It’s-uh gas, gas, gas
An 824 megawatt combined cycle gas turbine electricity generator plant would cost roughly CDN$950 million.
The gas to power the plant is readily available from the local offshore. It can be landed using a conventional gas pipeline that would cost around CDN$500 million to build. That’s based on a
The cost of the gas itself would be functionally zero if the provincial government took the supply of gas as part of royalty payments for offshore production. Alternately, Nalcor could take its equity share of White Rose and other fields in kind, i.e. in gas, rather than in cash.
The only question to be settled would be the valuation the provincial government would apply to the gas for the purpose of calculating royalty.
That works out to about $1.5 billion, all up. Since you can build it on the island near existing power lines, the cost to hook it to the grid would be negligible.
The Oil and Water Option
By comparison, the hydro-electric generating plant proposed for Muskrat Falls would be rated at 824 MW but would only produce the equivalent of about 570 MW on average. You can find the numbers in Manitoba Hydro International’s recent assessment.
Nalcor estimates that the Muskrat Falls dam and plant would cost about $2.9 billion, or about three times the cost of the 824MW CCGT plant.
In addition, you have to build a transmission line from Labrador to the island at a cost currently estimated at about $2.1 billion.
That works out to about $5.0 billion, all up.
Then you have to add about $1.4 billion to cover the cost of 520 MW worth of oil-fired generation Nalcor plans to build, along with the cost of the fuel to go with it.
Manitoba Hydro puts the all-up cost, including fuel at about $6.6 billion.
Neither Nalcor nor MHI looked at natural gas as an option.
When you look at the numbers, you have to wonder why they didn’t.
- srbp -
