaw states that any new wind farm in the county must be located no less than two kilometres from the shoreline, and it can’t be located less than 1,000 metres from any non-participating landowner. The original plan was to construct the wind farm by 2019. It’s now expected to be in production by 2020. Three sites have been selected for wind resource assessment; Irishtown, Rock Barra and Eastern Kings. The site selected must be able to accommodate 10-15 wind turbines.

Heather MacLeod, the manager of energy assets for the Corporation, said in April that to facilitate the wind resource assessment, two new meteorological towers have been erected in Rock Barra and Irishtown, while the existing tower in Eastern Kings has been refurbished. The towers will test for wind speed, temperature and changes in wind direction. Wind resources at the three sites will be evaluated, in conjunction with other factors such as available land base and proximity of existing electrical infrastructure. “After this preliminary evaluation, a single site will be selected for more indepth consideration. Once a site is selected the project must enter into the environmental assessment process,” MacLeod wrote in an emailed response to Natural Resources Magazine.

If the wind farm comes online, it will add to P.E.I.’s impressive wind energy capacity. The province currently generates 25 per cent of its electricity from wind, the second highest percentage in the world, according to the Corporation. The province’s energy strategy released in 2017 says another 40-MW wind farm will be developed by 2025.

LOCATION: Nova Scotia   |   CAPITAL COST: US$7-10 billion   |   SHIPPING CAPACITY: 10 million tonnes annually

PIERIDAE ENERGY CANADA made steady progress in 2018 to position Goldboro LNG Project to be Canada’s first LNG export facility.

Goldboro LNG has been in the works since 2012 when Calgary-based Pieridae announced it was advancing the project. It will consist of a natural gas liquefaction plant, a marine terminal, storage facility and power plant located in Guysborough County, Nova Scotia. Natural gas will be processed at Goldboro. In addition to a 10-million-tonne shipping capacity, the facility will have 380,000 cubic metres of storage capacity.

However, since the project was announced the global LNG market has changed significantly. It’s become over-supplied and key LNG markets like Japan and South Korea are looking for cheaper LNG. Despite the headwinds, Pieridae keeps soldiering on. In February, Morgan Stanley was hired as the investment bank to help it raise the approximately $10 billion required to fund the project.

The Nova Scotia Utility and Review Board confirmed in April the company had filed an application to build a natural gas liquefaction plant, marine terminal, storage facility and power plant at Goldboro. In May, Pieridae announced it had entered into a term sheet to negotiate a sale and purchase agreement for one million tonnes of LNG annually with an unnamed customer in Europe. The company has already secured a buyer, Uniper SE, to purchase half of its permitted output.

“After having contracted the entire output from Train 1 with Uniper, this agreement moves Pieridae another step closer to the final investment decision on Train 2, which would bring much-needed jobs and other economic benefits to Nova Scotia and Canada,” said Pieridae Energy CEO Alfred Sorensen in a May 7 press release.

Trains are an industry term referring to an LNG export facility’s liquefaction and purification facility that turns natural gas into the liquid form that is shipped on tankers to customers. The project will use the 1,400-kilometre-long Maritimes & Northeast Pipeline located adjacent to the project site to gets its supply of natural gas.

Site preparation, including deforestation, clearing, and grubbing, is taking place between September 1 and April 30, in accordance with Pieridae’s Environmental Assessment Approval. Commissioning is set to commence in 2022. But first the company must make a final investment decision on Goldboro LNG, something the company says will occur in 2018. The company anticipated a decision on a construction permit from the Utility and Review Board this spring. It is also awaiting approvals from the Department of Natural Resources.

LOCATION: New Brunswick   |   CAPITAL COST: $579 million   |   PRODUCTION CAPACITY: 30,000 tonnes per day

THE SISSON tungsten-molybdenum project has received provincial and federal regulatory approvals to be built. The products it would produce are in demand across the world. So why hasn’t the thing been built yet?

In the case of Sisson, it’s all about finding the capital to build the mine and customers to buy its production. Greg Davidson, manager of community relations for proponent Northcliff Resources Ltd., says the Vancouver-based company is now ready to move into the next stage of development of the project, which is securing necessary permits to begin construction.

The metals that will be mined there, tungsten and molybdenum, are seeing increasing market demand and value. Northcliff is trying to secure construction and operating permits, off-take agreements, and project financing. The company hasn’t said much publicly about Sisson in recent years. But in an update provided on April 17 by Northcliff president and CEO Christopher Zahovskis, the project partners say they are now well advanced in a multi-year metallurgical optimization program at a Lakefield, Ontario facility of SGS Mineral Services Canada. “The objective of this metallurgical program is to assess the potential to improve the grade of the tungsten concentrate produced by the proposed concentrator for the Sisson project, while maintaining metallurgically optimal tungsten recoveries,” Zahovskis said in the update.

New Zealand-based Todd Corporation, which has a strategic interest in tungsten, recently acquired a $14-million 11.5 per cent direct interest and a $19-million 25 per cent effective interest in the mine. Sisson could become a significant long-life (Northcliff says the mine would have a 27-year lifespan), low-cost North American producer of tungsten. Currently 85 per cent of the world’s tungsten supply comes from China, where mining has been scaled back due to increased production costs. Simultaneously, the demand for tungsten in China is increasing due to industrialization. This high demand in China has left little excess tungsten available for the global market, driving up prices for the commodity.

This all seems like good news for Sisson’s proponents. It would also be good news for the economy of the province as the open pit mine would employ 300 people at a time when new resource mega-projects in New Brunswick are few and far between.

LOCATION: Nova Scotia   |   CAPITAL COST: $5.5 billion terminal/$235 million pipeline   |  SHIPPING CAPACITY: 8 million tonnes of LNG annually

BEAR HEAD LNG is Nova Scotia’s second entry into the global LNG exporting race.

The project’s site in Point Tupper, Cape Breton Island, about 100 kilometres from Pieridae Energy’s Goldboro LNG site, was purchased for $11 million in 2013 by Australiabased Liquefied Natural Gas Ltd. It also happens to be the deepest ice-free terminal on the North American Eastern Seaboard and the site came with most of the required infrastructure already in place―something Goldboro LNG doesn’t have.

What Bear Head LNG does have in common with Goldboro is its owner hasn’t decided on whether to build it or not. However, Bear Head LNG, a subsidiary of Liquefied Natural Gas Ltd., says it hopes to begin operations in 2019. Bear Head’s sister company, Bear Paw Pipeline Corp., has approval to build a pipeline that would run between Goldboro and Point Tupper and connect to the existing Maritimes & Northeast Pipeline. From there it has access to markets in Eastern Canada and Massachusetts.

With so many of B.C.’s LNG export projects having been cancelled, the fact Nova Scotia’s LNG projects are still alive gives the province hope it could host Canada’s first LNG export facilities. But one of the company’s biggest issues is where it will get its natural gas from. One option is to ship it from Alberta by pipeline to North Bay, where a new pipeline would be constructed to Goldboro. Bear Head is hoping to have commitments from gas producers to supply Bear Head LNG by mid-2018.

That’s a major item it must check off its to-do list. But other significant milestones have already been met. Liquefied Natural Gas Ltd. received approval from the National Energy Board to import natural gas from the U.S. and export LNG from its facility for 25 years. It also obtained the U.S. Department of Energy’s approval to import natural gas from the U.S. and export it as LNG to countries the U.S. has a free trade agreement with for natural gas. All federal, provincial and municipal regulatory approvals to build the facility are in place.

Paul MacLean, Bear Head’s strategic and regulatory affairs advisor, is coining the project an “all Canadian solution” and national in scope. “We are working on all conditions of approval issued by the minister of environment and successfully navigating through all necessary permits in order to see this project to production,” MacLean said in a May 4 interview with Natural Resources Magazine.

LOCATION: Newfoundland and Labrador   |   CAPITAL COST: US$999.4 million   |   PRODUCTION CAPACITY: 7.8 megatonnes per year

YOU WOULD BE FORGIVEN if you have forgotten about Alderon Iron Ore Corp.’s Kami project. It’s been a while since there has been anything to write about the Montreal-based junior miner’s slumbering project, which has been dogged by depressed iron ore prices.

But it seems the times are changing in 2018. On Feb. 5, Alderon reappointed Tayfun Eldem as president and CEO. Eldem stepped down from those roles in August of 2015 because company founder Mark Morabito said the company couldn’t maintain a large management team during an industry downturn.

Apparently Morabito thinks the downturn is over. Eldem is back and his job is to advance the Kami project into production after overseeing many completed milestones during his first stint running Alderon, including release from federal and provincial environmental assessment processes. “I am very pleased that Tayfun Eldem has decided to rejoin Alderon as CEO,” Morabito said in a Feb. 5 press release. “The high-grade, low deleterious element iron ore that will be produced at Kami … will fetch a premium price because of its quality.”

Alderon is stepping up efforts to advance the Kami project, located near the towns of Wabush, Labrador City and Fremont near the Quebec/Newfoundland and Labrador border, because market demand for high grade iron ore is increasing in the steel industry as companies are required to meet stricter emissions requirements. The ore that would be mined at Kami contains 65.2 per cent iron and very low levels of impurities. High quality iron ore product is in demand as it allows higher productivity, reduces cost, and meets stricter environmental standards. The project will produce iron ore that will be shipped through Sept-Isles, Quebec. Iron ore was trading at approximately 50 cents a pound as this magazine went to press.

The updated preliminary economic assessment and economic Impact assessment were released in November 2017. Alderon’s April 26 press release says it has hired BBA Inc to update the feasibility study on Kami’s Rose Deposit. The study will build on the previous 2012 study and the company hopes it will help secure financing for the project. It will include market analysis, capital and operating expenditures, and updated reserve estimates. The company expects to release the results in late 2018.

Aerial shot of Muskrat Falls

LOCATION: Newfoundland and Labrador   |   CAPITAL COST: $12.7 billion   |   ELECTRICITY CAPACITY: 824 megawatts

THE CONSTRUCTION of the controversial Muskrat Falls hydro project is finally nearing the finish line.

Over budget by approximately $6.5 billion and two years behind schedule, Muskrat Falls, located in Labrador, is slated to be the second largest hydroelectric plant in Atlantic Canada, behind Labrador’s Churchill Falls plant. In 2017, the generation side of the project reached 78 per cent completion while the Labrador-Island-Transmission Link reached 98 per cent completion with 2,250 kilometers of wire strung and two of three dams completed. All transmission lines have been constructed including the Labrador-Transmission Assets and the Strait of Belle Isle Marine Cable Crossing. The Soldiers Pond AC switchyard on the island’s Avalon Peninsula is completed and connected to the provincial electrical system. It is anticipated that power will be brought from Labrador to Newfoundland in mid-2018.

In a May 14 project update, project proponent Nalcor Energy says that the spillway is operational, and construction of the North Spur Dam and South Dam is completed. Significant progress was made on the North Dam, it was 40 per cent completed and construction had restarted on the dam as this magazine went to press. The powerhouse and intake structures are substantially completed; and work continues on the installation of the turbines and generators. First power from the generation project is expected by late 2019.

For the transmission side of Muskrat Falls, construction of the transmission lines from Churchill Falls to Soldiers Pond is completed and all major electrical equipment is in place. As construction continued to progress on the switchyards and converter stations, commissioning work began with the energization of completed parts of these sites. Following the completion of the transmission assets in mid-2018, power from Churchill Falls will be delivered to the island.

The progress on Muskrat Falls has left Nalcor president and CEO Stan Marshall feeling much better about the project than he did when he took the job in 2016. “We came into 2018 looking to build on the great year of success we saw in 2017, to ensure a safe and strong finish for the Muskrat Falls project,” Marshall says. “We are on the cusp of a significant transformation of our electricity system. Our hardworking, capable team is operationalizing one of the most ambitious clean energy projects in the history of our province.”

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