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The fuel of choice - LNG

November 18, 2012

The Yukon’s major power producer, Yukon Energy, plus nearly all of the territory’s new mining projects foresee using LNG for much of their energy needs.

Yukon Energy is rapidly approaching grid capacity, with the Victoria (ticker VIT on TSX) Gold Eagle gold mine due to come on stream in about 2 years. YEC will have to resort to either diesel or alternate energy as new demand exceeds the hydro capacity. YEC sees a few advantages to LNG: a) scalability, b) reduced cost compared to diesel, and c)less pollution. YEC’s large diesel generators at Whitehorse are nearing the end of their service lives and the company could very well opt for LNG generators rather than diesel.

LNG has been identified by most of the mining projects in the territory including the Casino project, the Selwyn project, and others. Of course having a few larger LNG customers would tend to reduce the cost for all. Right now the options would be to ship from Calgary, but YEC envisions either Ft.Nelson or Kitimat being possibilities.

There is only one gas liquefaction facility in the north—the 40 year old Chevron/Marathon Oil LNG facility at Nikiski on the Kenai Peninsula. Amazingly, this is the only LNG export facility in continental North America. The other 59 LNG facilities in the US are for storage/peak shaving of energy production.

Fairbanks Natural Gas, LLC (FNG) is the natural gas utility providing gas service to Fairbanks, Alaska. The company initiated service to its first customer during the spring of 1998. Over 1000 residential and commercial customers now enjoy the benefits of natural gas. FNG continues to broaden its underground distribution system to serve the Fairbanks community. FNG trucks LNG from Nikiski up to its facilities in Fairbanks.

LNG is either made at peak-shaving sites or trucked there in special insulated tanks — commonly 40-foot-long thermos bottles on wheels. LNG is too cold — minus 260 — to be piped anywhere; steel pipe exposed to the frigid LNG would shatter.


As large scale LNG export facilities are being pondered for south-central Alaska and northern BC, small scale options exist to transport in LNG by truck. As the demand for low-priced natural gas grows, and facilities are built, all kinds of supply possibilities will become available. Perhaps Yukon could obtain LNG via Alaska Marine Lines from Kitimat to Skagway in 2015?