Yukon Energy Strategy Technical Workshop November 20 and 21, 2007 - - PowerPoint PPT Presentation

Yukon Energy Strategy Technical Workshop

November 20 and 21, 2007 Energy Sector Scoping Presentation

Presented by Paul Kishchuk, MA Box 31126 Whitehorse, Yukon Y1A 5P7 paul@vectorresearch.ca www.vectorresearch.ca t: 867.668.3164 f: 867.668.3124 c: 867.333.2910 November 20, 2007

Yukon Energy Strategy

Presentation Overview

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Energy Sector Capacity and Potential Supply Energy Sector Production and Imports Energy Sector Consumption and Prices Yukon Greenhouse Gas Emissions Energy Infrastructure Possible Programs and Policies Yukon Energy Sector Issues

Yukon Energy Strategy

Energy Sector Capacity and Potential Supply

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The Yukon’s onshore oil and gas resource potential remains largely unexplored and untapped. Approximately 75 wells have been drilled in the Yukon to date. By way of comparison, 3,336 oil wells and 11,603 natural gas wells were drilled in Alberta in the year 2006 alone.

Yukon Government Onshore Oil and Gas Dispositions Disposition Number Permit Number Region Bid ($ million) Permit Owner Permit Expiry One 001 Eagle Plain 8.2 Devon ARL November 2008* One 002 Eagle Plain 12.2 Devon ARL November 2005 Two 003 Eagle Plain 2.9 Devon ARL March 2007 Three 004 Peel Plateau 1.2 Hunt Oil Canada January 2008 Five 005 Eagle Plain 0.4 Northern Cross (Yukon) Ltd. permit pending Five 006 Eagle Plain 0.5 Northern Cross (Yukon) Ltd. permit pending Five 007 Eagle Plain 0.5 Northern Cross (Yukon) Ltd. permit pending Five 008 Eagle Plain 0.5 Northern Cross (Yukon) Ltd. permit pending Five 009 Eagle Plain 0.5 Northern Cross (Yukon) Ltd. permit pending Five 010 Eagle Plain 0.5 Northern Cross (Yukon) Ltd. permit pending Five 011 Eagle Plain 0.5 Northern Cross (Yukon) Ltd. permit pending Five 012 Eagle Plain 0.9 Northern Cross (Yukon) Ltd. permit pending Five 013 Eagle Plain 2.1 Northern Cross (Yukon) Ltd. permit pending Five 014 Eagle Plain 5.1 Northern Cross (Yukon) Ltd. permit pending Five 015 Eagle Plain 3.6 Northern Cross (Yukon) Ltd. permit pending Five 016 Eagle Plain 2.7 Northern Cross (Yukon) Ltd. permit pending Five 017 Eagle Plain 2.0 Northern Cross (Yukon) Ltd. permit pending

Source: Government of Yukon, Department of Energy, Mines and Resources. * Permit Number One conditions were modified in 2004; among the modifications was an extension of the expiry date for Permit Number One to November 30, 2008. Complete details can be found in Yukon Order in Council 2004/234 Devon Permits Variation Order.

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Energy Sector Capacity and Potential Supply

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North Yukon Oil and Gas Working Group commissioned the North Yukon Conceptual Oil and Gas Development Scenario and Local Benefits Assessment in 2005. Key findings include:

• Eagle Plain has the greatest potential for development among geological basins in the

North Yukon with exploration activity predicted to be focused in the southeastern part

• f the Eagle Plain basin.
• On the basis of assessment work undertaken by the Yukon Geological Survey, a

natural gas resource of 5.39 trillion cubic feet exists at Eagle Plain (enough gas to supply a 20-inch pipeline for more than 20 years).

• Development of the North Yukon gas resource depends on prior construction of major

market-bound pipelines (i.e., MacKenzie Valley Pipeline or the Alaska Highway Pipeline).

• A North Yukon Pipeline will be fed by an estimated 873 wells drilled at Eagle Plain

(including disturbance-reducing directional wells).

• The optimal pipeline route for Eagle Plain gas parallels the Dempster Highway and

connects to the MacKenzie Valley Pipeline at Inuvik.

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Energy Sector Capacity and Potential Supply

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Two different types of oil and gas dispositions grandfathered:

• exploration licenses
• significant discovery license

Northern Cross (Yukon) Ltd. holds rights to Chance significant discovery license (three production- tested wells). Northern Cross has undertaken feasibility work for a small-scale modular distillate refinery at Eagle Plain. The modular refinery would produce fuel from crude oil suitable for use in electrical generators and off-road vehicles. Initial capacity of 80m3 per day, increasing in 80m3 per day increments to 400m3 per day. Annual consumption of distillates (diesel, stove oil, kerosene) in Yukon totaled 86,900,000 litres in 2006, equivalent to 238,100 litres on a per day basis. A refining capacity of 80 m3 per day is equivalent to 80,000 litres per day.

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Energy Sector Capacity and Potential Supply

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1998 Canada/Yukon Oil and Gas accord did not alter offshore oil and gas resources arrangements. Responsibility for management and development of oil and gas resources in the Beaufort Sea continues to be held by the Government of Canada. Beaufort Sea region oil and gas resources are managed under the Canada Petroleum Resources Act and the Canada Oil and Gas Operations Act.

Beaufort Offshore Resource Potential Oil (billion barrels) Natural Gas (trillion cubic feet) Discovered 1.7 12 Potential 5.4 54

Source: Yukon Energy, Mines and Resources, Yukon Oil and Gas: A Northern Investment Opportunity.

Yukon’s coal resources also largely undeveloped. Responsibility for management of coal resources (including coal bed methane) transferred to Yukon as part of 2003 devolution package. Regulatory regime for management of coal bed methane not yet completed.

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Energy Sector Capacity and Potential Supply

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The Yukon’s electricity generation capacity totals 112.0 MW. Third turbine at Aishihik Hydro Facility will add 7 MW of generating capacity. Yukon electrical system is isolated, it is not connected to the North American grid. Yukon electricity generation and transmission system is not deregulated. Electricity prices are set by the Yukon Utilities Board using Cost of Service approach. Most of the Yukon’s hydro-electric potential remains untapped. Yukon Energy’s 20 Year Resource Plan (2006) contain most recent illustrative analysis of hydro potential. Yukon Electricity Generation Capacity (megawatts) Yukon Energy The Yukon Electrical Company Ltd. Hydro Hydro Whitehorse 40.0 Fish Lake 1.3 Aishihik* 30.0 Diesel Mayo 5.0 Carmacks 1.3 Total 75.0 Haines Junction 1.3 Diesel Teslin 1.3 Whitehorse 22.6 Ross River 1.0 Faro 5.4 Watson Lake 5.0 Dawson 6.0 Beaver Creek 0.9 Mayo 2.0 Destruction Bay 0.9 Total 36.0 Old Crow 0.7 Wind Pelly Crossing 0.7 Haeckel Hill 0.8 Stewart Crossing 0.3 Swift River 0.3 Total 13.7 Total Yukon Energy Capacity 112.0 MW Total YECL Capacity 15.0 MW Total Yukon Capacity 127.0 MW Total Yukon Hydro Capacity – Summer 76.3 MW Total Yukon Hydro Capacity – Winter 60.0 MW Total Yukon Diesel Capacity 49.7 MW Total Yukon Wind Capacity 0.8 MW

Source: Yukon Energy Corporation 2006 Annual Report.

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Several options for renewable energy exist in the Yukon including solar, wind, hydro. geothermal and biomass (wood). Most promising renewable sources identified by Pembina Institute for Sustainable Development (Economic Development from Renewable Energy: Yukon Opportunities) include:

• Solar water heating for homes, offices, or other buildings.
• Solar space heating for homes or offices through passive solar building design

techniques.

• Biomass space and water heating for homes, offices, other buildings with individual

wood boilers/stoves, or entire communities through district heating systems.

• Hydro, wind, and biomass systems to provide electricity for off-grid communities,

working in tandem with existing diesel generators.

• Hydro, wind, biomass, and solar PV systems to provide electricity into the utility grid.
• Hydro, wind, and solar PV electrical systems to provide power for remote applications,

providing power into previously un-powered areas, or reducing the consumption of fuel with existing diesel generators.

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Energy Sector Production and Imports

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Energy Sector Production and Imports

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Energy Sector Production and Imports

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Energy Sector Production and Imports

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Yukon Energy Strategy

Energy Sector Consumption and Prices

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Yukon Energy Strategy

Energy Sector Consumption and Prices

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Energy Sector Consumption and Prices

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Energy Sector Consumption and Prices

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Energy Sector Consumption and Prices

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Energy Sector Consumption and Prices

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Yukon Energy Strategy

Yukon Greenhouse Gas Emissions

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Yukon Energy Strategy

Yukon Greenhouse Gas Emissions

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Whitehorse and Area Average Daily Traffic - 2006

Source: Yukon Government, Highways and Public Works, Yukon Traffic Count Summary, June 2007.

…even Whitehorse has a commuter footprint

Yukon Energy Strategy

Energy Infrastructure

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The Yukon’s Stock of Energy Infrastructure

Electricity Infrastructure

• Total Yukon electricity generation capacity stands at 112 megawatts
• 76MW hydro, 50MW diesel, 1MW wind
• Yukon Energy operates Whitehorse/Aishihik/Faro grid (510 km) and Mayo-Dawson

line (223 km)

• Yukon Electrical Company Limited operates sub-WAF grid (Teslin, Carcross, Tagish,

Marsh Lake)

• Construction of Carmacks to Stewart WAF grid extension by Yukon Energy scheduled

for completion in fall of 2008

• Additional electricity infrastructure projects identified in Yukon Energy’s 20-year

Resource Plan Processing Infrastructure

• no natural gas or crude oil refineries located in the Yukon

Pipeline Infrastructure

• total extent of Yukon’s current pipeline infrastructure is a 20-inch pipeline that

connects production from three gas wells at Kotaneelee field to larger line in northern British Columbia Transportation Infrastructure

• no operating freight rail lines (tourist operation only between Skagway and Carcross)
• no direct access to ports within its boundaries

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Possible Programs and Policies

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A starter set of possibilities for Yukon programs, projects, policies….

• electricity load shifting (season to season)
• electricity load shaping (time of day rates, smart meters)
• electricity peak shaving (efficiency and conservation measures)
• electrical energy storage (e.g., conversion to hydrogen)
• micro-hydro (e.g., Fort Selkirk)
• geo-thermal (e.g., Vanier Secondary School, Whistle Bend District System)
• solar (e.g., passive space heating)
• wind (electricity generation)
• First Nation partnerships
• energy education
• energy regulatory regime (e.g., coal bed methane, uranium)
• independent power production
• energy efficiency
• conservation measures

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Possible Programs and Policies

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• carbon taxes
• government leadership (e.g., fleet vehicle modifications, LEEDtm for new building

construction) [LEEDtm = Leadership in Energy and Environmental Design]

• emission taxes (based on actual emissions)
• building design (e.g., Model National Energy Code for Houses)
• efficient street lighting
• rebates for energy conservation
• biofuels
• biomass
• cogeneration
• research and development funding
• public transportation

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Yukon Energy Sector Issues

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Three main elements in a “traditional” energy strategy:

• 1. adequate and reliable supply of energy;
• 2. stable and reasonable energy prices; and,
• 3. environmental sustainability.

Energy strategies in five Canadian jurisdictions reviewed as part of July 2007 background work: Prince Edward Island, British Columbia, NWT, Quebec and Saskatchewan. Strategies since completed in Newfoundland & Labrador and Nunavut. Focus in recent energy strategies in other jurisdictions has clearly shifted towards the third element – environmental sustainability.

• Extensive use of terms/concepts such as renewable energy, energy conservation,

alternative energy, greenhouse gas reductions and energy efficiency in the strategies examined.

• Relatively few words are spent on the concepts of adequate and reliable supply of

energy and stable and reasonable energy prices. This is less true of the Newfoundland and Labradour Energy Plan.

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Yukon Energy Sector Issues

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• The strategies examined, as well as existing federal initiatives, recognize that the

involvement of communities and First Nations is an important factor in energy planning and implementation.

• The strategies and initiatives focus on moving forward with measures that are

“doable”:

• portfolio expansions into renewable energy are being lead with tried and true

technologies such as wind and biofuels;

• governments leading by example through increased energy efficiency in public

buildings and the greening of vehicle fleets;

• independent power production from renewable sources is being encouraged with

subsidies and federal tax measures.

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Yukon Energy Sector Issues

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Three Yukon’s key features of the Yukon’s current energy circumstances should be considered in strategy development:

• 1. High degree of dependence on imported refined petroleum products
• Energy consumption in the Yukon continues to consist primarily of imported refined

petroleum products.

• At the same time, the Yukon market for refined petroleum products remains far too

small to reasonably contemplate, given economies of scale considerations, that energy self-sufficiency can be realized in the near term with current technologies.

• 2. Yukon is now the lead act on the energy infrastructure stage
• On April 1, 2003, the Yukon gained full control over the development of its natural

resources and sole responsibility for initiating development of the energy infrastructure required to support future resource development.

• With all existing major pieces of energy infrastructure in the Yukon paid for by the

federal government, future resource development hinges on recognition by the Government of Yukon that it is the lead act on the energy infrastructure stage.

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• 3. “Vapor lock” on electricity demand side management is soon to break
• The existence of significant surplus hydro-electric capacity on the WAF grid since

1998 has created a vapor lock around demand side management (DSM) and energy efficiency initiatives involving electricity.

• Notwithstanding that Yukon Energy’s 20-Year Resource Plan is virtually silent on

DSM, the Plan anticipates that the vapor lock is soon to break and goes a long way to addressing how to supply the electricity that will inevitably be needed.

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In consideration of the background research, it is recommended that a Yukon energy strategy focus on the following issues:

• Energy conservation and efficiency initiatives (including renewable energy) that focus

first on reducing energy use from non-renewable sources and later on electrical energy use (as surplus hydro-electric capacity diminishes);

• Community engagement in the management, development and conservation of

energy resources in the Yukon;

• Recognition that self-governing First Nations in the Yukon have a statutory role to

play in the development of future energy infrastructure in the territory (via the “Strategic Investments” clauses found in Final Agreements;

• Innovation/technology relevant to Yukon’s latitude and energy import circumstances;
• Greenhouse gas reduction initiatives which recognize that two-thirds of the Yukon’s

greenhouse gas emissions are transportation-sourced;

• Energy infrastructure development as an economic development lever; and,
• Implementation of regulatory regimes (resource management and environmental)

that do not unnecessarily encumber future energy infrastructure development efforts.