Economic Impacts of Natural Gas Development Within The
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Study No. 142 March 2015 CANADIAN ECONOMIC IMPACTS OF ENERGY RESEARCH NATURAL GAS DEVELOPMENT INSTITUTE WITHIN THE YUKON TERRITORY Canadian Energy Research Institute | Relevant • Independent • Objective ECONOMIC IMPACTS OF NATURAL GAS DEVELOPMENT IN THE YUKON TERRITORY Economic Impacts of Natural Gas Development in the Yukon Territory Copyright © Canadian Energy Research Institute, 2015 Sections of this study may be reproduced in magazines and newspapers with acknowledgement to the Canadian Energy Research Institute ISBN 1-927037-26-3 Authors: Peter Howard Jon Rozhon Paul Kralovic Acknowledgements: The authors of this report would like to extend their thanks and sincere gratitude to Afshin Honarvar of the Alberta Energy Regulator and all CERI staff that provided insightful comments and essential data inputs required for the completion of this report, as well as those involved in the production, reviewing, and editing of the material, including but not limited to Allan Fogwill and Megan Murphy. CANADIAN ENERGY RESEARCH INSTITUTE 150, 3512 – 33 Street NW Calgary, Alberta T2L 2A6 Canada www.ceri.ca March 2015 Printed in Canada Front Cover Photo Courtesy of http://upload.wikimedia.org/wikipedia/commons/thumb/f/f4/Dempsterhighway.jpg/800px-Dempsterhighway.jpg Economic Impacts of Natural Gas Development iii Within the Yukon Territory Table of Contents LIST OF FIGURES .............................................................................................................. v LIST OF TABLES ................................................................................................................ vii EXECUTIVE SUMMARY ..................................................................................................... ix Scenario 1 ............................................................................................................................ x Scenario 2 ............................................................................................................................ xi CHAPTER 1 INTRODUCTION ......................................................................................... 1 Government, Ownership & Administration of Natural Resources ..................................... 4 Oil and Gas Infrastructure ................................................................................................... 5 Other Pipeline Infrastructure .............................................................................................. 6 Alaska Highway Pipeline Project & Mackenzie Valley Pipeline Project .............................. 7 The Yukon’s Electricity Generation and Transmission ........................................................ 7 Mining and Mineral Exploration and Development ........................................................... 11 Yukon Energy Strategy ........................................................................................................ 16 CHAPTER 2 YUKON BASINS: AVAILABILITY AND RISK ................................................... 21 Available .............................................................................................................................. 21 Unavailable ......................................................................................................................... 21 Encumbered ........................................................................................................................ 22 First Nations-Owned ........................................................................................................... 22 Oil and Natural Gas Potential ............................................................................................. 23 Eagle Plain Basin ................................................................................................................. 26 Peel Plateau & Plain Basin .................................................................................................. 29 CHAPTER 3 DESCRIPTION OF ISSUES ............................................................................ 33 Supply Abundance .............................................................................................................. 33 Demand Dynamics .............................................................................................................. 33 Market Structure ................................................................................................................. 34 Resource Access .................................................................................................................. 34 Environmental and Societal Pressures ............................................................................... 35 Alberta and British Columbia .............................................................................................. 35 Yukon Territory ................................................................................................................... 35 Diesel vs. Natural Gas Electricity Production ...................................................................... 36 CHAPTER 4 METHODOLOGY AND SCENARIOS .............................................................. 39 Assumptions for the Input/Output (I/O) Model ................................................................. 40 Capital Costs .................................................................................................................. 40 Operating Costs ............................................................................................................. 40 Capital Injections ........................................................................................................... 40 Operating Injections...................................................................................................... 41 Scenario 1 – Domestic Pipeline: Eagle Plain to Stewart Crossing ...................................... 42 Economic Impacts for Scenario 1 ........................................................................................ 50 March 2015 iv Canadian Energy Research Institute Scenario 2 – Domestic and Export Pipeline: Peel Plateau & Plain + Eagle Plain to US Border ................................................................................................................... 52 Economic Impacts for Scenario 2 ........................................................................................ 57 CHAPTER 5 KEY FINDINGS AND CONCLUDING REMARKS .............................................. 59 Key Findings ........................................................................................................................ 59 APPENDIX A A NOTE ON THE LIARD, OLD CROW, BEAUFORT-MACKENZIE, BONNET PLUME AND KANDIK OIL AND GAS BASINS ................................................................. 63 Liard Basin ........................................................................................................................... 63 Old Crow Basin .................................................................................................................... 66 Beaufort-Mackenzie Plume Basin ....................................................................................... 69 Bonnet Plume Basin ............................................................................................................ 70 Kandik Basin ........................................................................................................................ 71 Whitehorse Trough Basin ................................................................................................... 73 APPENDIX B THE HISTORY OF MINING IN YUKON .......................................................... 75 March 2015 Economic Impacts of Natural Gas Development v Within the Yukon Territory List of Figures 1.1 Oil and Gas Basins in Western Canada ......................................................................... 1 1.2 Topographical Map of Yukon ........................................................................................ 3 1.3 The Canol Refinery at Whitehorse, October 29, 1943 .................................................. 6 1.4 Studebaker Truck Loaded with Pipe Moving toward the End of the Line .................... 7 1.5 Yukon Electricity Facilities, 2014 ................................................................................... 10 1.6 Exploration and Development Activity in Yukon, 2005-2014 ....................................... 14 1.7 Map of Mineral Development, Electrical Grid & Pipeline Routes ................................ 18 2.1 Current Availability in all Yukon Basins, Percentage of Total Basin Area ..................... 23 2.2 Yukon’s Oil and Natural Gas Resource Potential by Exploration Region ...................... 24 2.3 Yukon Basin Availability, 2014 ...................................................................................... 26 2.4 Map of Eagle Plain Basin Exploration Region ............................................................... 27 2.5 Northern Cross Yukon Proposed 2015 Drill Program ................................................... 28 2.6 Map of the Peel Plateau & Plain Exploration Region ................................................... 30 3.1 Forecasted Henry Hub Prices ........................................................................................ 36 3.2 Levelized Cost of Electrical Power Delivered to a 5 MW Mine .................................... 37 4.1 Scenario 1 Route Map 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