Alta Gas is investing $725 M on a major hydro facility which will enable mining development in northwestern BC.
The project will capture the immense energy produced by the natural flow and elevation drop of the Iskut River to produce and deliver clean, renewable power to the grid at Bob Quinn Lake via BC Hydro’s 287-kV Northwest Transmission Line (NTL), now under construction. The project will have an installed capacity of 195 megawatts (MW), enough to power approximately 70,000 homes.
The project will redirect a portion of the flow of the Iskut River through a tunnel to an underground powerhouse containing turbines to generate electricity. As a run-of-river project, the installation does not impound water behind a dam for water storage but does have a weir to redirect the water to an intake structure. The intake structure is located near the confluence of the Forrest Kerr Creek and the Iskut River. After passing through the intake, water will be redirected into a 3-km tunnel feeding into an underground powerhouse containing the turbines and generators. During operation, water will always flow in the river.
The project has an estimated cost of $725 million, making it one of the largest infrastructure developments in northwestern B.C. At its peak, the project is expected to create 400 jobs and the demand
for goods and services is expected to provide positive economic stimulus to the region. AltaGas estimates that Forrest Kerr will be completed in mid-2014.
Alta Gas Ltd. (ticker ALA on TSX). The company trades at $33.10 per share and has a market cap of $3.4 B. A year ago the company’s shares traded at $27.50. The company has two other hydro projects in northwestern BC: McClymont Creek and Volcano Creek (Approximately 82 MW capacity at combined projects). ALA owns Enstar, Alaska’s largest natural gas utility and a 65% interest in Cook Inlet Natural Gas Storage (CINGSA).
It is interesting that the private sector is developing hydro facilities in BC. BC Hydro is the customer with Alta Gas in long term 60 year agreements. This makes sense financially for BC Hydro as the proponent is investing the capital for the long term thereby relieving pressure on BC Hydro’s capital structure.