Canada: Advanced Explorations Updates on LNG Power Project at Roche Bay

Advanced Explorations Inc. provided an update on its plans to implement alternative power solutions as part of its Roche Bay development plan.

The unique coastal location of the Roche Bay project affords the company the opportunity to utilize a turnkey, modular LNG power and distribution solution with the potential to reduce both AEI’s associated capital requirements while still capturing significant operational savings. These solutions have substantial benefits for the Roche Bay economics, and likewise can be applied to meet the challenges of Canada’s northern resource developments and remote communities. As such, the companies that have been engaged in developing these solutions are anticipated to leverage their knowledge and experience across the North to encourage economic growth and competitiveness for other remote mines and Northern communities.

Studies to date indicate that the significant operational benefits both in environmental impact (approx. 40% reduction in CO2 emissions) and operating cost for LNG based power (technical studies indicated potential $8/t savings reducing the total FOB cost to approximately $42/t). These operating cost savings afford the company the opportunity to tradeoff a turnkey power solution for long-term operating cost while still retaining a net benefit to operating margins. Other resource companies are now evaluating LNG based power as there are both advanced turnkey power production and supply and storage models being developed. As currently contemplated, AEI plans to conclude partnership agreements that will include joint LNG feasibility studies (power and LNG supply) based on delivery of a turnkey power solution.

There are two independent partnerships being negotiated. The first partner would be granted the exclusive right to build and operate the LNG power facility should turnkey trade-off studies justify the benefits to AEI. The second, would provide an LNG supply and storage concept as a turnkey solution to complement the LNG power plant. Given there are business sensitive details associated with these negotiations, details will be released as permitted once agreements have been finalized. Additional news is expected in the near future.

Supplemental Wind Power

Studies provided by ArcStar Energy have demonstrated that the wind regime at the site is one of the best it has seen anywhere in the world. The initial economic evaluation for Roche Bay was done on a turnkey wind power solution whereby ArcStar Energy would capitalize the wind power facilities on a long term power purchase agreement at an approximate 40% discount to diesel power. Since completing its initial report, ArcStar has further evaluated technical and operational challenges and satisfied themselves that a turnkey solution can be delivered upon verification of the wind regime which is needed for ArcStar’s financing requirements. Wind energy can only be viewed as a means of delivering supplemental power, and in the initial study the business case was done as a diesel displacement benefit estimated to reduce consumption by 30%.

This plan can also be incorporated into the LNG option as wind delivered power will reduce consumption of non-renewable LNG, offering a possible hedge against rising future LNG prices. The results from Arcstar’s work may provide an updated perspective on the use of supplemental wind power as a broader solution for northern development.

The company is extremely proud being an industry leader in moving resource development towards executable, sustainable power solutions which provide a broad range of social economic benefits to the north. AEI believes these alternative power initiatives are both economic solutions for remote resource projects and communities and have the opportunity to contribute economic competitiveness and improved environmental stewardship to remote Northern mines.

John Gingerich, President & CEO, commented: “We are confident that AEI and its stakeholders are at the forefront of the inevitable conversion from Arctic Diesel towards LNG and supplemental wind power for resource projects in the Far North. By working with developers on turnkey delivery models, this will provide additional options for communities and developers wishing to avoid the onerous infrastructure burdens when affordable power is the only real objective. AEI believes it will be able to capture the first mover benefits generated by having motivated partners with a long-term regional focus in mind. We are convinced that the success of our alternative power initiatives will provide a long term sustainable advantage for all stakeholders.”

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LNG World News Staff, March 04, 2013; Image: Advanced Explorations