Originally anticipated for December, the Canoe Reach geothermal tenure area is now open for competitive bidding on three permit options.
Permit 63297 (2,200 hectares) and Permit 63299 (5,174 hectares) both lay within the Regional District of Fraser-Fort George. Permit 63299 is 4,474 hectares and while it mostly lies within the Regional District of Fraser-Fort George as well, it also crosses into The Thompson-Nicola Regional District. All permits are for one-year terms. If a permit holder can confirm an economic geothermal resource, a permit can be converted to a long-term lease for
power generation.
The results of the permit bidding process will be announced at noon Oct. 27, exactly 24 hours after bidding closes. The Canoe Reach permits are only the second parcel offered by the B.C. government since 2004.
While industry contacts will not confirm their interest and bidding status until the competition closes, yet another Canadian energy company has decided to invest in geothermal south of the border. In what is its first foray into the geothermal sector, Calgary-based Enbridge (one of the largest oil pipeline companies in North America) announced on Sept. 8 that it will invest up to US $23.8 million for a 20 per cent interest in a 35-megawatt geothermal project in Oregon that’s being developed by Idaho company U.S Geothermal Inc.
Sean Peasgood, an analyst with Wellington West Capital Markets says that Enbridge is focusing on regions where they’re able to get government subsidies. For example, Enbridge will receive a cash grant for its investment in the Oregon project under the US government’s investment tax credit (ITC) scheme. Under this program, geothermal and other renewable energy developers are eligible for ITC grants, which are equal to 30 per cent of a project’s capital costs, if their projects can be brought online by 2012.
“There just isn’t the same type of government stimulus in Canada,” said Peasgood.
The B.C. Sustainable Energy Association was formed in 2003. Members include B.C. Hydro, Vancity Credit Union, The Canadian Mortgage and Housing Corporation, and the B.C. Ministry of Environment. Their lobby efforts include promoting geothermal energy. According to the association website, their lobby focuses on trying to get the government to guarantee producers a price of 7 cents/kWh for the first 5,000 MW of geothermal energy until 2015.
Dr. Mory Ghomshei, professor of Mining Engineering at UBC, says that the industry may need such an incentive for development in the Canoe Reach to be feasible, however his laboratory and field work on the Canoe Reach indicates significant geothermal potential. Ghomshei and a partner, Briant Kimball, have done geochemical geothermometers of Canoe hot springs which indicate that the deep undiluted geothermal waters under the property may have temperatures above 200°C. These analyses are based on chemical compositions in the spring water which can indicate the temperatures which have affected them.
But Ghomshei, and industry contacts, have noted other factors which make the Canoe Reach very feasible. The project is approximately 7 km away from a substation on the BC Hydro Power grid and there is already good road access in.
“Medium scale binary production is possible for the already-existing permit where the springs are. Flash steam needs very high temperatures and I do not know if you have these temperatures in the Rockies or not. At what depth and how much is another issue, but we have good indication that we have medium temperatures good for binary generation,” says Ghomshei.
Ghomshei adds that while the potential of B.C. is great, lack of development is due, in part, to the cheap price at which B.C. Hydro can produce hydro electric power. But he adds that until recently, there has not been a significant increase in demand for power in B.C. However, this demand is starting to heat up, and three are not many good sites left for large-scale hydro electric dams.
“I have been trying to convince people in Ottawa that the time to invest in geothermal is now. They invested in the oil sands in Alberta and they are getting benefits from it. In the same way they invested in Alberta oil sands, they should invest in B.C. geothermal. Geothermal is B.C.’s oil sands.”
At a total estimated price of 5-6 billion dollars the highly contentious proposed “Site C Dam” on the Peace River would cost about $6,000/kilowatt. Ghomshei says that the price for geothermal is about $3,000/kw, although close proximity to the power grid is a factor, and many of B.C.’s best geothermal sites are located in remote areas, often protected areas such as parks.
While it is expected that most large Canadian geothermal companies will bid on the Canoe Reach properties, potential for public development has not been ruled out.
Johnny Stilaeff, VP Investments for the Columbia Basin Trust, says that while the CBT would have to first be approach by basin municipalities such as Valemount, Revelstoke or Golden, it could fall under the CBT’s mandate to partner and invest in public development of a geothermal power plant on the Canoe Reach.
“The communities would have to indicate that they would be willing to drive such a project. If the communities came together we would definitely talk about being involved.”
Stilaeff adds that the timing is coincidental considering the recent adoption of three strategic priorities for spending by the CBT.
“Alternative energy was one of those priorities. We have already started some investigation into alternative energy.”
While Stilaeff says that public partnership in geothermal development may fit into these recent developments, he cautions that there is still a lot of work ahead if such a venture is to proceed.
“We still have a lot of work to do to determine if there is a role there for the trust. We have investment abilities, but they do have to pass an investment test.”
Support for some public development of the Canoe Reach geothermal potential comes from Ghomshei as well. He says that he has envisioned such public initiative many times since he first started writing reports on the Canoe Reach area.
“That is exactly what I recommended to the Golden and Area Initiatives,” he says. “I would be glad to help with that study.”
Valemount Mayor Bob Smith says he and Chief Administrative Officer Tom Dall have already started looking into the possibility of the Village of Valemount being involved in development of the Canoe Reach, and they will broach the topic to other basin municipalities for potential partnerships.
Comstock Energy Inc. owns permit number 55274, a 550-hectare area surrounding the natural hot springs. Company sources say that based on the temperature and discharge rates, the hot springs appear to exceed both Fairmont and Radium in Geothermal potential. Vertical or directional wells could be drilled to bring hot geothermal fluids up to a platform above Kinbasket Lake.
One report has noted that 50 MW/ year could generate as much as $35 million in revenue not including government green energy incentives and carbon offset trading potential. Multiple other reports have mentioned 50 MW as a feasible output for the Canoe Reach area. Geothermal proponents are quick to point out that unlike other alternative energies, geothermal power generation is a firm base-load and highly predictable source. It is also cited by both energy and environmental proponents as being one of the greenest and most eco-friendly forms of power generation.
