LNG facility will cost more than originally planned
The new LNG facility is running at $6.4 million above the estimate provided to the Yukon Utilities Board, Yukon Energy president Andrew Hall confirmed Friday.
The new LNG facility is running at $6.4 million above the estimate provided to the Yukon Utilities Board, Yukon Energy president Andrew Hall confirmed Friday.
Hall said the additional 18 per cent in costs arise from three issues.
The most significant factor was more time needed than anticipated to go through the permitting process which pushed back the original schedule, resulting in higher costs associated with working through the winter, he said.
Hall acknowledged Yukon Energy was perhaps aggressive in the window it allotted to have the project work its way through the regulatory process.
Additional requirements related to the design of the catchment basin around the facility meant digging lower into the water table, resulting in higher costs, he explained.
Hall said the third factor was related to the design of the emergency water supply in case of fire.
“The bottom line is our cost estimates at the end of the day were a little light,” he said.
Originally, Yukon Energy was estimating a cost of $34.4 million to install two new backup generators powered by natural gas trucked up from Vancouver as liquefied natural gas. The cost was elevated to $36.5 million when the project proposal was presented to the utilities board a year ago.
The new estimate of $42.9 million was first shared with the Yukon’s elected representatives when Hall appeared before the legislative assembly before Christmas for the Crown corporation’s annual report.
A summary of the additional costs provided by Yukon Energy on Friday says $3.1 million is attributed to the regulatory process, $1.5 million is due to higher market prices than estimated and $1.8 million is associated with the emergency firewater system.
Yukon Energy has designed the facility to add a third natural gas generator in the next couple of years at a cost of an estimated $4.4 million, on top of the $42.9 million.
The publicly owned utility was originally planning to begin construction last May with completion scheduled for the end of 2014.
Completion is now scheduled for late March or early April.
Yukon Energy maintains that going with natural gas to replace two old diesel generators will save Yukoners millions of dollars in fuel costs and result in cleaner exhaust emissions.
Critics argue investing that amount of money in more fossil fuel generation robs the territory of its ability to pursue renewable energy alternatives at a time when the planet can least afford more green house gas emissions.
The project proposal also received harsh criticism from those opposed to liquefied natural gas and the process of hydraulic fracturing used to obtain it.
Yukon Energy maintains it is pursuing renewable options but insists the Yukon needs reliable backup generation available at the flick of a switch which is not available with wind, solar of other renewables.
Comments (23)
Up 7 Down 14
predictable on Feb 20, 2015 at 4:49 pm
Interveners who paid dearly to participate in the Yukon Utilities Board process evaluating the economics of the LNG plant did, in fact, propose a smarter alternative for backup, emergencies, and peaking: the simple diesel alternative. The purpose of thermal backup is to have it on standby when we need it, but to rarely use it. Diesel is more stable in storage than LNG and a better fit with conservation, efficiency and the development of renewable energy. New diesel engines burn efficiently, are cheaper, and the storage, transport and safety infrastructure and expertise already exist here. It does appear that political interference in our public utility and energy regulator got us to this point, despite strong but ultimately ignored environmental and economic arguments against the LNG facility. Too bad.
Up 27 Down 3
tim bacon on Feb 18, 2015 at 4:02 pm
For those who continue to reference the studies conducted by Cornell and Stanford universities, are spreading misinformation.
the statement below is a direct quote form the authors of said study:
Howarth: “Let me just as an aside say that, again, the quality of the
data behind that number [methane emissions during well completion]
are pretty lousy. You know, they’re these weird PowerPoint sort of
things.”
Ingraffea: “I hope you don’t gather from this presentation that we think
we’re right.”
another:
“And Howarth, he’s alleging that gas might actually be dirtier than coal. He
throws a whole bunch of assumptions into that. ”
– Abrahm Lustgarten, ProPublica
a google search returns many of the scientific community debunking the study.
Up 36 Down 15
north_of_60 on Feb 18, 2015 at 3:39 pm
We can thank the anti-everything group for the delays that resulted in most of the cost overruns. This was clearly their intent from the beginning. If they couldn't stop it they would at least make it more expensive.
It's not surprising that some of the group's ringleaders live off-grid and of course won't be effected by the increased costs of electricity due to the delays they caused.
Once again they've demonstrated their arrogant belief that they know what's best for us.
Up 26 Down 9
What Do Yukoners want in energy - Wilf Carter on Feb 18, 2015 at 3:01 pm
What do Yukoners want in energy. There has to be trade offs and clear understanding of these trade offs. Germany is changing and energy and manufacturing costs are going up making them less competitive in the world markets.
By the year 2044 the world population will start to decline because of the birth trends. Places like China will decline the most. The US and Canada has been declining for years. Look at the birth trends in US and Canada.
By this stage fossil fuels will be half of what it is today because new inventions will change it.
There is a new vertical wind mill system developed in Poland by father and son engineers which can be put on your house or stacked for commercial use.
It is more effective then any other type out there.
This wind mill system will produce energy with very low wind down to 5 miles an hours. It does not have big blades to turn but small fine ones and it is light weight. Totally different, very a head of its time.
One of the big issues with wind is how much wind do you need to make it work and it is not reliable.
All this sniping just solves nothing but give everyone a pain in the A.
Up 66 Down 25
Place the extra cost on anti development group on Feb 18, 2015 at 11:58 am
The anti development is trying to stop all development and driving cost up. They should be required to pay for most of the extra costs. Or even better why didn't the anti development group bring forth a plan before the LNG started to be an alternative to LNG? Because there is none. Einsteins are people who like to talk but do nothing.
Up 22 Down 26
Utilities Consumers' Group on Feb 18, 2015 at 11:27 am
And guess what Yukoners, the Yukon Utilities Board will allow all these
extra cost be tagged to our bills. And what about the cost/benefit
analysis they gave to us...smoke and mirrors and poor management from
those who are now comfortably retired on our dollar. Oh and they probably
got a bonus from their Board of Directors for efficient operation of our public utility.
Up 27 Down 9
Just Say'in on Feb 17, 2015 at 9:54 pm
@UnbalancedMetrics. Haha Funny use of statistics on your part. The reason the Pro LNG, Pro Progress, Pro Common Sense bunch chimed in after the Greenies was we were still at work.
Up 12 Down 1
Take the long road home on Feb 17, 2015 at 9:43 pm
Truck LNG from Vancouver? Is this the only place it can be obtained? I like LNG over Diesel because it burns cleaner but trucked from Vancouver. Stewart B.C. is going to have some kind of big happening with LNG. Enough on that. I also believe that for the good of the Yukon that we somehow quash Bill S-6. This is just an attempt by the 'good ol boys' to short circuit required process for profit.
Up 17 Down 41
SeeingThroughTheBS on Feb 17, 2015 at 7:04 pm
Ha ! Unbalanced Metrics - you are spot on. Yukon Energy must have had their entire PR Dept hitting those 'dislike' icons like a Las Vegas fruit machine addict. I think its called Astroturfing ( giving the appearance of natural grass to a synthetic process ). I always thought it was natural gas they were using to fool the taxpayer, not natural grass. Poor Yukon Energy, they can't handle public opinion can they?
Up 18 Down 27
Jonathan Colby on Feb 17, 2015 at 5:49 pm
Methane is horrible, horrible stuff. It is complicated to transport at economical energy densities, and almost as complicated to store. It is a potent greenhouse gas in the atmosphere, it is of medium to poor use as a vehicle fuel, and it is more and more obtained by the over-demonized-yet-ecologically-questionable process of hydraulic fracturing. The only time methane looks good is after combustion: I can personally confirm that the simplest hydrocarbon burns so, so sweetly.
Though I never like working with it, diesel is the fuel of choice for many applications, and I believe it is future proof. Diesel has excellent energy density, decent storage life, and is ubiquitous: farm equipment, furnaces, trucks, cars, trains, generators, boilers. Everything but cooking can be done well with diesel. And the great thing about those fat ol' molecules? It's relatively easy to make them from biomatter. Diesel can be manufactured from pond scum in a zero-emission process (after initial energy investments to acquire feedstock). This diesel can be further cracked into lighter fuels: butane, propane, and others . If the investment is made into the proper research and facilities, clean energy will still come from the pump.
I would believe that opting for LNG over diesel on this project was an act of political interference or resource lobbying, but then I remember Hanlon's razor, and I remember that I should never attribute to malice that which can be adequately explained by stupidity.
Up 33 Down 61
UnbalancedMetrics on Feb 17, 2015 at 3:29 pm
Wow - looks like Yukon Energy got their staff on here at about 3 pm to 'adjust' some of the balance on popular opinion ( a sudden mass influx of 'dislikes' to critical commentary of their cost over-run errors ). Too transparent chaps - you need to even out the timing to make it look less obvious in future. A bit pathetic actually.
Up 39 Down 15
The real numbers _Wilf Carter on Feb 17, 2015 at 3:28 pm
How was the LNG financed. How much did federal program kick into LNG like Mayo. Let's face it, none of this money is ours but other peoples of Canada - money from Ontario to BC. That the facts and cost over runs are due to most regulatory time frames from people who are anti development. I like it when we are all perfect and can do a better job at running government. Then run for office like I am looking at.
Up 53 Down 21
Winers on Feb 17, 2015 at 3:05 pm
I was just talking to a group at one of our favorite coffee shops. Most people don't understand the issues and think all these anti development want to do is nothing but make noise. Don't worry if young Mr. Trudeau gets into power he will tax the death out of LNG, gasoline, home heating fuel. Then watch our economy go down.
NDP will be there to help. Trudeau made this statement this week.
Up 37 Down 11
north_of_60 on Feb 17, 2015 at 2:29 pm
@LC "LNG is just as filthy as coal"
Anyone who has actually studied energy resources knows how ludicrous that statement is. GHGs are not 'filthy', however toxic pollution from coal is. About 85% of the mercury pollution in North America now comes from burning coal in Asia. More radiation is emitted in the fly ash from coal fired plants than is emitted by a nuclear power plant or using natural gas.
Nearly all plastics come from natural gas. The amount of pollution created by all the plastic Yukoners buy and throw away, far exceeds any possible pollution from the LNG used to generate electricity for that 5% of the year when it's bitterly cold and hydro isn't enough.
Up 22 Down 34
Sally Wright on Feb 17, 2015 at 2:08 pm
Not only will Yukon ratepayers feel the brunt of this mis-guided project, but our children will be paying with an unstable climate. The economics of this project never made any sense and that is why it cost YEC so much to get it through the regulatory process. Lots and lots of lawyers, consultants and data spinners were involved. They paid all of them ACCEPT the intervenors. People and organisations that questioned and challenged the YEC LNG project were punished severely by the YUB. YCS hired a lawyer for the first time to question this seriously flawed project because they realised how important it was and when the time came to have their $74,363.39 bill paid, the YUB only allowed $36,006.80, YUB Board order 2014-12. The review and variance was refused.
The petition to the Supreme Court cost a local man $5000 out of his own pocket. The judge said the issue was sound but that it was YCS that should have brought it forward. How can they afford to?
So as you can see, this cost overrun is not due to them actually compensating third party engineers, regulatory lawyers and scientists that brought substantial problems with the project to the regulators. The money was spent greenwashing and putting lipstick on the pig. Now with the price of oil collapsing, the growing global recognition that fugitive methane has tipped the climate into instability (+2oC Feb17 Yukon), the LNG dreams of BC has disappeared and Yukon now has its own LNG white elephant is about to emerge.
Up 64 Down 30
Good Job Yukon Energy on Feb 17, 2015 at 10:52 am
Good job Yukon energy. We need back up that is available when we need it. LNG is the best for BACK POWER SOURCE. The anti development people just don't know what they want or refuse to look at the facts of energy the way it is, not what they think it is.
Up 47 Down 27
June Jackson on Feb 16, 2015 at 8:06 pm
I truly believe every single adult in the territory could have predicted this.
Up 41 Down 11
BnR on Feb 16, 2015 at 7:23 pm
When was the last time any project that was managed by YEC came in on time and on budget, or even went smoothly for that matter?
And we want a YEC group to plan our next major hydro project? Dig deep tax payers....
Up 34 Down 23
Oh Come On on Feb 16, 2015 at 7:21 pm
Claiming that the permitting process set them behind schedule and raised costs seems guaranteed to incite anger in people who opposed this project. Even without any permitting process, their timeline seemed ridiculous, given exactly those issues -- its proximity to the lake, safety and weather. Who doesn't think they tried to fast track it to avoid the opposition?
That petulance is becoming the corporate brand. Witness David Morrison's presentation to the Senate about the YESAA amendments. Surprise -- he was for them.
Up 42 Down 16
Lost in the Yukon on Feb 16, 2015 at 5:55 pm
Well add this to the list of well managed Yukon Party capital projects ... Hospitals, jails, schools ... Can hardly wait for the next budget when the flood gates open and money flows as they try and buy the next election. Hidden away is HSS's Clinical Services Plan ... Wait until you see the cost on this brain child of the imported Albertan DM.
Up 33 Down 40
Powerless and poor on Feb 16, 2015 at 5:49 pm
Well done Yukon Energy. Barely a year into the project and already a 25% cost overrun. Thanks to the Yukon Utilities Board for overseeing what everybody knew was going to be a total joke. Do I smell a rate increase in the future so the investors can maintain their profit margin? All paid for by, of course, by the Yukon rate payers. And, also, thanks to the Yukon Party for letting all of this happen and not doing anything to control this. We know whose side your on!
Up 25 Down 56
Lee Carruthers on Feb 16, 2015 at 5:41 pm
Let's get one thing straight: LNG may produce cleaner exhaust emissions at the generator stack, but the process of drilling, fracking, piping, liquefying and transporting the gas results in net greenhouse gas emissions far exceeding those of diesel. Taking everything into account, LNG is just as filthy as coal. (this according to studies conducted by Cornell and Stanford universities)
Up 31 Down 29
EinsteinsBigBrother on Feb 16, 2015 at 5:23 pm
So utterly predictable. If my private sector company bid for a job and came in 18% 'light' on costings ( it wouldn't happen in the real world of competitive tendering ) then this shortfall is absorbed, with the learning of a salutary lesson. Not here, just keep your eye on your utility bills over the next five years for those 'adjustments' that sure as heck won't be coming out of Yukon Energy's payroll.