If you live in BC or have followed the NovaGold story for a few years now, you probably recall the name Forrest Kerr. It's a run-of-river hydroelectric project, which NovaGold purchased as part of a suite of renewable-energy projects when we acquired Coast Mountain Power back in 2006. The idea behind the acquisition was to produce the power for Galore Creek ourselves by developing a hydroelectric project and building a power line – which I always thought to be such an entrepreneurial and forward-looking idea. :) We made good progress with our own internal team but in the end decided to sell the entire portfolio to AltaGas for C$40M in 2008 since the market wasn't ascribing any value to our ownership and we needed to concentrate on our core projects.
AltaGas has been working hard and last year confirmed that it had signed a 60-year Electricity Purchase Agreement (EPA) with BC Hydro to deliver power to the Bob Quinn Lake grid via BC Hydro power lines.
Last month AltaGas announced that construction of the Forrest Kerr project had begun. This is huge news for the region on many fronts.
Approximately 50 workers are at the campsite and the number is expected to reach 400 in mid-2013. The capital cost of the project is approximately $700 million and so far AltaGas has spent approximately $26M on construction and approximately 80% of that is with local contractors or contractors that have joint ventures or labour agreements with First Nations entities. AltaGas, like NovaGold,signed an agreement with the Tahltan Nation's Central Council which provides for economic benefits such as jobs, training, scholarships and construction contracts. AltaGas expects approximately 95% of the project and material to come from local and Canadian suppliers.
Once completed, the project will provide enough electricity for approximately 70,000 homes in British Columbia and will offset more than 450,000 tonnes of greenhouse gas equivalents annually. Forrest Kerr will contribute to the BC government's goal to achieve energy self-sufficiency by 2016 and will help the Province meet its clean energy needs by offsetting the use of electricity generated from fossil fuels.
And it will be produced with a relatively small environmental footprint that will minimize impacts to terrestrial and aquatic ecosystems. This is because unlike regular hydroelectric projects which impound water within a dam for storage, at the Forrest Kerr project a weir redirects the water to an intake structure, located near the confluence of the Forrest Kerr Creek and the Iskut River. It will redirect a portion of the flow of the Iskut River through a tunnel to an underground powerhouse containing turbines to generate electricity. The run-of-river nature of this project ensures continual movement of water and materials downstream of the proposed tailrace discharge, minimizing any potential effects on aquatic resources in the area, and the underground nature of the project results in a relatively small surface footprint. Forrest Kerr will be the largest run-of-river hydro facility in North America.
The power line will travel up Highway 37 and ends approximately where the Galore Creek access route begins. Galore Creek Mining Corporation (a 50/50 partnership between NovaGold and Teck Resources) is working on an access road that will join Highway 37 to the Galore Creek valley. GCMC plans on building its own power line to tap into the grid.