Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 27 - Evidence - April 21, 2015
OTTAWA, Tuesday, April 21, 2015
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5 p.m. to study non-renewable and renewable energy development including energy storage, distribution, transmission, consumption and other emerging technologies in Canada's three northern territories.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Richard Neufeld. I represent the province of British Columbia in the Senate, and I'm chair of this committee.
I would like to welcome honourable senators, any members of the public with us in the room and viewers all across the country who are watching on television. As a reminder to those watching, these committee hearings are open to the public and available via webcast on the sen.parl.gc.ca website. You may find more information on the scheduled witnesses on the website under "Senate Committees."
I will now ask senators around the table to introduce themselves, and I will begin with Senator Patterson.
Senator Patterson: Dennis Patterson, senator from Nunavut.
[Translation]
Senator Boisvenu: Senator Pierre-Hugues Boisvenu from Quebec. Good evening.
[English]
Senator Seidman: Judith Seidman from Montreal, Quebec.
Senator Black: Doug Black from Alberta.
Senator Sibbeston: Nick Sibbeston from the Northwest Territories.
[Translation]
Senator Ringuette: Pierrette Ringuette from New Brunswick.
[English]
The Chair: I would also like to introduce our staff beginning with the clerk on our left, Lynn Gordon; and our two Library of Parliament analysts, Sam Banks and Marc LeBlanc.
On March 4, 2014, the Senate authorized our committee to undertake a study on non-renewable and renewable energy development, including energy storage, distribution, transmission, consumption and other emerging technologies in Canada's three northern territories.
I'm pleased to welcome the following witnesses from Diavik Diamond Mines Inc. Appearing before us from Yellowknife is Chris Bertoli, Superintendent, Power Distribution and Surface Electrical; and Corey McLachlan, Manager, Communities and External Relations.
Gentlemen, thank you for being with us today. We have your presentation, so please proceed. Once you are done, we will go to questions and answers. The floor is yours, sir.
Corey McLachlan, Manager, Communities and External Relations, Diavik Diamond Mines Inc.: My name is Corey McLachlan. I thought I would reference that for the committee so they know who they are speaking to. I will begin the presentation, and I will then turn it over to my colleague, Chris. I will just reference the page numbers or slide numbers as I go through.
Starting on the second slide, Diavik Diamond Mines Inc. is a joint venture. It is between Rio Tinto and Dominion Diamonds. Rio Tinto is a 60 per cent owner and operator of our operation.
Moving on to slide 3, I will tell you a little bit about Diavik. We began construction in the year 2000, built the main infrastructure through to 2002 and began operating and production in 2003.
We're currently a fully underground mine. We're mining from three kimberlite pipes. If you look at the picture on slide 3, you can see the larger pit at the foreground. That has two kimberlite pipes in it. The smaller pit in the background has one.
We recently announced, at the end of 2014, that we were going to develop our fourth kimberlite pipe, called A21. The construction on that has recently begun. It is a US$350 million project, which will take us until 2018 to construct, and then we will move into production. We will use the same technology and construction methods as we used for the other two dikes. It will be a rock-filled dike because the kimberlite pipe is once again located under the lake.
We have an average workforce of just under a thousand people, but that workforce number will fluctuate now through to 2018 with the construction project. We will see that number increase over the construction period in the summer and then tail off a little bit in the winter.
Last, but obviously not least, we have formal agreements with our five Aboriginal partners in the North. Diavik is a leader in its partnerships and relationships with Aboriginal communities, and we're quite proud of all the work that we have done over time with them.
Slide number 4 will tell you about where we are located. It is hard to tell from slide 3 and the picture you saw there because it was winter, but our operation is located on an island in Lac de Gras, 300 kilometres northeast of Yellowknife. We're north of the treeline and about 350 kilometres south of the Arctic Ocean.
As I'm sure you are all aware, we are only accessible by a seasonal winter road. Otherwise, all access is by air. There is no permanent infrastructure which allows us to access the mine.
You can also take a look at the map on your right. You can see that Dominion Diamond has an operation just across the lake from us, and the other two operating diamond mines in the Northwest Territories that De Beers owns and operates are to the south of us as well.
Moving on to slide 5, for a number of years Diavik has explored different energy options. We were previously 100 per cent reliant on diesel fuel, but we wanted to explore to see if there were other options for us. There were a number of reasons for wanting to do that, which I will get into in a minute. I will look first at the options that we looked at.
The Government of the Northwest Territories explored, for a number of years, the option of extending a transmission line from their hydro dams south of Great Slave Lake up to the diamond mines in the North, but, unfortunately, it simply wasn't feasible due to the large infrastructure costs and the capex. We were not able to proceed with that.
We also explored solar and geothermal, but, again, neither option was economical, and they weren't going to work for our operation.
At the end of the day, what we settled on to supplement diesel with was wind. That wasn't settled on lightly. It required many years of study, in fact a three-year wind study at site to make sure it would work for us. That being said, while we are proud of the wind farm and what it will do for us, we are still going to have to rely on diesel for the majority of our energy needs.
I will now move to slide 6. This is a bit of background on the discussion that I just mentioned around the energy options. We only have access to our mine for eight weeks of the year during the seasonal winter road, so we know that we have to bring everything that we need, any large components up over that period. We currently have 80 million litres of storage capacity for diesel fuel on our mine site. Again, we are required to bring that up over an eight-week period, so it is a logistical challenge. We want to make sure we have enough diesel to last us for the year.
We operate in the Arctic, which you are well aware of. With that come challenges of weather and extreme cold in the winter. We need to have an energy supply that is secure because we simply cannot afford, where we're located, with the lack of infrastructure and the temperatures, to have a situation where we go for prolonged periods without energy.
We needed to look at energy options that would be secure and safe. Obviously, with climate change and fuel prices as variables that we could see, we wanted to look at something that could help offset some of those risks. In 2006, it was particularly warm year in the Northwest Territories, and our ice road had to close significantly earlier than anticipated resulting in extremely high costs for us to get components in and also our diesel fuel. We wanted to look at energy options that could help mitigate some of those risks for us.
Turning to slide number 7, I will turn it over to my colleague, Chris Bertoli, who will take you through the remainder of the slide pack.
Chris Bertoli, Superintendent, Power Distribution and Surface Electrical, Diavik Diamond Mines Inc.: Good afternoon. I will just go through some of the final scenario that we decided with. We went with four Enercon 2.3- megawatt turbines. This overall would reduce our footprint and consumption of fuel by 10 per cent, based on the actual amount of kilowatts of energy we use per year.
Overall, it is going to reduce our carbon footprint by 12,000 tonnes of CO2. The turbines are also equipped with blade de-icing. The project was forecasted to have 17 gigawatt hours of renewable energy per year. The reliability was also a decision that we wanted to go with, but the Enercon turbines are a gearless, direct-drive option, so that provided some reliability to the turbine. We are Canada's most northern wind farm, and it was an award-winning project.
We started up in September of 2012. We started off with a wind following, which is basically that all the generators were on a synchronous mode. As the wind went up and down we would vary the governor on the generators to wind follow, so every bit of energy produced by the wind farm was used.
We also did some wind forecasting. We used a Norwegian website called YR.NO. It's a meteorological website. We connected the wind farm directly to the overhead line, which comes into our boiler house, and this is the first time that we connected to Enercon's proprietary SCADA system for direct information transfer into our SCADA system.
Slide 9 has a quick forecast, in orange, of the energy we predicted based on the five-year forecast that we captured for the wind study, and the blue is the actual. As you can see, in January and in February we had less than favourable winds and some problems. If you go to slide 10, 2013, overall 2013 was our coldest year. September, October and November were very good months in the warmer weather, but as January and December rolled in, we definitely had some issues.
The blade heating was supplied incorrectly from Enercon. It was set at 50 hertz, not at 60. The anemometer on each turbine started to fail with electronic issues from the cold. We also had electronic issues on the inverters down on the main floor and in the nacelle, which is the very top of the wind turbine. The support from Enercon was very difficult because the connection through their SCADA system was not working properly either.
Mitigation-wise, we needed to do a few things right away. One, we installed 600-volt heaters into the base, into the nacelle. Particularly this is the only way we could troubleshoot the turbines. If you can imagine being 240 feet in the air, at minus 40, you definitely need heaters. We installed these, and we also installed generators for these heaters. We turned them off when the turbines were operational, and when they were not, and for maintenance, we would turn them on. We also replaced electronic anemometers and inverters. We also tried to get support from Enercon through the SCADA system.
Slide 12 shows 2013 wind farm alterations. Enercon replaced all the blade heating components, cables, heaters and breakers. They came on site. They also brought out one German engineer in February and March. All the lubricants were replaced for cold weather operation, lower viscosity. New programming was put in place for the turbines that was more applicable to the northern application, and Enercon SCADA Delta V was connected, and support was improved.
The project produced 17 gigawatt hours for 2013 and for 2014 an average penetration of 10 per cent. That was our forecast. And overall, in 2013, we finished at 15.9, primarily due to the poor January and February that we had.
As far as 2014 goes, our forecast again was 17 gigawatt hours. We closed the year off at 19.9, almost 20 gigawatt hours; so 3 gigawatt hours ahead of our forecast, and average penetration was 10.5. This will speak to the offset. The 19.9 equals 4.9 million litres, which equates to a cost saving of over $6 million.
Mr. McLachlan: Just to finish off with slide 14, obviously, when Diavik explored different options that we could use to help offset some of the diesel that we were using, we recognized that we also had an opportunity to share these benefits and learnings with the broader North and, again, it's the way that Diavik operates. We're happy that we've been able to demonstrate that wind is a viable option for the North. We've been happy to show that the changes made in 2013 have improved the reliability and the production of energy from the wind farm.
What we've done is offered our assistance to the local government here, the Government of the Northwest Territories, and we are working with them to share our knowledge about the learnings of the wind farm. More tangibly, we also donated our wind tower that was used for testing the wind capacity to one of our Aboriginal partners, and they have set it up at Giant Mine. I'm hoping that they will be able to use some wind power on the remediation of that operation as well.
The other thing is it has generated a lot of interest. We know the GNWT is also exploring wind options now to the North, in and around Inuvik. We are happy that people have learned from what we have done. We've been told now that the Raglan Mine in northern Quebec has worked with Enercon and has again once further probably moved some of the technology forward in terms of Arctic technology and reliability. We are very happy with the results and very happy to share those results and benefits with people so that we can assist with their learnings.
Mr. Chair, that concludes our official presentation. At this point we would be happy to discuss the wind farm in more detail with you and the committee.
The Chair: Thank you very much, gentlemen. We will now go to questioners.
Senator Massicotte: Thank you both for being with us. This is very interesting. It's particularly interesting because we've had other experts before you, experts who have had less experience than you have had, but we've often heard that the wind factor cannot work up North because of freezing in their blades, which you've obviously experienced, and the wind is unpredictable. Given your own experience, you have to provide redundancy nearly consistently because you are never sure what the conditions are going to be.
I gather what you're saying is that in spite of the fact you have to provide the capex for your diesel generation, irrespectively, you can say that in spite of the total cost of wind you can still provide a marginal benefit, save money on a marginal basis, with the wind in spite of all the difficulties; is that a good summary?
Mr. Bertoli: Yes, I agree totally. Diesel is our primary generation of power. Wind is supplemental. If there's no wind, yes, it is going to be variable. When it's there we use it. We don't have any storage, so if it's windy on any day, at 100 kilowatts or over a megawatt, we will use every last bit of it.
Mr. McLachlan: The cost to construct the wind farm was $32 million. We're projecting a payback of just over seven, seven and a half years. The diesel costs and the remoteness of our operation made wind very feasible.
It was also, as I mentioned, highly researched ahead of time. I think — and Chris can correct me if I'm wrong — there was over three years of wind data to confirm, as you mentioned, senator, that we had the wind resource there and it was sufficient. It's my understanding that there are many other communities in the North that also would have wind resources that would be sufficient. The real challenge will obviously be with the loads in those communities and then having the technical expertise on the ground to troubleshoot if and when required.
Senator Massicotte: If it's so profitable that you now contribute approximately 10 per cent of energy resources, why not do it again and again and reduce that, make that 60 or 70 per cent?
Mr. Bertoli: Right now, they chose to go with 9.2 megawatts. What ends up happening is that your penetration ratio in the summertime, as your resistive loads go down, gets up to the 50, 60 per cent. That starts to cause the grid to be unstable because your power factor starts to go astray, and you actually start making your generators insufficient.
The highest penetration we have gone up to in the summer is actually 60 per cent. We do fluctuate.
Senator Massicotte: Having said that, as you know, we're studying the energy challenges up North, and your example is very good. You have obviously gone through a lot. What would you tell us if you were president or prime minister of all of the North? What would you do for energy resources? Is there a solution with wind? Are we overlooking something?
Mr. McLachlan: What I would say is that we recently met with the government of the Northwest Territories and discussed this with them as well. The challenge is scalability. Most of the communities have very low loads. Our load factor at Diavik is equivalent to Yellowknife's. So to find economic options for wind can be challenging in the smaller communities. Not impossible. Most importantly, the message we gave to the government was ensuring that the wind study was done ahead of time so that you have a viable resource. The second thing was continuing to look at the technology. It has advanced so much in the last couple of years that it is viable now in the North. As Chris mentioned, not having the gear up at the nacelle — you don't need a large crane always on site, but you still need some of that technical expertise and those abilities to check in on the turbines regularly, so it is not impossible. It is probably one of the options to look at in the North, but, again, then it is also synchronizing it with diesel generators that exist already in communities because wind wouldn't be able to supply the whole energy requirement for a community.
Mr. Bertoli: Or hydro or what have you.
Senator Ringuette: First of all, I am very pleased to see that your breakeven will be seven to seven and a half years. That's pretty good.
At the University of New Brunswick, we have Professor Yves Gagnon, who is a research chair specifically for wind energy. He has mapped the wind potential for the entire country. I was wondering, have you called on his expertise before looking at and taking three years to test the potential wind capacity?
Mr. Bertoli: I can't speak to the study on that one. All I know is that the data we captured in the three to five years isn't actually that accurate. So, in the first year, if you look back at the graph, it shows August. August was supposed to be a high month of wind. It was not a high month of wind. So going back historically is very difficult. I am not sure what he would have been able to provide us with. The more help the better. If he does have knowledge, I'm sure he'd like to share it with other companies or other places.
Mr. McLachlan: Our other challenge was that, as we mentioned, we operate on an island, so our footprint is extremely small. Our footprint is 20 square kilometres. I'm not familiar with his data, but we needed to be very specific and needed to understand the wind resource in a very small, specific area because we simply did not have the ability to go further afield.
Senator Ringuette: From my visit to that centre, it is very specific and detailed. I think they have data dating back over 50 years. It is really incredible what they have there. If at any time your company needs more information, I'm sure that the university would be very happy to help.
Senator Black: Gentlemen, thank you very much for your contribution. I might have missed it, but I do want to understand: Of your energy mix, what percentage is wind, and what percentage is diesel?
Mr. Bertoli: It all depends on the month. So primarily in the summertime, the wind is supposed to be lower, but we will get points where it is primarily wind generation and not diesel. In the winter, with the resistive loads going up, it actually primarily becomes more diesel than wind, even though wind —
Senator Black: If you were to average it, though, average it for me over a year. We don't need to be specific, but I want some order of magnitude here of wind versus diesel.
Mr. Bertoli: That's where the 10 per cent comes in.
Senator Black: Ten per cent wind. Is that what you are saying?
Mr. Bertoli: Yes.
Senator Black: Okay, thank you very much. I just wanted to understand that. Are you aware of whether or not any other major mining facilities or industrial facilities in the North are relying on wind at all?
Mr. McLachlan: As I mentioned, it is my understanding that Raglan Mine also has recently installed one turbine, so they have utilized the Enercon turbines as well. They have gone a little bit larger than us but just have the one. That's the only one I'm aware of.
Senator Black: Okay, that's helpful. I want to follow up on what one of my colleagues — I believe it was Senator Massicotte — asked. If you were the boss of the world, what would the ideal energy solution be for the North?
Mr. McLachlan: Yes, that's a tough question. We know that in the North there is great hydro potential available. Unfortunately, though, we know that with the great distances, the capex is extremely large to try to feed in.
I think realistically, if you looked at the North, the isolation of the communities, the distance between them, the cost of putting infrastructure in, you would like something like that, but that would be incremental and over time. In the short- to medium-term, what you would probably want to do is supplement the existing diesel facilities that have the proven track record and reliability with renewables, with the longer-term goal of eventually extending the grid to the South in Canada and then incrementally adding on communities and industrial areas as well.
One of the biggest things to prohibit economic development in the North is — again, I'm not telling you anything you don't know — the lack of infrastructure, and one of those key things is energy. So that would be my personal suggestion again.
Senator Black: I found that very helpful. Building on the last comment you made regarding energy being an inhibitor to industrial development, that's what you said?
Mr. McLachlan: Yes, definitely. If you look at the costs of our diesel, for instance, if you can imagine, we're purchasing it in Edmonton. We then have to transport it to Yellowknife, and then, once you get it to Yellowknife, you have to transport it an additional 400 kilometres to our mine site. The window that we have available to get that diesel fuel in is eight weeks each year. That window is based on a temporary ice road that costs us $18 million to build, and it melts every spring. If something were to come up, like in 2006, where the road closes early due to weather and we're not able to get all of our diesel in, we simply don't have any other options to operate.
That security of supply, that access to supply, is a huge requirement for us in our environment, and then, obviously, there are the huge additional costs that we have to expend to get our energy source up to site.
Senator Black: If we followed your wish through and if there were electrification, there were an investment — it would be a national investment in hydro facilities and electricity being provided to the North — what view do you think it would have on industrial development in the North?
Mr. McLachlan: Again, it is hypothetical, but I think it would be fair to say that if cheaper energy were provided into the Great Lakes geologic region, where the four diamond mines currently reside, you'd have the possibility of maybe extending the mine life of some of the operations. You'd also have the ability of potentially developing resources that are less economic currently, due to the high costs. Again, once you have the infrastructure in place, to build a spur off of it, you're talking about smaller incremental costs after that. You've got a security of supply. It just makes things easier.
Right now, we know in the Northwest Territories that our mineral potential is extremely great, according to many of the studies they do. In terms of the investor sentiment, it's right near the bottom. One of the key reasons is the cost of doing business and the lack of infrastructure there.
So anything that you can do to make it easier for investment will help. Obviously, you've got the huge added benefit of being able to tie in remote communities as well. I'm sure you've all been to small communities where they have a diesel generator in the middle of the town. It's loud. It's noisy. They would like nothing better than to have another type of resource that could provide that energy for them.
Senator Black: I found your answers tremendous. Thank you both very much.
Senator Sibbeston: I know our committee is examining energy issues in the North and inviting you to appear before us with your experience of a wind generator. I think in some respects, though, that what you have is only possible by a very lucrative diamond mine, situated as you are. The amount of money that it costs to set up such a system and the technical resources needed to bring it about are so expensive and so beyond the ordinary little community in the North. Your experience, I submit, in a way, is unique to you and may not be used anywhere else in the North. What would you say about that?
Mr. McLachlan: I would say you've got some valid points, senator. To the points that we made earlier, the load capacity of communities is quite small, as you know, in the N.W.T., and our operation is on par with Yellowknife, the largest centre. But I think the point that I would challenge there is the technology. The technology continues to advance with wind, to the point where it is possible — and we've demonstrated that it is possible — to operate in the North in these extreme environments. The wind resource, we do know, exists across the N.W.T. that would make it economic. But it is that next step. Does the Government of the Northwest Territories have the funds available to invest in an energy source that will only ever provide a fraction of the community energy needs? As we know, wind is not the solution to provide the total energy needs of the community.
You're right; it would be challenging. That's the exact same message we've given to the Government of the Northwest Territories as well. It's going to be a challenge, but in and around Yellowknife there are some opportunities, in around maybe some of the larger centres, Inuvik as well, with the wind resources there. You have the load that is a little bit larger. You have some of the technical expertise, with maybe the power corporation having offices and people there.
I think there is a possibility still. I wouldn't totally discount it.
Senator Sibbeston: Did you work with the government in terms of investigating the possibility of using hydro? I know one scenario was to use the Taltson, south of you, and have a line that goes around the lake. But there are smaller projects in the Yellowknife area, north of Yellowknife. Did you fully assess the possibility of cooperating with the government or giving some of the money the government would need in order to bring about a system, a hydro and a grid to your mines and into that area like you described, which would, in the long term, be a good thing for the North in terms of your type of industry but also for the people in the North, particularly the small communities and Yellowknife?
Mr. McLachlan: Yes, we did, senator. We explored that option with them a couple of times. But at the end of the day, the overall cost was still too prohibitive for us, so it wasn't successful. So the government engaged with not only ourselves but the other operators at the time, and we weren't able to proceed forward, which is the reason why we went with wind.
We've got a mine life of only 10 more years, so we simply didn't have enough time to wait for the possibility of a future transmission line. We wanted to act now.
Senator Patterson: Just further on Senator Sibbeston's question, you were candid with us about some of the problems, the teething pains, I guess, that you had with the system. What kind of capacity would a community need, compared to what you have with your employees, to deal with the issues that you described: the electronic issues, the redesign issues to add heat? How sophisticated are the maintenance requirements on these systems?
Mr. Bertoli: To answer that, I go back to what Corey said. The small communities would have trouble with that. The larger centres, obviously you have skilled tradesmen; there would be no issues. The modifications are fairly generic if you're an electrician. The maintenance in general is very minor. Enercon does four maintenances a year, a week at a time, for a marginal cost of less than $100,000.
Mr. McLachlan: Chris, would it be fair to say that once the wind farm is up and operating, and once the modifications have been made, the ongoing maintenance, as you mentioned, is quite minimal?
Mr. Bertoli: Yes. We may go out there once a week for a call to do a reset. We go out there maybe to do some plowing for snowdrifts and stuff so we can access the turbine to inspect it. We have constant coverage to see what's happening, and alarms. Enercon watches it from Halifax and Germany on a daily basis. If we have issues, they call us. We wouldn't be able to do it without Enercon also.
Senator Patterson: Thank you for the excellent presentation. You described this additional energy option as a way of reducing risk with your dependence on the ice road, and you talked about 2006 having been a warm year, and the road had to close prematurely. Since that time, how has the ice road performed? What kind of length of seasons have you had recently? Is there evidence of climate change affecting the winter road in recent years, since 2006?
Mr. McLachlan: Thank you. It's a great question. We understood the risk, obviously, but 2006 was excellent for us to sort of refocus.
I'm happy to say we've continued to advance how we build and maintain the road. We continue to put a lot of money into research and design. We've implemented a number of activities over the last couple of years that have allowed us to be probably even more successful than we've ever been with the winter road. Some of those examples would be that we clear the snow off the winter road earlier in the season now to facilitate ice growth. We have the profiling of the ice, and doing that regularly, being able to look for areas that are weak and to flood those more regularly.
Overall, all of these new initiatives have resulted in our being able to build the road more efficiently. We've come up to full weight. We need to get to 48 inches to be able to hold a Super B tanker that's fully loaded. Over the last couple of years, we've been able to come up to full weight earlier than we had in the past and have been able to maintain that.
It's a long answer, but just to summarize, in the recent past since 2006, we've had no concerns or issues with the winter road. Not to say we won't in the future, but we feel much more confident today in our ability to build and maintain that road and to get the loads in.
That being said, we had our second-busiest year on record, this winter road season in 2015, with the construction of the fourth diamond mine in the Northwest Territories. With increasing exploration and development, the use of the road may increase, which puts a little bit more stress on it. It is incumbent upon us to stay on top of it and ensure that our maintenance and construction continues to advance.
Senator Massicotte: Talking about energy, you obviously make the point that it's very important up North. Of your own operation, what percentage of your total operating costs are energy costs when you amortize your capex over the useful life?
Mr. McLachlan: I don't have the exact number with me, but I think, Chris, it would be fair to say that energy costs are our second-largest expense as an operation.
Mr. Bertoli: They are the second largest.
Mr. McLachlan: It's a huge contributor.
Senator Massicotte: After labour costs?
Mr. McLachlan: Correct.
The Chair: At the start of your presentation you looked at solar. Could you expand on solar a bit? We've heard people say that in the Northwest Territories they're going to start using a lot more solar. I just want to know your experience, where you folks are at in solar.
Mr. McLachlan: I'll maybe start, and Chris can jump in if I miss anything.
We examined solar, but, as I mentioned or as the slide pack mentioned, it just wasn't going to work for us economically, whereas we could get more energy requirements from wind.
Again, I do know that in the Northwest Territories there is a small community that's coming on line this June with their solar, so I know it is being used on smaller scales, but for our needs and requirements it just wasn't going to deliver what wind could for us.
Mr. Bertoli: That's correct. As technology improves, I think the NPB on projects with solar will improve because the technology will get better.
The Chair: Technology gets better with everything as we move forward, but right now the technology is not there, so I appreciate that.
You have enough diesel generation on site to run everything if, in fact, none of the wind farms generated any electricity; is that correct? You have enough redundancy to run the whole place?
Mr. Bertoli: Yes, we have 50 megawatts of diesel generation capacity and 9.2 of wind on top of that.
The Chair: So if all the wind didn't work anymore, you could still operate through the whole year?
Mr. Bertoli: That's correct, yes.
The Chair: Correct me if I'm wrong, but I think you said you used 6 million litres less diesel fuel last year when your wind farm was working. Was that correct?
Mr. Bertoli: We have 4.9 million litres with $6 million of savings.
The Chair: Okay. Did you bring in 5 million litres just in case something went wrong, or are you eliminating the 5 million litres because you're sure that the wind is going to generate the electricity for you?
Mr. Bertoli: We don't add extra diesel to take up a bad wind year. We do have contingency if we have a poor ice road or if we have a delayed start on the ice road. We have that contingency in our order.
Mr. McLachlan: I think the other thing I want to mention is just how impressive that reduction in diesel is. The reason is because we were going deeper underground. We are required to use more energy as we go deeper underground. The heating costs, and we have to truck the ore further. So our energy requirements weren't decreasing. It was offset by the wind farm and a number of other energy efficiency initiatives that we had on site. So it's an impressive number to consider as we go deeper underground that we're using less energy.
The Chair: On slide 11 you say that you had to install 600-volt heaters to keep the towers and everything warm when they weren't generating electricity. Do I understand that slide correctly? You had to put a diesel generator there?
Mr. Bertoli: It was primarily to troubleshoot the electrical issues that we were having inside the turbine.
Mr. McLachlan: What would happen is that if the electricians had to go do any work on the turbine, if you can imagine you're standing in that turbine, it's 40 below outside, there's no heat source in there, and it becomes very difficult to operate.
As Chris mentioned, if you go up to the top, 240 feet, you're walking up the ladder; by the time you get to the top, if there's no heat, you don't have a lot of time to troubleshoot or work before you're cold and you have to go back down to your truck and warm up. The installation of the heaters was to facilitate the troubleshooting and the checking on the turbines.
The Chair: That was my question, why you would need that, but it's for service of the tower itself.
Mr. Bertoli: That's its purpose only.
Senator Sibbeston: I was trying to get my colleague Grant Mitchell to ask a very intelligent question and he wouldn't, so I'll ask it.
Have you considered using caribou or reindeer, hitching them up so they could turn like a big turbine and make power?
Mr. Bertoli: Did you think of that?
Mr. McLachlan: I think we'll leave that one.
The Chair: Nick lives in the Northwest Territories, so there you go.
Senator Patterson: Were there any regulatory issues around installing the wind turbines? Did that have to go through a process?
Mr. McLachlan: There was a process to go through it. It was fairly straightforward for us. We had to install them within the current operating footprint of our mine site, so that did make it easier as well, but that process was quite efficient. The timelines for us to get this approved and constructed were quite tight, and we were able to manage that process.
Senator Patterson: Was there any financial assistance or subsidies for any of this energy infrastructure that you installed, may I ask?
Mr. McLachlan: No, none at all. It was fully funded by us, with no support from any level of government.
Senator Patterson: I don't know if you've looked at the Raglan story, or if you've been able to look at the Raglan story, but I know that federal assistance was provided for that installation. I wonder if you would have any comments about whether government should provide financial assistance or incentives for these kinds of initiatives.
Mr. McLachlan: I would be very happy to retroactively take some. I think, as I mentioned, Raglan learned from our experience both on the technical side and maybe they also learned from our experience on the government support side as well.
All joking aside, I think in the North, in these difficult conditions, when you are at the cutting edge and when you are trying to do things that haven't been done before and that have a greater element of risk to them, some level of government support would definitely be appreciated and would most likely facilitate more companies taking this chance and risk.
I suspect the longer our wind farm operates the more assurances and comfort others will have, but it definitely wouldn't hurt. I know we get a lot of people asking us how much support we got, and probably it was only possible due to subsidies, and when we tell them there was none involved at all they sort of appreciate the risk that we took, being the first to do this. Again, we felt confident, because we'd done the homework, that it was going to work, and we've been proven correct to date.
Senator Patterson: Have you heard how the Raglan project is going?
Mr. McLachlan: My understanding is it's going very well. Like I said, I think they've sort of taken our experience and built off of that by going with a larger turbine. I think they have some power storage as well, which is an addition on to what we've done, but that's about all I know.
The Chair: Thank you very much, gentlemen. That was very interesting. I appreciate your time and your knowledge. That will help us an awful lot in getting our report done.
(The committee adjourned.)