02 November 2012

Labrador Mines and Muskrat Falls #nlpoli

One of the things everyone is learning this week is that a consultant who accepts all the assumptions Nalcor used to arrive at its conclusion in the first place will -  inevitably -  reach the same conclusions.

Some people will think that the second report proves that the first conclusion was right.

Unfortunately, such is not the case.  It merely means that – inevitably –such an approach will repeat the same mistakes, errors, and flaws just as readily as it might get something right.

Think of it as a case of GIGO:  garbage in, garbage out.

Anyway, it will take some time for your humble e-scribbler to work through the mounds of reports and see if there is anything truly intriguing in them.

In the meantime, take a look at the rather heavy sell job the provincial government unleashed on Friday for the mining industry.  They issued two papers. 

Where will the power come from?

One – by the provincial natural resources department – is called Labrador mining and power:  how much and where from. For the most part it’s actually a pretty innocuous document but the curious thing is that it doesn’t really give you any kind of insight as to the policy issues with respect to Labrador mining and potential energy issues.

in other words, while it gives you a sense of how much electricity potential mines would need, it doesn’t do anything to lay out the possible options for where that power might come from.  There a lengthy discussion of mining development, current operations, ones coming on line and planned projects, plus a whole raft of similar information including the sorts of power requirements.

But the “where from” part of the title consists of two short paragraphs on the bottom of page 16 and the top of page 17 that describe the current situation.

Then there is a paragraph on page 17 that makes the patently misleading comment that the  “maximum generating capacity of the facility of 824 MW is available to meet the full peak demand of the province including wintertime demand on the Island) and, in the event that the Maritime Link is sanctioned, to meet the 170 MW capacity commitment to Emera for Nova Scotia Power.”

And that’s it. 

No discussion of Gull Island, the potential that the companies could install diesel generators (as some of them already are planning to do), or propose other small hydro and wind developments of their own.

Of course, regular readers know by now that even Nalcor will acknowledge that Muskrat Falls has a firm capacity of 515 megawatts, not 824 MW.  To get that sort of output, they’d need something more consistent, like say natural gas.

And if you do the math – even crudely -  you pretty quickly realise something else.  Heck, let’s do the math.  Muskrat Falls’ firm output is 515 MW.

Holyrood pumps out 490 MW at peak.  Plus you have to add the 170 MW commitment to Nova Scotia. That comes to 660 MW or 145 MW than Muskrat Falls can firmly (reliably) provide.

Bit of a problem, isn’t there?

It’s a really obvious problem, too, even to the people pushing Muskrat Falls.  We’ll get back to that in a second.

From GIGO to PIFO

The other piece the provincial government unveiled on Thursday was a paper by Wade Locke.  He reaches a truly staggering conclusion:  iron ore development has been good for the provincial economy and more development would be even gooder.

No shit.

Locke concludes that his paper “demonstrates the significant economic impacts the iron ore mining industry is having on the economy and treasury of Newfoundland and Labrador. The already impressive economic impacts could increase by a factor of three if all anticipated increases in production perceived in this analysis proceed.”

That’s it.

Lots of charts and graphs.  Plenty of numbers to intimidate or impress the innumerate. 

And not much else.

Wade has just produced another bit of marketing copy.  it’s fine as far as it goes.  It just doesn’t go very far when you are trying to come to grips with a multi-billion dollar public works project.

JM got it right

Don’t lose heart. For those who have persevered, there is a reward.

Go back and read JM’s paper ion the implications of mining development on Muskrat Falls.   A few weeks ago, he noted the very real and very significant issue posed by trying to tack mines onto the Muskrat falls project.

Rather, an integrated demand forecast is required, which includes the Nova Scotia block, and any obligations for Labrador mining. This is important as they will not be “spot market” sales, and will be firm commitments of Nalcor. Any deficiencies will likely have to be accommodated by the island consumer. The Electrical Power Control Act of 1994 is very clear that that the Newfoundland and Labrador rate payers deserve and should expect to have visibility on such factors that will affect our rates in the long term. The PUB does not have the opportunity to fulfill its legislative mandate. In addition, the other third party reviews did not consider the current inputs.

You’ll wind up much better informed about the issues as a result of JM’s work and you’ll be much better equipped to handle the serious policy questions posed by mining development in Labrador. 

You see, if we have to add mines to the mix of demand in Labrador, there really isn’t any point in building Muskrat Falls by 2017.  The Falls just isn’t up to the job.  A detailed analysis has already shown it.

And if you think others haven’t figured it out, just look at what the government’s own “analysis” states as its very last sentence:

In the longer term (by 2021) mining developments may absorb all residual power from the Muskrat Falls development, and further power may be needed.

2021 is not the longer term.  It is a mere four years after Muskrat Falls achieves first power according to the current schedule.  Clearly we would be fools to build Muskrat Falls at such extraordinary cost when it can’t meet the anticipated need.

-srbp-

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