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UPPER CHURCHILL REPEAT? Not on My Watch

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UPPER CHURCHILL REPEAT? Not on My Watch V21N6 2010:V20N3 2009 10/27/10 9:54 AM Page NR8 ALTERNATIVE ENERGY FEATURE REPORT UPPER CHURCHILL REPEAT? Not on my watch. By Martin Connelly ED MARTIN sees a very bright future for Newfoundland and Labrador. More specifi- cally, the CEO of Nalcor Energy, a provincial crown corporation power utility created in 2007, believes that future is inextricably tied to the proposed Lower Churchill hydroelec- tric project (in a good way). “The future of our province rests on en- ergy,” he said. “And we’re going to have a tremendous amount for export. The Lower Churchill itself could take 3.2-million cars off the road. It could take [care of] 100 per cent of Atlantic Canada’s electricity emissions and 15 per cent of Canada’s 2020 target... If we get a good deal for Atlantic Canada, we’re going to do the deal.” The deal he’s talking about is one with Nova Scotia energy company Emera, one that will take power south from Labrador, across the Strait of Belle Isle, down the island of Newfoundland, and then across the Cabot Strait into Nova Scotia. Transmitting Lower Churchill power into Nova Scotia has been Nalcor’s stated goal since May of this year. In the interest of clarity: The Lower Churchill Project is a proposed hydroelectric development in Labrador, located down- stream from the existing 5,428 megawatt (MW) Churchill Falls generating station. The new project will consist of installations at Gull Island and Muskrat Falls on the Lower Churchill River (known as Mishtashipu to the local Innu) which, combined, are expected to produce 3,074 MW of electricity annually at an estimated capital cost of $6.5-billion. That $6.5-billion becomes $9-billion when you include the cost of the transmission in- frastructure. While the potential of Gull Is- land and Muskrat Falls have been a given for nearly 50 years, everything else is up for de- bate. Blogger Ed Hollett (of the “Sir Robert Bond Papers”) contends that, based on vari- ous media reports and inflation, the cost, with Photo: Paul Daly, pauldaly.net transmission, is more like $15-billion. NR8 | Natural Resources Magazine | November/December 2010 V21N6 2010:V20N3 2009 10/27/10 9:54 AM Page NR9 YOUR BEST MOVE WHEN DOING BUSINESS IN ATLANTIC CANADA To access our Doing Business in Atlantic Canada publication, please visit www.smss.com/corporate SMSS.COM CHARLOTTETOWN FREDERICTON HALIFAX MONCTON SAINT JOHN ST. JOHN’S V21N6 2010:V20N3 2009 10/27/10 9:54 AM Page NR10 site on the continent. Together, these two Newfoundland & Labrador Energy Warehouse sites are capable of producing 17-billion kilo- watt hours of environmentally clean, stable, and competitively priced electricity.” So, why hasn’t it been developed yet? LIKE MANY large infrastructure projects, the two major issues at stake with the Lower Churchill are politics and economics. Within the Government of Newfoundland and Labrador, it has been a popular mantra for many years to state that no deal will be made with Hydro-Québec for development of the Lower Churchill without redress for 1969 (the year contract negotiations were finally con- cluded between Brinco and Hydro-Québec). Source: Nalcor What went wrong in 1969? According to Philip Smith’s Brinco: The Story Of Churchill Falls, Québec was in the position of power and the Brinco corporation was in a position There are two routes the transmission it on March 19, 1964. In a 1997 speech, Pre- where they had to make a deal. Brinco had lines can go. They can go northwest and con- mier Brian Tobin had this to say: “The Na- spent a considerable amount of money and nect with the existing transmission link be- tional Energy Board of Canada has ranked time trying to develop the project; if it didn’t tween Churchill Falls and Hydro-Québec, or the… Gull Island site on the Lower Churchill proceed, the corporation would have gone they can go southeast, to the island of New- River in Labrador as the lowest cost unde- under. Add in Premier Smallwood’s insistence foundland, and continue south from there. veloped hydroelectric site on the North that the deal had to happen, and there was The Lower Churchill Project has been an American continent. Just a few miles down- very little the Brinco negotiators could do. eager gleam in political eyes since former Pre- stream, the Muskrat Falls site has been They were between Québec and a hard place, mier Joey Smallw ood first made mention of ranked as the fifth lowest cost hydroelectric and that, more than any other reason, is why Meeting industry’s medical needs both onshore and offshore Atlantic Offshore Medical Services (AOMS) offers the following integrated occupational medical services to industry world wide: · Pre-employment, Periodic Fitness, and Return to Work Physician Assessments · Drug and Alcohol Screening · Disability Case Management to Facilitate Early and Safe Return to Work · Independent Medical Examinations · International Travel Clinic · Initial Set up and Design of Remote Medical Facilities · The Provision of Medical Directives/Contro l to Remote Worksites · Deployment of Medical Personnel · 24/7 On-call Emergency Physicians · Medevac Teams Atlantic Offshore Medical Services e-mail: [email protected] phone: 877.722.4074 web: www.aoms.nf.net NR10 | Natural Resources Magazine | November/December 2010 V21N6 2010:V20N3 2009 10/27/10 9:54 AM Page NR11 they made the now-infamous deal that failed to include allowances for the rising price of electricity. In fact, as negotiated, the price paid by Hydro-Québec has actually been falling, at regular intervals, instead of rising with infla- tion. Developing the Lower Churchill will par- tially make up for the humble pie Newfound- land and Labrador has been forced to eat in the face of the 1969 deal. If that deal was an expression of the desire to bring the benefits of modern economies to Newfoundland, this project is an expression of Newfoundland and Labrador’s modern economy. THE LOWER CHURCHILL PROJECT has been a pillar of the current premier’s govern- ment platform since 2003, and it’s been a very central one since Danny Williams publicly opted to “go it alone” (i.e. sans Hydro- Québec) in 2006. Since then, Newfoundlan- ders and Labradorians have been living in an environment much akin to the years leading up to the Churchill Falls deal. There are pub- lic announcements, angry outbursts and, very likely, a whole lot of meetings behind closed doors. Top left, clockwise: proposed dam and powerhouse development (2,250 MW/year) for Gull Island; two dams and According to one schedule articulated in powerhouse development (824 MW) proposed for Muskrat Falls; Muskrat Falls, a natural 15 metre waterfall on the past, Nalcor should have broken ground the lower Churchill River, west of Happy Valley-Goose Bay, Labrador. Photo: Nalcor BUILDINGS, TTOWERSOWERS AND OFFSHORE OIL AND GAS FACILITIES • STRUCTURAL ENGINEERING TILLER • INSPECTIONS TILLER ENGINEERING INC. • PROJECT MANAGEMENT Specializing in structural engineering, analysis, design, inspection and mapping. Our fully qualified technical staff are trained to perform aerial inspections safely and with extreme attention to detail. Licensed across Atlantic Canada. Contact Richard W. Tiller (M.Eng., P.Eng.) President Toll Free: 1.877.907.6700 Telephone: 709.579.6700 Email: [email protected] St. John’s, NL Canada, A1E 5X7 www.rwtiller.com Online extras: naturalresourcesmagazine.com | NR11 V21N6 2010:V20N3 2009 10/27/10 9:54 AM Page NR12 Lower Churchill The Opportunity for Canadian Suppliers (Total Opportunity $2.4-Billion) Transmission Conductors Generation Most importantly, from the Province’s per- Wire And Cable Transmission Industrial Electrical Equipment spective, Nalcor is in a much better position Construction Equipment than Brinco ever was. While Brinco had to General Supplies finance operations by repeated stock offer- Cement And Concrete ings, Nalcor and the provincial government Travel & Accommodations can finance their operations with oil money. Fuel And Oil “If you look at our oil resources, which are Campsite & Operations generally increasing, but in time will go Steel away, it’s an obvious thing to take some of our revenues from there and pump them in Million Dollars (CDN) 100 200 300 400 500 600 700 to here, because this is the future. That’s our Source: Nalcor stated strategy, ”Martin said. by now, but CEO Ed Martin puts a positive agreements have been made with the Innu The second ace in Nalcor’s hand is a green spin on the delay. He says there are five and are expected to be ratified before 2011, one. Electricity might be comparatively things that must be completed before the and engineering work shows that proposed cheap right now, but that is going to change, project can move into the next phase: engi- inter-provincial and subsea transmission lines and ‘Green’ energy will command a pre- neering and construction planning; an envi- are feasible. Work is also proceeding on ne- mium. “What is now a bit of a glut of power ronmental review; ratification of an impact gotiations with Emera (Nalcor’s publicly in the market is expected, in the course of the and benefits agreement with the Innu nation; traded Nova Scotia equivalent). decade, to become a relative scarcity,” said project financing; and, transmission access. “Obviously the governments of both sides Tim Curry, president of the Atlantica Center Sitting in a boardroom overlooking the St. will eventually be involved,” Martin said, for Energy in New Brunswick. Not only that, John’s harbour arterial, Martin checks them “but right now we’re in discussions with but with provinces, states and entire nations off one at a time. “We have come to a point Emera and those discussions are aimed making green energy goals, 3,000 MW could where we have enough engineering and at...what agreements will be made.
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