Fording Coal Ltd. has reapplied with provincial regulators to build a $1.5-billion coal-fired power plant and strip-coal mine near Brooks, east of Calgary.
The move worries a group of area landowners, including some whose property will be needed for the 5,500-hectare surface coal mine that will feed the proposed 1,000-megawatt power plant.
But Fording Coal says it has yet to make a final decision on whether to proceed, and would still prefer to have a partner on the project.
“We will not make a final decision until we have the permits and we redo the feasibility study,” says Don Shyluk, Fording’s vice-president of projects and development.
David Andrews, president of the Bow City Landowners Protection Committee, says the group believes Fording will build the project with or without a partner. The rural landowners live near the hamlet of Bow City, about 20 kilometres southwest of Brooks.
“Fording’s attitude has been pretty much that this is a good project and it should go ahead, and that the local residents will just have to take whatever comes,” Andrews says.
The company filed an initial application for the power plant and coal mine last summer, but provincial regulators asked the company to fill some information gaps and reapply.
Potential partner ENMAX Energy Corp. decided last July not to exercise its option to participate, citing lower electricity prices and uncertainty about emission reductions for coal-fired plants under the Kyoto Accord.
Shyluk says Fording Coal would still prefer to have a partner that’s in the electricity marketing business. “But we’re not knocking on any doors right now. We’re just going through the long regulatory process.”
Fording’s revised application, which includes an environmental impact study, has cleared the first step and is now being reviewed by the Alberta Energy and Utilities Board, Alberta Environment and other government departments.
Andrews says the Bow City landowners want a buyout option for residents whose land will be needed for the mine or whose homes will be near the industrial operation, even if the actual impact doesn’t occur for several years.
Fording, however, has said it would prefer to buy land as it’s needed for the mine – which will expand in stages – rather than offer every landowner an immediate buyout.
But Andrews, whose family home and cattle ranch will be swallowed by the mine, says Fording’s approach leaves people in limbo.
“It’s an awful place to be,” in terms of landowners waiting and wondering when they’ll be able to relocate, Andrews says. “People are upset. They don’t know what to think, how long it’s going to take.”
About 35 families, including 10 in Bow City hamlet, will either have to sell their farmland for the strip-mine or live next door to the industrial operation.
Shyluk says that Fording empathizes and understands the impatience of landowners who “are living in limbo while we’re going through this.”
But the company would only displace people by buying property now that might not be needed for several years, he says. “We are not going to acquire any more land until such time as we know we are going ahead with the project.”
Power demand in the province is greatest in southern Alberta. Yet almost all of the region’s electricity is now transmitted on high-voltage lines from coal-fired generating plants west of Edmonton.
Much of the electricity is lost over such long distances, which adds to consumers’ power bills. Shyluk says Fording’s proposed power plant got an indirect boost from a ruling last November by the Energy and Utilities Board (EUB).
The EUB decided on a new approach to encourage companies to build power plants in areas that will minimize the delivered cost of the electricity.
Companies building plants in areas with excess generation capacity, such as the Edmonton region, will have to pay higher transmission charges as of Jan. 1, 2004, than power producers in zones with insufficient capacity, such as southern Alberta.
Fording’s power plant near Brooks would save money in transmission costs and be able to quickly provide electricity to the provincial power grid during peak demand times, the company says. Says Shyluk: “I believe that it is an economic, viable project to enter the marketplace.”
In another wrinkle, Fording shareholders are voting Feb. 19 on a $1.83-billion deal to combine Fording’s operations with those of Teck Cominco Ltd. and Sherritt International Corp., in a giant new income trust named the Fording Canadian Coal Trust.
Under the deal, Sherritt will buy Fording’s thermal coal assets for $225 million. That includes at least 165 million tonnes of low-sulphur, readily accessible coal in the Brooks area – enough to fuel the proposed power plant for 50 years.