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A strategic reconnaissance level methodology for assessing power supply alternatives for northern mining Schmitt, Harold Rolf 1985

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A STRATEGIC RECONNAISSANCE LEVEL METHODOLOGY FOR ASSESSING POWER SUPPLY ALTERNATIVES FOR NORTHERN MINING by HAROLD ROLF SCHMITT B.Sc. The U n i v e r s i t y of B r i t i s h Columbia, 1977 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE i n THE FACULTY OF GRADUATE STUDIES SCHOOL OF COMMUNITY AND REGIONAL PLANNING We accept t h i s t h e s i s as conforming to the r e q u i r e d standard THE UNIVERSITY OF BRITISH COLUMBIA October 1985 © Harold R o l f Schmitt, 1985 I n p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t o f t h e r e q u i r e m e n t s f o r an a d v a n c e d d e g r e e a t t h e U n i v e r s i t y o f B r i t i s h C o l u m b i a , I a g r e e t h a t t h e L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e a n d s t u d y . I f u r t h e r a g r e e t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g o f t h i s t h e s i s f o r s c h o l a r l y p u r p o s e s may be g r a n t e d by t h e h e a d o f my d e p a r t m e n t o r by h i s o r h e r r e p r e s e n t a t i v e s . I t i s u n d e r s t o o d t h a t c o p y i n g o r p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l n o t be a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n . D e p a r t m e n t Of Community and Regional Planning The U n i v e r s i t y o f B r i t i s h C o l u m b i a 1956 Main Mall V a n c o u v e r , Canada V6T 1Y3 Date October 7, 1985 DE-6 (3/81) ABSTRACT > A STRATEGIC RECONNAISSANCE LEVEL METHODOLOGY FOR ASSESSING POWER SUPPLY ALTERNATIVES FOR NORTHERN' MINING This study develops and tests a methodology that can be u t i l i z e d for a reconnaissance level assessment of elect r i c power supply alternatives for medium-scale mining in northwestern Br i t i s h Columbia. The study is organized into four parts. Part one characterizes the public planning framework of the study area. Present and future use trends of the region's natural resources, in particular minerals and energy, are reviewed, and a typology of public preferences for their development is established. Part two carries out a literature-based review of the conceptual basis of normative decision-making. Specific energy project evaluation approaches are introduced. This establishes a theoretical framework for constructing the methodology. Part three presents the energy project assessment methodology. Part four applies the methodology to the RED-CHRIS deposit. Salient features of parts three and four which form the core of the study, are outlined below. Energy Project Assessment Methodology The central part of the study proposes a strategic, reconnaissance-level methodology for evaluating energy supply alternatives for medium-scale mining. Its scope is defined by ; a) inclusion of strategic elements such as emphasis on pr i o r i t i e s , analytical continuity, robustness, * and adaptiveness, and b) adoption of a reconnaissance approach which reflects i i an intention to accommodate preliminary information at an appropriate level of complexity and comprehensiveness. The essence of the methodology entails three inter-related components: 1) Core Information Environment - Identifies and focuses on defining the energy supply issues for a particular undeveloped mineral deposit. 2) Basic Evaluation Environment - Assesses the v i a b i l i t y of potential alternatives through the application of multiple c r i t e r i a and formal decision-making procedures. 3) Peripheral Evaluation Environment - Assesses strategic information which is independant of the focused problem, but can exert an influence on the outcome of both the core and basic environments. Each component contains strategic data bases and analytical processes that assist the analyst to proceed from i n i t i a l problem identification to selection of alternatives. Within and between the three structural component information is refined in an iterative fashion. This maintains a current perspective on the problem environment and leads to a more confident appraisal of the favoured energy alternatives for a mineral deposit. Case Study Analysis RED-CHRIS copper-gold deposit situated southeast of Iskut was selected for a case study application of the methodology. Typical production schedule ranging from 8 to 20 years would require corresponding installed e l e c t r i c a l capacity of 7.5 to 23.5 Megawatts. Key points which emerged from an analysis of this deposit's energy supply alternatives form the mine planner's perspective'are: 1) Interest groups concerned with planning, developing, or regulating energy supply for RED-CHRIS include: a) Mineral deposit owners whose objective i t is to maximize profit b) Societal interests whose objective i t is to maximize economic, social and environmental well-being aspects of the project. c) Public policy interests whose objective i t is to maximize economic, p o l i t i c a l , and social welfare within national and provincial energy policy. 2) Energy supply candidates identified and examined , include: diesel-electric, high voltage grid extension, small-hydroelectric, coal and biomass-fired generation, natural gas, peat, geothermal, wind and solar. 3) Comparison of different small-scale energy applications for remote areas is made d i f f i c u l t because of technical, p o l i t i c a l , and environ-mental uncertainties. 4) Satisficing and Dominance can be successfully applied from the mine planner's perspective to key decision c r i t e r i a to narrow the various energy supply alternatives. 5) Small-hydro is the most favourable alternative at this juncture, followed by diesel. Coal-fired generation and biomass are comparable, and may be more favourable than diesel under certain circumstances. Other alternatives are presently unsuitable. General Conclusions Application of the methodology is limited by the interaction between analytical design, available physical resources, and uncertainty in the operating environment, human values and external decisions. The methodology appears sufficiently robust and comprehensive to be adapted to other deposits in the region. Commonly shared information requirements combined with the iterative nature of information processing, can be used to reduce the resource demands and improve the efficiency of subsequent applicaitons. Finally, i t is recommended that the value sensitivity of the method-ology be tested by applying i t from more than one perspective to the same deposit. iv TABLE OF CONTENTS A b s t r a c t i i - v Table of Contents v i - x L i s t of F i g u r e s x i L i s t of Ta b l e s x i i Acknowledgements x i i i CHAPTER ONE: INTRODUCTION 1 1.1 I n t r o d u c t i o n 1 1.2 Research O b j e c t i v e s 4 1.3 Research O r g a n i z a t i o n 5 CHAPTER TWO: A MINERAL AND ENERGY SYNOPSIS OF NORTHWESTERN BRITISH COLUMBIA 8 2.1 Purpose 8 2.2 A M u l t i s e c t o r a l Review of Northwestern Resources 8 2.3 P u b l i c P r e f e r e n c e s and Resource Use 18 2.4 M i n e r a l D e p o s i t s 24 2.4.1 D i s t r i b u t i o n 24 2.4.2 Economic P o t e n t i a l 25 2.4.3 C o n s t r a i n t s 31 2.4.4 A Sense of Development Timing 34 2.5 Energy Resources 41 2.5.1 D i s t r i b u t i o n and Development Status 41 2.5.2 Development S t i m u l i 44 2.5.3 Power Supply Requirements f o r Mining 45 2.6 C o n c l u s i o n s 48 CHAPTER THREE: THEORY AND PRINCIPLES OF EVALUATION 50 3.1 Purpose 50 3.2 Overview of E v a l u a t i o n Theory 51 3.2.1 E v a l u a t i o n Techniques 51 v i 3.2.1.A Problem F o r m u l a t i o n and O b j e c t i v e C l a r i f i c a t i o n 53 3.2.1.B Design of A l t e r n a t i v e s 55 3.2.1.C E v a l u a t i o n of A l t e r n a t i v e s 56 i ) V a l u a t i o n 56 i i ) E v a l u a t i o n 57 i i i ) Method 58 3.2.I.D I n t e r p r e t a t i o n , D e c i s i o n and Implementation 59 i ) D e c i d i n g to Decide 59 i i ) D e c i s i o n F a c t o r s 60 i i i ) Value P r e f e r e n c e s 61 i v ) E x t e r n a l i t i e s 61 v) U n c e r t a i n t y 62 3.2.1. E M o n i t o r i n g and V e r i f i c a t i o n 63 3.2.2 U n c e r t a i n t y 64 3.2.2. A D e f i n i t i o n 64 3.2.2.B U n c e r t a i n t y v s . Risk 64 3.2.2.C Kinds of U n c e r t a i n t y 65 3.2.2.D D e a l i n g with U n c e r t a i n t y 66 3.3 M u l t i p l e O b j e c t i v e s and E v a l u a t i o n Design 67 3.3.1 I n t e r e s t Group P e r s p e c t i v e s and Approaches to Energy P r o j e c t E v a l u a t i o n 67 3.3.1.A E n g i n e e r i n g E v a l u a t i o n 71 i ) I n t r o d u c t i o n to Technique 71 i i ) Conceptual P l a n n i n g and B a s i c Data C o l l e c t i o n 73 i i i ) Cost E s t i m a t i o n 74 i v ) Economic A n a l y s i s 75 v) Comparison of A l t e r n a t i v e s 77 v i ) Summary of Economic D e c i s i o n C r i t e r i a 77 3.3.1.B S o c i a l B e n e f i t / C o s t A n a l y s i s 78 i ) I n t r o d u c t i o n to Technique 78 i i ) B a s i c Tenets 80 i i i ) L i m i t a t i o n s of the Technique 81 a) Values 81 b) Treatment of Time 81 v i i c) Shadow P r i c e s 82 d) Risk and U n c e r t a i n t y 82 e) D i s t r i b u t i o n a l E f f e c t s 83 f ) E x t e r n a l i t i e s 83 i v ) Summary 84 3.3.l.C P u b l i c Energy P o l i c y 85 i ) Conceptual B a s i s f o r P o l i c y 85 i i ) E v a l u a t i o n C r i t e r i a 87 i i i ) Summary 87 3.3.1. D I n s t i t u t i o n a l C o n s i d e r a t i o n s 88 i ) Government R e g u l a t i o n s and I n c e n t i v e s 89 i i ) P r i v a t e F i n a n c i n g 91 3.4 Summary 91 CHAPTER FOUR: A STRATEGIC METHODOLOGY FOR RECONNAISSANCE EVALUATION OF ENERGY SUPPLY ALTERNATIVES 96 4.1 Purpose 96 4.2 Elements of a S t r a t e g i c Methodology 96 4.3 Methodology 99 4.3.1 I n t r o d u c t i o n 99 4.3.2 Proposed Framework 101 4.3.2. A Core I n f o r m a t i o n Environment 105 4.3.2.B B a s i c E v a l u a t i o n Environment 106 4.3.2.C P e r i p h e r a l E v a l u a t i o n Environment 107 4.4 L i m i t a t i o n s 109 4.5 C o n c l u s i o n s 111 CHAPTER FIVE: A CASE STUDY: RED-CHRIS COPPER-GOLD DEPOSIT 113 5.1 H i s t o r y of E x p l o r a t i o n and Reserves 114 5.2 Power Requirements 117 5.3 C o n c l u s i o n s 122 CHAPTER SIX: EVALUATION OF ENERGY SUPPLY ALTERNATIVES FOR RED-CHRIS 123 6.1 Purpose 123 6.2 Core I n f o r m a t i o n Environment 123 v i i i 6.2.1 S t r a t e g i c Data Base One - I n t e r e s t Groups and O b j e c t i v e s 124 6.2.2 S t r a t e g i c Data Base Two - Energy Demand 140 6.2.3 S t r a t e g i c Data Base Three - Regiona l I n f l u e n c e s 145 E v a l u a t i o n Environment 149 P r i o r i t y V a l u a t i v e C r i t e r i a 149 Energy Supply A l t e r n a t i v e s 154 6.3.2.A Category I 155 i ) D i e s e l E l e c t r i c 155 a) I n t r o d u c t i o n 155 b) Technology 156 c) Economics 156 d) Environment 158 e) S o c i a l I m p l i c a t i o n s 158 f ) Summary 159 i l ) High Voltage G r i d E x t e n s i o n 159 a) I n t r o d u c t i o n 159 b) A l t e r n a t i v e 1 160 c) A l t e r n a t i v e 2 162 d) A l t e r n a t i v e 3 162 e) A l t e r n a t i v e 4 164 i i i ) Small Hydropower 165 a) I n t r o d u c t i o n 165 b) Technology 167 c) Economics 167 d) Environment 170 e) S o c i a l I m p l i c a t i o n s 171 f ) Resource Supply 171 6.3.2.B Category I I 174 i ) C o a l - F i r e d G e n e r a t i o n 174 a) I n t r o d u c t i o n 174 b) Resource Supply 175 c) Technology 176 d) Economics 178 e) Environment 180 f ) S o c i a l I m p l i c a t i o n s 181 i i ) Geothermal 181 a) I n t r o d u c t i o n 181 b) Resource Supply 184 c) Economics 187 d) Summary 188 i i i ) Biomass 188 a) I n t r o d u c t i o n 188 b) Resource Supply 189 c) Technology 191 d) Economics 191 e) Environment 194 f ) S o c i a l I m p l i c a t i o n s 196 i x i v ) N a t u r a l Gas 196 a) I n t r o d u c t i o n and D i s c u s s i o n 196 b) Summary 198 6.3.2.C Category I I I 199 i ) S o l a r 199 a) I n t r o d u c t i o n and Technology 199 b) Economics 199 c) Resource Supply 200 d) Summary 201 i i ) Wind 202 a) I n t r o d u c t i o n 202 b) Economics 202 c) Resource Supply 204 d) Environment 206 6.3.3 I n t e r p r e t a t i o n and S e l e c t i o n of A l t e r n a t i v e s 207 6.4 P e r i p h e r a l S t r a t e g i c Data 223 6.4.1 P e r i p h e r a l Data Base I - S t a t u s of M i n e r a l Deposit Development Adjacent to RED-CHRIS 223 6.4.2 P e r i p h e r a l Data Base I I - M i n e r a l Commodity P r i c e , Demand/Supply Trends 224 6.4.3 P e r i p h e r a l Data Base I I I - Government R e g i o n a l M i n e r a l Development P o l i c y 225 6.4.4 P e r i p h e r a l Data Base IV - Changing Land Use P a t t e r n s 225 6.5 F u r t h e r Research Needs 226 6.6 C o n c l u s i o n s 229 CHAPTER SEVEN: CONCLUSIONS 232 BIBLIOGRAPHY 236-255 APPENDICES 256 Appendix 1 - 1910 D e c l a r a t i o n of the T a h l t a n Nation 256-257 Appendix 2 - RED-CHRIS Proposed Small v v v Hydropower S i t e L o c a t i o n s ^ J 258 Appendix 3 - Net Present Value C a l c u l a t i o n s f o r D i e s e l , Small Hydro, Biomass, and Coal Power Ge n e r a t i o n 259-278 x LIST OF FIGURES 1 L o c a t i o n Map 7 2 M i n e r a l Deposit L o c a t i o n Map 23 3 T o t a l Gross E s t i m a t e d Value of Commodities by M i n e r a l Deposit S i z e Category 33 4 Copper P r i c e F o r e c a s t s 35 5 P o s s i b l e P r o d u c t i o n Schedule: S c e n a r i o I -O p t i m i s t i c Price/Economic Outlook 36 6 Energy Resource D i s t r i b u t i o n Map 40 7 I t e r a t i o n i n the D e c i s i o n Making Process 52 8 G e n e r a l i z e d Methodology S t r u c t u r e 100 9 Core I n f o r m a t i o n Environment * 104 10 B a s i c E v a l u a t i o n Environment 108 11 Schematic I l l u s t r a t i o n of Key I n t e r a c t i o n s Among O b j e c t i v e Groups 126 12 Mining and M i l l i n g P r o c e s s and Energy Requirements 144 13 Klappan R i v e r Hydrograph 173 14 Bi o m a s s - F i r e d Power G e n e r a t i o n - Processes and Energy Flows 190 x i LIST OF TABLES I Boya Lake Park and Kinaskan Lake Park Use Data 17 I I M i n e r a l Deposit Data 28-30 I I I E x i s t i n g Power Ge n e r a t i n g F a c i l i t i e s 42 IV Estimated Power Requirements f o r S e l e c t e d M i n e r a l D e p o s i t s 47 V P r o v i n c i a l L e g i s l a t i o n with I m p l i c a t i o n s f o r Energy P r o j e c t s 90 VI RED-CHRIS Energy Demand C a l c u l a t i o n s P r o d u c t i o n S c e n a r i o 1 120 VII RED-CHRIS Energy Demand C a l c u l a t i o n s P r o d u c t i o n S c e n a r i o 2 121 V I I I Proposed Small Hydropower S i t e Data 169 IX Summary of Geothermal Energy Costs from 50 MW P l a n t s on Three Model F i e l d s 186 X Biom a s s - F i r e d Power Ge n e r a t i o n Cost E s t i m a t e s From Recent S t u d i e s 192 XI Mean Wind V e l o c i t i e s f o r Afternoon Mixing Layer - Northwestern B r i t i s h Columbia 204 XII C h a r a c t e r i z a t i o n of A l t e r n a t i v e s 208 XI I I Socio-Economic, Environmental and P o l i t i c a l C h a r a c t e r i z a t i o n of A l t e r n a t i v e s 209-210 XIV Summary of Net Present Value E s t i m a t e s f o r RED-CHRIS Power Generation A l t e r n a t i v e s 217 x i i ACKNOWLEDGEMENTS The completion of t h i s thesis would not have been possible without the perseverance, generosity, and i n s p i r a t i o n of the following i n d i v i d u a l s : Irving K. Fox, whose ideas and in s i g h t contributed greatly to the early conceptualization of the problem. Anthony J . Dorcey, who assumed the r e s p o n s i b i l i t y of p r i n c i p a l advisor and gave so f r e e l y of his time, ideas, and energy i n helping to di r e c t t h i s study. Dr. Peter N. Nemetz, for his l u c i d a n a l y t i c a l approaches to the problems of energy evaluation. Judy Eng, who s k i l l f u l l y managed to process these many words into a presentable document. Dr. Giles P e a t f i e l d and Peter DeLancey of Kidd Creek Mines for the i r h e l p f u l i n s i g h t s to topics related to RED-CHRIS. and f i n a l l y , Ruth Ruckle, my wife, to whom I am deeply indebted for her kind encouragement and sharing of seemingly endless s a c r i f i c e s of time and finances. x i i i CHAPTER ONE INTRODUCTION 1.1 INTRODUCTION: M i n e r a l s , timber, f i s h , w i l d l i f e , and t o u r i s m r e s o u r c e s of Northwestern B r i t i s h Columbia present p o t e n t i a l s o c i a l and economic development o p p o r t u n i t i e s . Resources are l a r g e l y undeveloped however, owing to t h e i r remote and i n a c c e s s i b l e n a ture, combined with u n f a v o u r a b l e economics, i n s u f f i c i e n t i n f r a s t r u c t u r e , and s m a l l p o p u l a t i o n base. Government e f f o r t s to c a t a l y z e northwestern r e s o u r c e development have o c c u r r e d most r e c e n t l y through the I n t e r m i n i s t r y Working Group on Northwest B r i t i s h Columbia (1982), whose task i t was to develop a l t e r n a t e g o v e r n m e n t - i n i t i a t e d economic, s o c i a l , and environmental s t r a t e g i e s f o r responding to a range of a n t i c i p a t e d development s c a l e s , t i m i n g and s o c i a l p r e f e r e n c e s . R e c e n t l y p u b l i s h e d s t u d i e s of the Working Group concluded that the m i n e r a l r e s o u r c e s e c t o r e x h i b i t s the g r e a t e s t p o t e n t i a l f o r e x p e r i e n c i n g immediate growth with r e s u l t a n t major r e g i o n a l impacts. The t o p i c of t h i s study concerns the problem of energy supply f o r m i n e r a l r e s o u r c e development. An energy focused study was chosen because l a c k of e l e c t r i c a l .power supply f o r major mining ventures i n the northwest has r e p e a t e d l y been c i t e d as one of the major c o n s t r a i n t s f a c i n g mine development i n the r e g i o n (F.L.C. Reed and A s s o c i a t e s , 1972; M i n i s t r y of 1 Economic Development, 1977; S c h r o e t e r and Pan, 1982). The I n t e r m i n i s t r y Working Group on Northwest B r i t i s h Columbia (1982) has s t a t e d : One of the p r i n c i p a l c o n s t r a i n t s on the development of mining i n the ( n o r t h e r n ) zone i s the l a c k of l a r g e volume, low-cost, e l e c t r i c power. Metal and a s b e s t o s mines are r e l a t i v e l y energy i n t e n s i v e o p e r a t i o n s and the c o s t of a l t e r n a t i v e energy sources i s p r o h i b i t i v e . In order to overcome the power c o n s t r a i n t to m i n e r a l development i n the area, new o p t i o n s need to be developed and i n v e s t i g a t e d . However, p l a n n i n g , r e g u l a t o r y , and c o n s t r u c t i o n l e a d time are such t h a t work should s t a r t immediately to review the a l t e r n a t i v e s and recommend a s t r a t e g y f o r implementation. (p. 131). Two p r e v i o u s s t u d i e s t h a t d e a l t with the energy problem are Northwest Study (1977) by the M i n i s t r y of Economic Development which o f f e r e d p r e l i m i n a r y s u g g e s t i o n s f o r power o p t i o n s f o r d e p o s i t s known at t h a t time, and a r e c e n t Northwest Task Force study prepared by B.C. Hydro (1983) which c a r r i e d out a p r e l i m i n a r y economic e v a l u a t i o n of a f a i r l y narrow range of energy supply a l t e r n a t i v e s f o r a number of major m i n e r a l d e p o s i t s p r i m a r i l y from a p r o v i n c i a l power systems p e r s p e c t i v e . The present study examines the energy supply problem from a more focused and a p p l i e d p u b l i c p o l i c y p e r s p e c t i v e by d e v e l o p i n g and a p p l y i n g an energy p r o j e c t e v a l u a t i o n methodology. A p r a c t i c a l aspect which i n f l u e n c e s the nature of t h i s study i s the e x i s t i n g Energy P r o j e c t Review Process i n B r i t i s h Columbia. The U t i l i t i e s Commission Act SBC 1980 C60 P a r t 2 S16 r e g u l a t e s i n d u s t r i a l p r o j e c t s where consumed energy exceeds 95 Megawatts continuous e l e c t r i c a l s u p p l y , or e l e c t r i c i t y 2 g e n e r a t e d e x c e e d s 20 Megawatts i n s t a l l e d c a p a c i t y . R e g u l a t e d p r o j e c t s a r e s u b j e c t t o t h e E n e r g y P r o j e c t R e view P r o c e s s , w h i c h p r o v i d e s f o r c o m p r e h e n s i v e p u b l i c a s s e s s m e n t o f e n v i r o n m e n t / r e s o u r c e / l a n d u s e , s o c i a l / e c o n o m i c , and e n e r g y / e c o n o m i c / f i n a n c e f a c t o r s . Thus f o r m a j o r p r o j e c t s t h a t f a l l w i t h i n t h e r e g u l a t i o n s o f t h e U t i l i t i e s C o m m i s s i o n A c t , t h e p u b l i c p o l i c y r e q u i r e m e n t s have been w e l l s t i p u l a t e d . Most o f t h e m e d i u m - s i z e d p o t e n t i a l m i n e s i n n o r t h w e s t B r i t i s h C o l u m b i a have e s t i m a t e d e n e r g y r e q u i r e m e n t s t h a t f a l l s h o r t o f 20 M e g a w a t t s i n s t a l l e d c a p a c i t y , and t h u s a r e n o t c a n d i d a t e s f o r r e g u l a t i o n and p u b l i c r e v i e w by t h e U t i l i t i e s  C o m m i s s i o n A c t . The m e t h o d o l o g y a d v o c a t e d i n t h i s s t u d y w i l l p e r m i t p r e l i m i n a r y e v a l u a t i o n o f e n e r g y s u p p l y a l t e r n a t i v e s f o r t h e s e s m a l l e r , u n r e g u l a t e d p r o j e c t s i n a manner t h a t b r i n g s t o g e t h e r s o c i a l and e n v i r o n m e n t a l c o n s i d e r a t i o n s i n t h e p r e l i m i n a r y e n g i n e e r i n g p r o j e c t e v a l u a t i o n p h a s e . Thus i n d u s t r y , g o v e r n m e n t , and t h e p u b l i c w i l l have an i n f o r m a l p r o c e s s t h r o u g h w h i c h s t r a t e g i c c o n s i d e r a t i o n o f e n e r g y a l t e r n a t i v e s f o r m i n i n g p u r p o s e s may be a c h i e v e d . The s t u d y c o n c l u d e s by a p p l y i n g t h e m e t h o d o l o g y t o RED-CHRIS, an u n d e v e l o p e d c o p p e r - g o l d d e p o s i t l o c a t e d c e n t r a l l y w i t h i n t h e s t u d y a r e a . A m a j o r f e a t u r e o f t h i s e x e r c i s e w i l l be t h e p r e l i m i n a r y e x a m i n a t i o n o f t e n e n e r g y s u p p l y t e c h n o l o g i e s . The most f a v o u r a b l e w i l l be s e l e c t e d b a s e d on p r i o r i t y c r i t e r i a w h i c h r e f l e c t t h e o b j e c t i v e s o f one o f t h e key r e s o u r c e use 3 p r e f e r e n c e groups. F i n a l l y , improvements to the o v e r a l l a n a l y s i s w i l l be suggested i n order to b e t t e r apply the a n a l y t i c a l framework to other m i n e r a l d e p o s i t s i n the r e g i o n . 1.2 RESEARCH OBJECTIVES: The p r i n c i p a l o b j e c t i v e of t h i s study i s to develop and t e s t a methodology t h a t can be u t i l i z e d f o r a r e c o n n a i s s a n c e l e v e l assessment of e l e c t r i c power supply a l t e r n a t i v e s f o r mine development i n northwestern B r i t i s h Columbia. The p r i n c i p a l o b j e c t i v e i s pursued through the f o l l o w i n g s u b - o b j e c t i v e s : 1) To p r o v i d e a s y n o p s i s of n a t u r a l r e s o u r c e endowment i n northwestern B r i t i s h Columbia with r e f e r e n c e to p u b l i c p r e f e r e n c e s and f u t u r e use t r e n d s . 2) To review a l t e r n a t i v e s c e n a r i o s f o r mine and power development i n northwestern B r i t i s h Columbia. 3) To review l i t e r a t u r e on normative d e c i s i o n - m a k i n g p r o c e s s e s as a p r e c u r s o r to i n v e s t i g a t i n g e v a l u a t i v e processes and c r i t e r i a s p e c i f i c to the range of p u b l i c p r e f e r e n c e s on r e s o u r c e use i d e n t i f i e d i n s u b - o b j e c t i v e 1. 4 ) To develop a methodology f o r r e c o n n a i s s a n c e l e v e l assessment of power g e n e r a t i o n a l t e r n a t i v e s f o r m i n e r a l development which i n c o r p o r a t e s the p r i n c i p l e s and c r i t e r i a i d e n t i f i e d i n s u b - o b j e c t i v e 3. 5) To t e s t the methodology through a case study of a p o t e n t i a l medium-sized mine, the RED-CHRIS copper-gold d e p o s i t . 6 ) To suggest f u r t h e r areas of r e s e a r c h which w i l l permit 4 an i m p r o v e d a p p l i c a t i o n o f t h e m e t h o d o l o g y t o o t h e r p o t e n t i a l m i nes w i t h i n t h e n o r t h w e s t . 1.3 RESEARCH ORGANIZATION: The s i x o b j e c t i v e s a r e a d d r e s s e d as f o l l o w s : O b j e c t i v e s 1 and 2 -C h a p t e r 2 r e v i e w s p r o v i n c i a l and r e g i o n a l g o v e r n m e n t s t u d i e s c o m m i s s i o n e d o v e r t h e l a s t d e c a d e w h i c h r e p o r t e d on r e g i o n a l d e v e l o p m e n t o f t h e n o r t h w e s t . T h e s e s t u d i e s a r e augmented by v a r i o u s community, i n d u s t r y , and i n s t i t u t i o n a l s o u r c e s , a l o n g w i t h g e n e r a l m i n e r a l e c o n o m i c and e n e r g y f o r e c a s t s , i n o r d e r t o o b t a i n a g e n e r a l u n d e r s t a n d i n g o f t h e p a t t e r n s o f r e g i o n a l r e s o u r c e s d e v e l o p m e n t , and t o i d e n t i f y t h e r a n g e o f p u b l i c i n t e r e s t s i n v o l v e d . The n a t u r e o f p o t e n t i a l f u t u r e m i n e r a l and e n e r g y d e v e l o p m e n t s c e n a r i o s i s p r e s e n t e d and c o n c l u s i o n s drawn r e g a r d i n g t h e i r i n d i v i d u a l c h a r a c t e r i s t i c s and t h e i r i n t e r r e l a t i o n s h i p s . R e a s o n s a r e p r e s e n t e d f o r c o n c e n t r a t i n g t h e s u b s e q u e n t a n a l y s i s on a g r o u p o f p o t e n t i a l m i n e s w h i c h c a n be c a t e g o r i z e d as m e d i u m - s i z e d . O b j e c t i v e 3 -L i t e r a t u r e p e r t a i n i n g t o n o r m a t i v e d e c i s i o n - m a k i n g i s r e v i e w e d i n C h a p t e r 3. T h i s e s t a b l i s h e s a c o n c e p t u a l b a s i s f o r u n d e r s t a n d i n g e n e r g y p r o j e c t e v a l u a t i o n methods, and t h e i r s p e c i f i c c r i t e r i a , t h a t a c c o m o d a t e t h e p r e v i o u s l y i d e n t i f i e d r a n g e o f p u b l i c i n t e r e s t s . O b j e c t i v e 4 -I n C h a p t e r 4 t h e c o n c e p t s and p r i n c i p l e s p r e s e n t e d i n 5 C h a p t e r 3 a r e c o m b i n e d w i t h key e l e m e n t s o f s t r a t e g i c c h o i c e a n a l y s e s , t o d e v e l o p a m e t h o d o l o g i c a l f r a m e w o r k f o r s t r a t e g i c , r e c o n n a i s s a n c e l e v e l e v a l u a t i o n o f e n e r g y s u p p l y a l t e r n a t i v e s f o r m e d i u m - s i z e d m i n e r a l d e p o s i t s . The m a j o r components o f t h e m e t h o d o l o g y a r e h i g h l i g h t e d t o g e t h e r w i t h d i a g r a m s i l l u s t r a t i n g t h e dynamic n a t u r e o f t h e i r i n t e r r e l a t i o n s h i p s and i n t e r n a l p r o c e s s e s . C h a p t e r 4 t h u s draws t o g e t h e r t h e t h e o r e t i c a l r e s e a r c h a s p e c t s and s e t s t h e s t a g e f o r e x a m i n a t i o n o f a c a s e h i s t o r y . O b j e c t i v e 5 -C h a p t e r 5 p r o f i l e s t h e RED-CHRIS c o p p e r - g o l d d e p o s i t ; as r e s e a r c h e d f r o m g e o l o g i c a l p u b l i c a t i o n s and company r e p o r t s , as w e l l as t h e w r i t e r ' s f i v e f i e l d s e a s o n s e x p e r i e n c e e n g a g e d i n m i n e r a l e x p l o r a t i o n on o r a d j a c e n t t o t h e d e p o s i t . A r a n g e o f p o t e n t i a l e n e r g y c o n s u m p t i o n c o r r e s p o n d i n g t o p o s s i b l e s h o r t -and l o n g - t e r m m i n i n g s c h e d u l e s i s c a l c u l a t e d f r o m s t a n d a r d e n e r g y c o n s u m p t i o n d a t a i n t h e l i t e r a t u r e . A p p l i c a t i o n o f t h e m e t h o d o l o g y p r o p o s e d i n C h a p t e r 4 t o RED-CHRIS i s d o c u mented i n C h a p t e r 6 . A c o m p r e h e n s i v e r a n g e o f e n e r g y s u p p l y a l t e r n a t i v e s a r e i d e n t i f i e d and c l a s s i f i e d , and l i t e r a t u r e - b a s e d r e s e a r c h o f s p e c i f i c e v a l u a t i v e c r i t e r i a c a r r i e d o u t . The a n a l y s i s i s c o n c l u d e d w i t h t h e most f a v o u r a b l e a l t e r n a t i v e s i d e n t i f i e d t h r o u g h t h e a p p l i c a t i o n o f f o r m a l m u l t i - c r i t e r i a d e c i s i o n - m a k i n g p r o c e d u r e s . O b j e c t i v e 6 -The f i n a l c h a p t e r s u m m a r i z e s t h e r e s u l t s o f t h e s t u d y and a n a l y s e s and p r o p o s e s ways t o i m p r o v e t h e a p p l i c a t i o n o f t h e m e t h o d o l o g y t o o t h e r m i n e r a l d e p o s i t s . 6 F i g u r e 1. S t u d y A r e a L o c a t i o n Map 7 CHAPTER TWO A MINERAL AND ENERGY SYNOPSIS OF NORTHWESTERN BRITISH COLUMBIA 2.1 PURPOSE: The p u r p o s e o f t h i s c h a p t e r i s t o i n t r o d u c e m i n e r a l and e n e r g y r e s o u r c e d e v e l o p m e n t s c e n a r i o s f o r n o r t h w e s t e r n B.C. t h r o u g h t h e f o l l o w i n g s y n o p s e s . a) A summary o u t l i n e o f t h e n o r t h w e s t r e g i o n ' s p r i m a r y r e s o u r c e s e c t o r s o t h e r t h a t m i n e r a l s and e n e r g y , t o p r o v i d e i n s i g h t s i n t o t h e b r o a d s o c i a l , b i o p h y s i c a l , and e c o n o m i c e n v i r o n m e n t p e r i p h e r a l , b u t c l o s e l y i n t e r - r e l a t e d , t o t h e m i n i n g and' e n e r g y i s s u e s . b) A f o c u s s e d d i s c u s s i o n o f t h e m i n e r a l r e s o u r c e s e c t o r . c ) A f o c u s s e d d i s c u s s i o n o f e n e r g y r e s o u r c e s : i n p a r t i c u l a r , t h e i r r e l e v a n c e t o m i n e r a l r e s o u r c e d e v e l o p m e n t . 2.2 A MULTI-SECTORAL REVIEW OF NORTHWESTERN RESOURCES N o r t h w e s t e r n B r i t i s h C o l u m b i a r e p r e s e n t s t h e p r o v i n c e ' s l a s t t r u l y e x t e n s i v e u n d e v e l o p e d r e g i o n . The w i l d e r n e s s c h a r a c t e r o f t h e r e g i o n b e l i e s i t s i m p o r t a n t endowment o f m i n e r a l s , w i l d l i f e , h y d r o e l e c t r i c and c o a l r e s o u r c e s , and s p e c t a c u l a r u n t r a m m e l l e d l a n d s c a p e s c o n t a i n i n g s u c h u n i q u e f e a t u r e s as Mr. E d z i z a v o l c a n i c t e r r a i n and .the S t i k i n e R i v e r ' s Grand C a n y o n . The t h e s i s a r e a shown on F i g u r e 1 c o v e r s a d i v e r s e g e o g r a p h y o f n e a r l y 150,000 km2, e x t e n d i n g westward f r o m t h e 8 Omineca and C a s s i a r M o u n t a i n Ranges t h r o u g h t h e S t i k i n e and T e s l i n P l a t e a u , t o t h e C o a s t Range M o u n t a i n s and b o u n d a r y w i t h A l a s k a . M a j o r r i v e r s s u c h as t h e I n k l i n , S t i k i n e , D e a s e , and I s k u t d r a i n g l a c i e r - c o v e r e d m o u n t a i n s , l o w l a n d muskeg, and s e m i - a r i d , t u n d r a - l i k e , t o f o r e s t e d p l a t e a u x . Highway 37, e x t e n d i n g n o r t h w a r d f r o m New H a z e l t o n t o Watson L a k e i n t h e Yukon i s t h e p r i m a r y l i f e l i n e f o r t h e r e m o t e and w i d e l y s c a t t e r e d r e s i d e n t s . The r e g i o n ' s e c o n o m i c c h a r a c t e r and p r i m a r y r e s o u r c e s a r e as d i v e r s e as i t s l a n d s c a p e s . The r e m a i n d e r o f t h i s s e c t i o n w i l l b r i e f l y d i s c u s s t h e f o r e s t , f i s h , w i l d l i f e , and human r e s o u r c e components and t h e i r a n t i c i p a t e d f u t u r e s c e n a r i o s as b a c k g r o u n d t o t h e d e t a i l e d m i n e r a l and e n e r g y s y n o p s e s w h i c h f o l l o w . S i n c e t h e e a r l i e s t c o n t a c t between n a t i v e T a h l t a n and C a s c a p e o p l e s and R u s s i a n , B r i t i s h , and A m e r i c a n c o a s t a l t r a d e r s , t h e r e g i o n has r e l i e d on t h e e x p o r t o f i t s n a t u r a l r e s o u r c e s as t h e b a s i s f o r i t s e c o n o m i c s u r v i v a l . A l t h o u g h a commodity s h i f t has o c c u r r e d f r o m g o l d and f u r s t o a p r e s e n t day e m p h a s i s on p r e c i o u s and base m e t a l s , i n d u s t r i a l m e t a l s , and t o u r i s m , t h e b a s i c p r e m i s e o f an e x p o r t - o r i e n t e d economy r e m a i n s i n t a c t and i s f o r e c a s t t o r e m a i n so i n t o t h e f o r e s e e a b l e f u t u r e ( I n t e r m i n i s t r y W o r k i n g Group on N o r t h w e s t e r n B r i t i s h C o l u m b i a , 1 9 8 2 ) . From 1861 t o t h e l a t e 1890's t h e r e g i o n e x p e r i e n c e d i t s f i r s t m a j o r i n f l u x o f t h o u s a n d s o f p r o s p e c t o r s and m i n e r s 9 enroute to the p l a c e r gold f i e l d s along the S t i k i n e , Dease, and McDame r i v e r s . T h i s rush was f o l l o w e d i n 1897 by the d i s c o v e r y of g old i n A t l i n area streams, s w e l l i n g the area's p o p u l a t i o n to over 10,000. Up to 1945, 898,681 ounces of g o l d , with a p r e s e n t value of n e a r l y $400 m i l l i o n , had been mined from the r e g i o n ( H o l l a n d , 1950). Today around 3000 people, comprised predominantly of T a h l t a n and Casca descendants and mineworkers, r e s i d e i n the w i d e l y s c a t t e r e d communities of C a s s i a r , A t l i n , Dease Lake, T e l e g r a p h Creek, Eddontenajon, I s k u t , G l e n o r a , and Bob Quinn. P o p u l a t i o n growth i s t i e d c l o s e l y to s u s t a i n e d r e s o u r c e development and t o u r i s m , and has tended to proceed s l o w l y and e r r a t i c a l l y . R e c e n t l y , young homesteaders seeking a l t e r n a t e l i f e s t y l e s and a resurgence of p l a c e r mining a c t i v i t y i n the h i s t o r i c gold camps have i n c r e a s e d l o c a l p o p u l a t i o n s i n such areas as T e l e g r a p h Creek and A t l i n . N e v e r t h e l e s s , w h i l e m i n e r a l e x p l o r a t i o n and mining development, highway c o n s t r u c t i o n and maintenance, and t o u r i s m s e r v i c e s c o n t i n u e to be the mainstay of l o c a l employment, they a l l s u f f e r from being a c u t e l y s e a s o n a l i n n a t u r e . The Northwest Report (1977), Northwest Region Study of the I n t e r m i n i s t r y Working Group (1982), and p u b l i c a t i o n s of F r i e n d s of the S t i k i n e and R e s i d e n t s f o r a Free Flowing S t i k i n e , a l l c o n c u r . t h a t d i v e r s i f i c a t i o n of the l o c a l economy to i n c r e a s e g r e a t e r year-round employment i s a high p r i o r i t y among r e s i d e n t s . At the same time, however, r e s i d e n t s are c o g n i z a n t of the need to balance t h e i r d e s i r e f o r g r e a t e r 10 economic prosperity and the ensuing s o c i a l and environmental changes with the possible diminishment of the qu a l i t y of wilderness l i f e s t y l e and sense of community. Residents w i l l be challenged to respond c r e a t i v e l y to the changes that increased resource sector a c t i v i t i e s w i l l impose on the region. Forest resources of the study area belong to the Cassiar Timber Supply Area (T.S.A.). Timber inventories are presently being r e f i n e d . Previous studies indicated forest resources to be primarily of non-commercial value owing to prevalent overmature and decadent timber (Ministry of Economic Development, 1977; Interministry Working Group on Northwest B r i t i s h Columbia, 1982). Other studies i n d i c a t e , however, interspersed l o c a l i z e d areas of moderate to high value timber along the lower and middle sections of the Stikine River, lower Klappan River, and upper Skeena River (Forestal International, 1980; ELUC Sec r e t a r i a t , 1976). For example, land within the former Stikine and Klappan Public Sustained Y i e l d Units (PSYU's), now redesignated part of the Cassiar TSA, encompassing 3,852,000 hectares contains 106,953,000 m^  (110 m^/ha) merchantable timber. Part of the S t i k i n e , Nass, and Iskut drainages, and Liard P l a i n support a number of small dimension lumber operations dependent on l o c a l demand. Overall, however, severe biophysical and c l i m a t i c constraints combined with a lack of i n f r a s t r u c t u r e , p r i n c i p a l l y i n the transportation sector, hinder short to medium term harvesting options. The 11 Interministry Working Group on Northwest B r i t i s h Columbia (1982) considered these constraints and was led to forecast r e l a t i v e s t a b i l i t y i n the forest sector. This can be interpreted to mean that for the foreseeable future the lumber industry w i l l respond primarily to l e v e l s of l o c a l economic a c t i v i t y . As a r e s u l t , the forest sector w i l l remain small and l i k e l y be unable to respond to lumber demands of major development projects, such as mine developments, with the r e s u l t that lumber would be procured from outside the region. Advances in wood processing technology and new product development may r e s u l t i n unforeseen future u t i l i z a t i o n of presently low value timber or noncommercial species such as cottonwood (Populus balsamifera trichocarpa sp.), thereby expanding forest sector a c t i v i t i e s . W i l d l i f e i s a multifaceted renewable resource of the north. Vast forestlands, of equivocal commercial value, in combination with adjacent wetlands and alpine areas create many diverse w i l d l i f e habitats. Varied b i o t i c zones support major species such as moose, Osborn's caribou, mountain goat, sheep, g r i z z l y and black bear, beaver, wolves and wolverine, as well as numerous resident and migratory bird species. W i l d l i f e p roductivity rates are t y p i c a l l y low, but substantial populations of nearly a l l species have been maintained by v i r t u e of t h e i r remoteness in comparison to greatly diminished w i l d l i f e populations prevalent i n accessible parts of the province. W i l d l i f e use and benefits in the north 12 include: i t s use as a t r a d i t i o n a l food source, c u l t u r a l i n s p i r a t i o n for native people, t o u r i s t and big game hunting a t t r a c t i o n , revenue source through trapping, and i t s contribution to natural ecosystem balance and natural heritage or s c i e n t i f i c study. W i l d l i f e ' s economic contribution to the region's economy i s aggregated with values for the entire Omineca-Peace Management Region, and cannot be e a s i l y disaggregated for the present study (Fish and W i l d l i f e Branch, 1983; 1984). Nevertheless, the Interministry Working Group on Northwest B r i t i s h Columbia (1982) has indicated that the t o t a l contribution by guide o u t f i t t i n g and trapping, generally within the study area, may exceed $1 m i l l i o n per annum. Recent studies by Williams (1982) i n B r i t i s h Columbia and Fox e_t a_l (1983) for the Yukon have concluded that w i l d l i f e d i v e r s i t y and preservation can be achieved by conservative management regulations, protection and maintenance of habitat, and appropriate i n s t i t u t i o n a l arrangements coupled with a commitment of p o l i t i c a l w i l l . Impending developments i n the northwest primarily i n the mining and tourism sectors w i l l increase access for hunting and w i l d l i f e viewing. The future of sustained w i l d l i f e populations in the northwest, therefore, appears to hinge on the embodiment of the substantive elements outlined by Williams and Fox e_t a l . The i n e v i t a b l e a l t e r n a t i v e i s to experience a general decline i n w i l d l i f e . 13 Northern f i s h e r y resources experience s i m i l a r developmental pressures and management issues as those experienced by w i l d l i f e . Extensive r i v e r i n e and lake systems support s i g n i f i c a n t populations of resident and anadromous species of rainbow trout, d o l l y varden, whitefish, grayling, and salmonids. Fish form an important staple of many northern d i e t s . Sport f i s h i n g , and to a lesser extent commercial salmon f i s h i n g , are expected to increase i n proportion to increasing resident populations, tourism, and new access opportunities. The nature and extent to which i n d u s t r i a l developments a f f e c t aquatic habitats w i l l have to be determined by a c a r e f u l weighing of the costs and benefits associated with preserving an acceptable l e v e l of f i s h habitat and populations. Spectacular scenery, uncrowded landscapes, exceptional w i l d l i f e viewing, and unsurpassed sport f i s h i n g are among the outstanding a t t r i b u t e s that a t t r a c t a s t e a d i l y growing number of t o u r i s t s to the northwest. Growth of t h i s sector in the l a s t decade has been such that i t i s now second i n importance to the mining industry. Three i d e n t i f i a b l e reasons contributing to t h i s increase are: upgrading of Highway 37 as an alternate route to the Yukon and Alaska; marketing of A t l i n as a t o u r i s t destination o f f e r i n g wilderness oriented, c u l t u r a l and h i s t o r i c a l a c t i v i t i e s amidst spectacular scenery; and, wilderness tours in adjacent Mt. Edziza and S p a t s i z i Parks. The region boasts f i v e major parks, a l l currently devoid of road access. These are: A t l i n Park (271,139 ha), Boya Lake Park (4597 ha), Mount Edziza Park (232,695 ha), S p a t s i z i 14 Wilderness Park (675,024 ha), and adjoining T a t l a t u i Park (105,825 ha). Park use data are generally not ava i l a b l e or incomplete (Selby, pers comm.). Man-made f a c i l i t i e s are r e s t r i c t e d to several motel and campground operations along Highway 37 and i n the A t l i n area. Table I presents campground day and overnight use data for two popular Parks along Highway 37. The li m i t e d season during which these f a c i l i t i e s are occupied has served as a deterrent to further major private sector investment for increasing capacity. However, recent promotion of A t l i n as a winter cross-country s k i destination may provide the impetus to expanding that community's accommodation sector. Additional constraints to tourism expansion c i t e d for the region include lack of access, lack of knowledge by non-residents of a t t r a c t i o n s , competition for tourism from other areas, possible l o c a l apprehension about outsiders, and lack of l o c a l funding a v a i l a b l e to construct new f a c i l i t i e s . While there i s an o v e r a l l lack of data regarding tourism to permit economic analyses and to d i s t i n g u i s h trends i n s p e c i f i c use categories, the volume of t o u r i s t s i s anticipated to grow in the future through greater access p o s s i b i l i t i e s , marketing, and other strategies and spinoffs of regional growth. For example, the Interministry Working Group on Northwest B r i t i s h Columbia (1982) forecasts expansion of the tourism economy to average 3.5% per annum in the short to medium term. This growth also appears predicated on the continued 15 a v a i l a b i l i t y o f a v a r i e t y o f w i l d e r n e s s o r i e n t e d r e c r e a t i o n o p p o r t u n i t i e s . To e n s u r e t h a t f u t u r e o p t i o n s f o r t o u r i s m a r e a v a i l a b l e , p a r t i c i p a n t s i n p r o v i d i n g t o u r i s t s e r v i c e s w i l l r e q u i r e a c t i v e i n v o l v e m e n t i n m a j o r r e s o u r c e d e v e l o p m e n t and a c c e s s p r o p o s a l s . 16 TABLE I. Boya Lake Park and Kinaskan Lake Park  Use Data - 1979 - 1984 YEAR PARK CAMPGROUND/OVERNIGHT DAY USE (Parties) (# V i s i t o r s ) (Parties) (# V i s i t o r s ) 1361 4355 974 n . d . n . d . 1979 Boya Kinaskan 1980 Boya Kinaskan 1981 Boya Kinaskan 1982 Boya Kinaskan 1983 Boya Kinaskan 1984 Boya Kinaskan 1245 n .d. 1292 2401 1227 1790 3984 (May-Sep) 4134 (Jun-Sep) 76,83 (Jun-mid Sep) 3926 (Jun-Jul) 5728 (Jun-Jul) 980 n. d. 3409 3430 (May-Sep) 2975 (May-Sep) 1596 (May-Sep) 3738 (mid May-mid Sep) 3591 (Jun-Sep est.) 1824 5836 (May-Sep) 850 3287 10,518 (May-Sep) 456 1585 5072 (mid May- 1068 mid Sep) 3218 10,298 (Jun-Sep 1026 est.) 2494 8729 (Jun-Aug) 3111 10,888 (Jun-Aug) 2788 9758 (Apr-Jul) 2706 9471 (May-Jul) Source: Courtesy of Donna Selby, Ministry of Lands, Parks and Housing Kinaskan Park not recorded in 1979, 1980. 17 2.3 PUBLIC PREFERENCES AND RESOURCE USE A f o r e m o s t e x e r c i s e i n managing f o r r e s o u r c e use i n any r e g i o n i s u n d e r s t a n d i n g t h e i n t e r e s t s o f r e s i d e n t i n d i v i d u a l s and g r o u p s , as w e l l as i n t e r e s t s o f n o n - r e s i d e n t i n d i v i d u a l s and g r o u p s , who may o r may n o t d e r i v e t h e i r l i v e l i h o o d s f r o m w i t h i n t h e r e g i o n . The i m p o r t a n c e o f t h i s e x e r c i s e i s t h a t i t p e r m i t s t h e o b j e c t i v e s o f t h e v a r i o u s i n t e r e s t g r o u p s t o be i d e n t i f i e d and p r i o r i t y management and p o l i c y i s s u e s t o be c l e a r l y f o c u s e d . R i g o r o u s e x a m i n a t i o n o f t h e c o n s e q u e n c e s o f n e wly p r o p o s e d p o l i c i e s , r e s o u r c e use r e g u l a t i o n s , and d e v e l o p m e n t p r o j e c t s i n l i g h t o f t h e s e i d e n t i f i e d o b j e c t i v e s p r o m o t e s an u n d e r s t a n d i n g o f t h e d i s t r i b u t i o n a l e f f e c t s o f a c t i o n s and t h e r e f o r e a i d s t h e d e c i s i o n maker's a t t e m p t s t o c o n s i d e r i s s u e s o f e q u i t y as w e l l as e f f i c i e n c y . P u b l i c v i e w s d i f f e r w i d e l y on t h e a p p r o p r i a t e u s e s o f t h e n o r t h w e s t ' s m y r i a d and commonly u n d e r u t i l i z e d r e s o u r c e s . To d a t e , no f o r m a l s u r v e y has been c a r r i e d o u t t o d e f i n e t h e v i e w s and p r e f e r e n c e s o f r e s i d e n t and n o n - r e s i d e n t i n t e r e s t g r o u p s . N e v e r t h e l e s s , on t h e b a s i s o f s e v e r a l r e c e n t r e p o r t s ( M i n i s t r y o f I n d u s t r y and S m a l l B u s i n e s s D e v e l o p m e n t , 1983; N o r t h w e s t D e v e l o p m e n t C e n t r e , 1 9 8 2 ) , and by c o m p a r i n g t h e r e g i o n w i t h e x i s t i n g s t u d i e s f r o m o t h e r n o r t h e r n j u r i s d i c t i o n s ( s e e f o r e x a mple, Freeman, 1981; A l a s k a Highway P i p e l i n e P a n e l , 1979; B e r g e r , 1977; W e s t w a t e r R e s e a r c h C e n t r e , 1 9 8 1 ) , i t i s p o s s i b l e t o d e f i n e t h e r a n g e o f d i f f e r i n g r e g i o n a l v i e w s . F o u r m a j o r , i d e n t i f i a b l e p r e f e r e n c e g r o u p s emerge as o u t l i n e d b e l o w . 18 Group A - Status and Non-Status Indians comprise over one-third of the study area population i n several reserves and widely scattered i n d i v i d u a l settlements. Native Indians are engaged predominantly i n seasonal commercial enterprises including f i s h i n g , big-game and t o u r i s t guiding, a g r i c u l t u r e , and subsistence hunting and gathering. These people have an inseparable r e l a t i o n s h i p to the land and i t s renewable resources which provide them with sustenance and t h e i r r e l i g i o - c u l t u r a l i n s p i r a t i o n and heritage. They have not signed t r e a t i e s with P r o v i n c i a l or Federal governments to date (see the 1910 Declaration of The Tahltan Nation i n Appendix 1). Native people express t h e i r views on resource development and management from t h i s perspective. In p a r t i c u l a r , they f e e l that the decision-making process for resource management must recognize t h e i r claim to aboriginal r i g h t s and e x p l i c i t l y acknowledge t h e i r r e s p o n s i b i l i t i e s and• roles i n resource a l l o c a t i o n a c t i v i t i e s (Ministry of Industry and Small Business Development, 1983). Justice Berger's summary of native concerns i n his Report of the MacKenzie Valley P i p e l i n e Inquiry (1977) appears to r e f l e c t l i k e sentiments of northwest B.C. native Indians, Their concerns begin with the land, but are not li m i t e d to i t : they extend to renewable and nonrenewable resources, education, health and s o c i a l services, public order and, overarching a l l of these considerations, the future shape and composition of p o l i t i c a l i n s t i t u t i o n s i n the North (p. 163). Group B - This group consists almost e n t i r e l y of non-Indian residents who reside predominantly i n the settlements of 19 C a s s i a r , Dease L a k e , Bob Q u i n n , and A t l i n . They g e n e r a l l y d e r i v e t h e i r l i v e l i h o o d s f r o m o w n e r / o p e r a t e d c o m m e r c i a l s e r v i c e s , h i g h w a y s c o n s t r u c t i o n and m a i n t e n a n c e , m i n i n g , and s e a s o n a l m i n e r a l e x p l o r a t i o n , t o u r i s m , and f o r e s t r y a c t i v i t y . The p e r s p e c t i v e o f t h i s g r o u p on r e s o u r c e d e v e l o p m e n t has been summarized by t h e I n t e r m i n i s t r y W o r k i n g Group on N o r t h w e s t B r i t i s h C o l u m b i a ( 1 9 8 2 ) . I n d u s t r i a l i z a t i o n and d e v e l o p m e n t f r o m t h e m i d - s i x t i e s onwards grew w i t h i n t h e framework o f r e l i a n c e on r e s o u r c e i n d u s t r i e s f o r employment o p p o r t u n i t i e s . The i n s t a b i l i t y o f t h e r e s o u r c e i n d u s t r i e s has r e s u l t e d i n a d e s i r e f o r f u r t h e r g r o w t h b a s e d on e c o n o m i c d i v e r s i t y . G e n e r a l l y , t h e c o m m u n i t i e s i n t h e N o r t h w e s t f a v o u r e n t e r p r i s e s w h i c h i n c r e a s e t h e employment r a t e r a t h e r t h a n t h o s e r e s u l t i n g i n a l a r g e i n f l u x o f p o p u l a t i o n . They a l s o f a v o u r e n t e r p r i s e s w h i c h add s u b s t a n t i a l l y t o t h e t a x b a s e , and r e t a i l , t r a d e s , and s e r v i c e e n t e r p r i s e s w h i c h f i l l gaps i n t h e b u s i n e s s s t r u c t u r e . However, t h e r e i s a w i d e s p r e a d c o n c e r n , t h r o u g h o u t t h e r e g i o n , t h a t a d d i t i o n a l g r o w t h n o t c r e a t e e n v i r o n m e n t a l p r o b l e m s (p . 27) . Group C - A s m a l l b ut g r o w i n g number o f n o n - I n d i a n r e s i d e n t s i n s u c h c o m m u n i t i e s as T e l e g r a p h C r e e k and A t l i n have moved t o t h e r e g i o n t o p u r s u e a l t e r n a t e w i l d e r n e s s l i f e s t y l e s p r e d i c a t e d on a c o m b i n a t i o n o f s u b s i s t e n c e and n o n - c o n s u m p t i v e w i l d e r n e s s o r i e n t e d c o m m e r c i a l a c t i v i t i e s and s e r v i c e s p r i m a r i l y i n t h e t o u r i s m and a r t s / c r a f t s s e c t o r s . The b a s i s o f t h e i r w i l d e r n e s s l i f e s t y l e s r e f l e c t s a c a u t i o u s a p p r o a c h t o r e s o u r c e u s e . N e v e r t h e l e s s , t h e s e r e s i d e n t s have e x p r e s s e d a d e s i r e t o s t a b i l i z e and d i v e r s i f y l o c a l e c o n o m i e s as a s t e p t o w a r d s e n r i c h i n g community v i t a l i t y ( M i n i s t r y o f E c o n o m i c D e v e l o p m e n t , 1977; F r i e n d s o f t h e S t i k i n e - N e w s l e t t e r 1, 1 9 8 0 ) . Group D - The f i n a l g r o u p o f i n t e r e s t s i n c l u d e r e s i d e n t and 20 non-resident p a r t i c i p a n t s i n mineral, timber, and energy resource development a c t i v i t i e s . Their i n t e r e s t s generally favour p o l i c i e s advocating expansion of regional economic opportunities related to resource extractive i n d u s t r i e s , and they are active proponents of improved transportation, energy supply, and settlement f a c i l i t i e s . This group of i n t e r e s t s has been mirrored i n the 'strategy for development' which i s advocated by the p r o v i n c i a l government's Cabinet Committee on Economic Development i n t h e i r Regional Economic Development Study, 1982. Tourists comprise a f i f t h group whose i n t e r e s t s contain elements of the previous four categories. Tourist preferences range from those who desire to experience, and see maintained, i n t a c t , unspoiled landscapes devoid of i n d u s t r i a l development, to those who desire to experience outdoor, h i s t o r i c a l , and c u l t u r a l a c t i v i t i e s while having the benefit of improved highway and community services. To summarize, public preferences pertaining to the renewable and non-renewable resource economy in the northwest are as diverse as the resources themselves. They include unresolved a b o r i g i n a l land rig h t s of native peoples, economic d i v e r s i f i c a t i o n i n t e r e s t s of non-Indian residents, resource extraction i n t e r e s t s of mining, timber and u t i l i t y corporations, as well as government socio-economic development objectives. This d i v e r s i t y of preferences can be conveniently categorized by resource use preference sets developed by Eyre 21 f o r a s t u d y o f Yukon w a t e r r e s o u r c e s by W e s t w a t e r R e s e a r c h C e n t r e ( 1 9 8 1 ) . One end member o f t h e p r e f e r e n c e s e t r a n g e r e f l e c t s v i e w s " d e s i g n e d t o f o s t e r a r a p i d r a t e o f e c o n o m i c d e v e l o p m e n t " , w h i l e t h e o t h e r end member r e f l e c t s t h e v i e w s o f t h o s e who d e s i r e "a r e l a t i v e l y s l o w p a c e o f e c o n o m i c d e v e l o p m e n t i n o r d e r t o a s s u r e p r e s e r v a t i o n o f t h e q u a l i t y o f e n v i r o n m e n t " . The r e m a i n i n g p r e f e r e n c e s s h a r e e l e m e n t s o f b o t h end members. W h i l e t h e p r i o r i t i e s and p r e f e r e n c e s o f n o r t h w e s t e r n B.C. i n t e r e s t g r o u p s d i s p l a y f u n d a m e n t a l d i f f e r e n c e s w h i c h w i l l n o t a l w a y s a l l o w i s s u e s t o be r e c o n c i l e d , i t i s , n e v e r t h e l e s s , w i t h i n t h i s c o n t e x t t h a t r e s o u r c e a l l o c a t i o n d e c i s i o n s and t h e i r r e s p e c t i v e t r a d e o f f s must be made. 22 City, Town, District, Village with Government Agent Post Off ice Community, Locality Hospital A i rpo r t (publ ic l i cence, land) Seaplane Customs Port STUDY AREA BOUNDARY 2.4 MINERAL DEPOSITS: 2.4.1 DISTRIBUTION Base m e t a l and i n d u s t r i a l m i n e r a l d e p o s i t s i n t h e t h e s i s a r e a a r e d i s t r i b u t e d as shown on F i g u r e 2. D e p o s i t s shown a r e t h o s e w h i c h have e x p e r i e n c e d a d v a n c e d e x p l o r a t i o n , t h e r e f o r e p e r m i t t i n g r e l i a b l e m e a s u r e s o f i n f e r r e d g r a d e and t o n n a g e and c a l c u l a t i o n s o f i n - s i t u v a l u e o f c o n t a i n e d m e t a l . A d d i t i o n a l m i n e r a l s h o w i n g s and p r o s p e c t s a t e a r l y s t a g e s o f e x p l o r a t i o n a r e n o t shown. H i g h m i n e r a l p o t e n t i a l a r e a s r e p r e s e n t i n g f a v o u r a b l e g e o l o g i c a l e n v i r o n m e n t s f o r d i s c o v e r y o f a d d i t i o n a l d e p o s i t s a r e i n d i c a t e d by t h e s h a d e d p a t t e r n i n t h e f i g u r e . F o u r m a j o r n o r t h w e s t t r e n d i n g t e c t o n i c b e l t s encompass s i x p r i n c i p a l g e o g r a p h i c c o n c e n t r a t i o n s o f m i n e r a l d e p o s i t s . The e a s t e r n m o s t Omineca B e l t , c o n s i s t i n g p r e d o m i n a n t l y o f P a l e o z o i c p l a t f o r m a l s e d i m e n t a r y r o c k s w i t h l o c a l t o r e g i o n a l l y s i g n i f i c a n t y o u n g e r i n t r u s i o n s , accommodates two c o n c e n t r a t i o n s o f m i n e r a l d e p o s i t s ; f r o m C a s s i a r n o r t h t o t h e Yukon, and a t K u t c h o C r e e k n e a r l y 100 k i l o m e t r e s e a s t o f Dease L a k e . P r i n c i p a l c o m m o d i t i e s i n c l u d e a s b e s t o s , molybdenum, c o p p e r , z i n c , l e a d , t u n g s t e n , g o l d , s i l v e r , j a d e , and p l a c e r g o l d . A c c e s s i s a c h i e v e d f r o m Highway 37 f o r t h e C a s s i a r a r e a d e p o s i t s , and v i a a l e n g t h y t o t e r o a d f r o m Dease Lake f o r t h e K u t c h o C r e e k a r e a . The I n t e r m o n t a n e B e l t t o t h e west c o n s i s t s o f complex a s s e m b l a g e s o f v o l c a n i c , i n t r u s i v e , and s e d i m e n t a r y r o c k s o f v a r i o u s a g e s . M i n e r a l d e p o s i t s , c o n c e n t r a t e d i n t h e A t l i n , 24 T u l s e q u a h , and S t i k i n e - I s k u t a r e a s i n c l u d e c o p p e r , molybdenum, t i n , t u n g s t e n , g o l d , s i l v e r , u r a n i u m and p l a c e r g o l d . L i m i t e d r o a d and t i d e w a t e r a c c e s s i s a v a i l a b l e t o d e p o s i t s i n t h e A t l i n and T u l s e q u a h a r e a r e s p e c t i v e l y , o t h e r d e p o s i t s a r e a c c e s s e d by a i r . The n e x t most w e s t e r n t e c t o n i c r e g i m e , t h e C o a s t C r y s t a l l i n e Complex i s c o m p r i s e d of young i n t r u s i v e r o c k s and i s n o t known t o c o n t a i n s i g n i f i c a n t m i n e r a l d e p o s i t s i n t h e r e g i o n . The w e s t e r n m o s t I n s u l a r B e l t c o n t a i n s v o l c a n i c and s e d i m e n t a r y r o c k s o f s u p p o s e d P a l e o z o i c age and P a l e o z o i c t o T e r t i a r y i n t r u s i v e r o c k s ( M a c l n t y r e , 1 9 8 3 ) . O n l y one d e p o s i t , t h e v e r y s i g n i f i c a n t W i n d y - C r a g g y c o p p e r - c o b a l t d e p o s i t , i s known t o d a t e . F u t u r e e x p l o r a t i o n may d i s c o v e r a d d i t i o n a l d e p o s i t s i n t h i s e x t r e m e l y r emote and r u g g e d a r e a as t h e g e o l o g y i s b e t t e r u n d e r s t o o d . 2.4.2 ECONOMIC POTENTIAL The e c o n o m i c p o t e n t i a l o f m i n e r a l d e p o s i t s l o c a t e d i n n o r t h w e s t e r n B.C. i s v e r y s u b s t a n t i a l . E s t i m a t e d g r o s s v a l u e o f t h e 26 w e l l documented d e p o s i t s i n t h e t h e s i s a r e a e x c e e d s $62.5 b i l l i o n . P r e s e n t l y , f o u r g o l d - s i l v e r mines and one a s b e s t o s mine a r e o p e r a t i v e a t C a s s i a r , a g o l d - s i l v e r - l e a d mine o p e r a t e s i n t e r m i t t e n t l y a t A t l i n , and a jade, mine o p e r a t e s s e a s o n a l l y s o u t h e a s t o f Dease La k e ( S c h r o e t e r and Pan, 1 9 8 2 ) . T a b l e I I l i s t s t h e s e 7 mines and 19 u n d e v e l o p e d d e p o s i t s . The t a b l e i d e n t i f i e s e a c h d e p o s i t ' s l o c a t i o n , c u r r e n t 25 o w n e r s h i p , commodity t y p e , g r a d e , q u a n t i t y , and e s t i m a t e d g r o s s v a l u e b a s e d on mid-1984 m e t a l p r i c e s . I t i s e v i d e n t t h e r e i s q u i t e a r a n g e i n d e p o s i t s i z e and v a l u e s o w i n g t o t r e m e n d o u s v a r i a b i l i t y i n commodity t y p e and g r a d e as a m a n i f e s t a t i o n o f t h e d i v e r s e g e o l o g i c a l e n v i r o n m e n t s . By a g g r e g a t i n g t h e v a r i o u s d e p o s i t s b a s e d on a m o d i f i e d m i n e r a l d e p o s i t s i z e c l a s s i f i c a t i o n u t i l i z e d i n r e g i o n a l m i n e r a l e v a l u a t i o n s i n B r i t i s h C o l u m b i a ( N o r t h c o t e e_t a _ l , 1 9 8 3 ) , i t i s p o s s i b l e t o show t h a t m e d i u m - s i z e d e p o s i t s r a n g i n g i n v a l u e f r o m $100 m i l l i o n t o $1 b i l l i o n c o m p r i s e t h e l a r g e s t c a t e g o r y . D e p o s i t s i n t h e v e r y e a r l y s t a g e s o f e x p l o r a t i o n a r e n o t i n c l u d e d b e c a u s e v a l u e e s t i m a t e s o f t h e i r r e s e r v e s a r e v e r y p r e l i m i n a r y . A g g r e g a t i n g t o t a l g r o s s e s t i m a t e d v a l u e s o f e a c h commodity as i n F i g u r e 3 p e r m i t s a c l e a r e r d e f i n i t i o n o f t h e p r i m a r y d e t e r m i n a n t s o f p o t e n t i a l w i d e s p r e a d m i n e r a l d e v e l o p m e n t i n t h e r e g i o n . The p r o f i l e r e a f f i r m s t h a t c o p p e r and molybdenum w i l l be t h e m a j o r d e t e r m i n a n t s o f f u t u r e d e v e l o p m e n t i n t h e r e g i o n i n t h e l o n g — t e r m as i n p r e v i o u s s t u d i e s ( M i n i s t r y o f E c o n o m i c D e v e l o p m e n t , 1 9 7 7 ) . T u n g s t e n and c o b a l t , however, w h i l e r e p r e s e n t i n g s i g n i f i c a n t g r o s s v a l u e s , and c o n t a i n e d i n d e p o s i t s w i t h s u b s t a n t i a l molybdenum and c o p p e r r e s p e c t i v e l y , f a c e s i g n i f i c a n t d e v e l o p m e n t c o n s t r a i n t s . The W i n d y - C r a g g y c o p p e r - c o b a l t d e p o s i t i s s i t u a t e d i n an e x t r e m e l y r emote and h o s t i l e a r e a , w h e r e a s t h e L o g t u n g t u n g s t e n - m o l y b d e n u m d e p o s i t r e q u i r e s s u b s t a n t i a l l o n g - t e r m i mprovement i n m e t a l p r i c e s . G o l d and s i l v e r a r e a l s o s i g n i f i c a n t f a c t o r s t h a t a r e 26 a b l e t o 'make o r b r e a k ' a f e a s i b l e m i n i n g o p e r a t i o n . T h e s e p r e c i o u s m e t a l s a r e p e r v a s i v e l y a s s o c i a t e d w i t h m e d i u m - s i z e ' p o r p h y r y ' c o p p e r and molybdenum d e p o s i t s , v e i n - t y p e , and p l a c e r d e p o s i t s . C o n t i n u e d h i g h p r i c e s f o r t h e s e p r e c i o u s m e t a l s w i l l a t t r a c t e x p l o r a t i o n i n v e s t m e n t and e n h a n c e t h e f e a s i b i l i t y o f known d e p o s i t s . The f o r e g o i n g c o n c l u s i o n s s u g g e s t a medium- t o l o n g - t e r m m i n e r a l economy p r o f i l e f o r t h e r e g i o n b a s e d on s p e c i f i c c o m m o d i t i e s . I t i s e m p h a s i z e d , however, t h a t f l u c t u a t i o n s i n t h e r e l a t i v e p r i c e s o f m e t a l s w i l l e n h a n c e p o t e n t i a l p r o f i t a b i l i t y o f d e p o s i t s c o n t a i n i n g r e l a t i v e l y h i g h e r p r i c e d m e t a l s a t any one t i m e . F o r e x a m p l e , o v e r t h e l a s t 5 y e a r s , h i g h e r p r e v a i l i n g p r i c e s f o r p r e c i o u s m e t a l s ( g o l d , s i l v e r ) c o i n c i d e n t w i t h d e p r e s s e d p r i c e s f o r base m e t a l s ( c o p p e r , molybdenum, l e a d , z i n c ) has been r e f l e c t e d i n e x p l o r a t i o n and d e v e l o p m e n t e x p e n d i t u r e s b e i n g d i r e c t e d t o w a r d s c o m p a r a t i v e l y h i g h v a l u e t o v o lume, s m a l l - t o m e d i u m - s i z e d d e p o s i t s w i t h i m p o r t a n t p r e c i o u s m e t a l c o m p o n e n t s . T h i s has o c c u r r e d even t h o u g h t o t a l known b a s e m e t a l r e s o u r c e s a r e s u b s t a n t i a l l y l a r g e r and a n t i c i p a t e d t o u l t i m a t e l y g e n e r a t e t h e g r e a t e s t e c o n o m i c a c t i v i t y . 2 7 TABLE II. MINERAL DEPOSIT DATA ESTIMATED* CONTAINED GROSS VALUE DEPOSIT OWNER NTS LOCATION COMMODITIES1 RESERVES2 GRADE3 MATERIAL ($) Hetal Mines: ATLIN SILVER Trident Resources 104 N/12E Ag.Pb.Zn Inc. rO CO BAIER5 Dupont of Canada 094/6B ERICSSON Erickson Gold 104 P/4E Mining Corp. HANNA United Hearne Res. 104 P/5E Taurus Resources VOLLAUG Silver Standard Mines 104 P/4E Ltd.; Cusac Industries CASSIAR Brlnco Mining Ltd 104 P/SU CRY LAKE Cry Lake Jade Mines 104 I/3E Ltd. Ag, Au Au, Ag Au, Ag Au, Ag 63,920 TN 100,000 TN 65,000 TN 440,000 TN 540,000 TN Asbestos 27,500,000 TN Jade 2500 TN 527.31 gt Ag 33,705,655 g Ag 5X Pb + Zn 28 gT Au 2,799,000 g Au 591 gT Ag 59,090.000 g Ag 20.22 gT Au 20.22 gT Ag 15.55 gT Au 8.5 gT Au $38/ton £ 31 *0.5-$20/lb 1,313,975 g Au 1,313,975 g Ag 8,397,000 g Au 4.590,000 g Ag 15,876,0O0,O00kg n.a. 13,145.200 3,269,500 16,414,700 40,501,530 23,045,100 63,546,630 19,013,220 512,450 19,525,670 13.062 gT Au 5,747,280 g Au 83,163,140 121,504,590 1,790,100 123,294,690 665,000,000 est.10,000,000 Undeveloped Deposits) ADANAC EAGLEI1EAD Placer Development Essoi Nuspar Resources 104 N/11W 104 I/6E| HE Ho, W Cu.Mo, Ag.Au 201,000,000 TN >30,000.000 TN .098Z MoSz 196,980.000 kg Mo 2,663,169,600 0.41Z Cu 123,000,000 kg Cu 0.022Z HoSz 3,780,000 kg Mo 2.71 gT Ag 81,300,000 g Ag 0.2 gT Au 6,000,000 g Ag 218,940,000 51,105,600 31,707,000 86,820,000 388,572,600 D E P O S . T OWNER NTS LOCATION COMMODITIES' RESERVES2 r O ERICKSON- Island Mining 104 K/llW Ag.Pb, 1,000,000 TN ASIIIIY Zn.Au CNAT PASS Hudson Bay Mining 104 1/4 Cu.Au 20,133,000 TN and Smelting JOEM Delia Mines 104 P/6W Mo U ,793,600 TN KIJTCIIO CREEK bumitomo; E^o iu4i/iW Cu.Ag, 17,700,000 TN Zn LAWYERS Serem 094 E/6W Au.Ag 735.000 TN I ETA IN Brinco Ltd. 104 1/7 Asbestos 12,000,000 TN UKITlim; Aroax 104 0/13E W.Mo 179,000,000 MIDWAY Regional Resources 104 0/16 Pb.Zn, 5,400,000 TN Canamux Resources Ag Procan Exploration P0I.ARIS-TAKU 104 K/12E Au 95,964 TN KEII-CIIRIS Kicld Creek Mines Ltd. 104 II/12U Cn.Au 43,700,(XX) TN RED IXX; Nortlmii Mines Ltd. 104 G/9W Au 2,200.000 TN SCIIAI-'I 'CREEK Tec k Corp. 104 G/7W C u . M i i , I00,(XX1,(XX) TN Ag, Au STIKINE 1.1,ml Cupper Mines 1114 0/TW Cn.Ag, I 25,()0()1<XI(I COPPER Au CAI.0KE CREEK) G R A D E 3 CONTAINED MATERIAL ESTIMATED* CROSS VALUE ($) 177.75 gT Ag 177,750,000 g Ag 69,322,500 1.7 gT Au 1,700,000 g Au 24,599,000 2.23% Pb 22,230,000 kg Pb 16,138.980 3.8% Zn 37,900,00(1 kg Zn 50,028,000 160,088,480 0.44Z Cu 88,000,000 kg Cu 156,640,000 0.31 gt Au 6,200,000 g Au 89,704,000 246,354,(XX) 0.17% MoSz 20,049,120 kg Mn 271,064,102 I. 5-2.3% Cu 313,740,000 kg 557,976,600 2.3-4.3% Zn 523,620,000 kg 691,178,400 • 22-41 gt Ag 508,680,000 g 198,385,520 1,447,540,200 6.02 gT Au 4,424,700 g Au 65,043,100 211.7 gT Ag 155,610,380 g Ag 60,688,000 125.731,100 $25 / TN 18,144,000,000 kg 500,000,000 0.13% Wo3 32,700,000 kg W 8,191,040,000 0.52% MoSz 93,080.000 kg Ho 1,258,441.600 9.449.481,600 323.5 gT Au 1.747,073,OOOg Au 681,358,500 12.3 % Zn 664,200,000 kg Zn 876,744,000 6.4% Pb 345.600,000 kg Pb 250,905,600 1,809,008,100 II. 62 gT Au 1,115,101 g Au 16,135,511 0.56% Cu 244.720.OIX) kg Cu 435,601,600 0.28 gT Au 12,236,(XX) g An 177,054,920 612.656,520 1.08 gT Au 2,376,000 g Au 34.380.71X) 0.3* Cu 3,(X)0,(X)0,(X)(lkKCu 5,340,000,(KH) 0.02% Mo 340,000,000 kg Mo 4,596.800,(XK) 0.113 gT An 113,(IIX),000 g Au 1,635,110.000 0.992 gT Ag 992,(XX),000 g Ag 386,880,(XXI 11,958,790, (XX) 1.1)62 Cu 1 ,325,(MX),(XXIkisCii 2, :)r>H, 500,(XX) .397 gT An 49,625,(XX) g An 718,073,750 7.')4 (;T AK 992,50(1,000 g Ag 187,075,(XHI :i,4(i3,648,75(1 ESTIMATED4 CONTAINED CROSS VALUE DEPOSIT OWNER NTS LOCATION COMMODITIES1 RESERVES2 GRADE1 MATERIAL ($) STOR1E SUSTUT TUISEQUAH Shell Falconbridge Corainco WINDY CRAGGY Falconbridge; Geddes Resources 104 P/4W 094 D/10E 104 K/12E 114 P/13E Mo Cu Ag.Au.Pb, Zn.Cu Cu.Co, Au.Ag, 100,000,000 TN 30,000,000 TN 714,874 TN 350,000,000 TN 0.13% MoSz 1.25% Cu 82.2 gT Ag 2.6 gT Au 1.3% Cu 1.6% Pb 1.5% 0.1% Cu Co 130,000,000 kg 375,000,000 kg 58,775,940 g Ag 1,822,930 g Au 9,293,360 kg Cu 57,189,920 kg Pb 5,250,000,OOOkgCu 350,000,000 kg Co 1,757,600,000 667,500,000 22,922,000 26,377,783 16,542,184 41,519,882 107,362,465 9.345,000,000 5,775,000,000 15,120,000,000 TOTAL ESTIMATED GROSS VALUE OF ALL DEPOSITS = $62,408,913,000 Q ^Ag - s i l v e r ; Au - gold; Cu - copper; Co - Cobalt; Mo - Molybdenum; Pb - Lead; Zn - Zinc; W - Tungsten. 2Reserves - Metal mines - Proven and mineable. - Undeveloped - Proven and d r i l l indicated. ^Grade gT - grams/metric Tonne, kg - kilograms, lb - pound. ' * Values - Prices used to compute values are appro/, mid-1984 producer prices: s i l v e r - $0.39/gm; gold - $14.70 gm; copper - $1.78/kg; c >l>alt - $16.50/kg; molybdenum - $13.52/kg; lead - $0.73/kg; zinc - $1.32/kg; tungsten - $35.20/kg; asbestos depends on fi b r e q u a l i t y . •''Raker Mine in the process of shutting down due to exhaustion of reserves. Sources: Schroeter and Pan, 1982; Northern Miner Press Ltd., 1981-1985 2.4.3 CONSTRAINTS The s i g n i f i c a n t economic p o t e n t i a l of northwestern mineral deposits has not been r e a l i z e d to date because of unsatisfactory combinations of factors required to encourage mining investment and maintain mining f e a s i b i l i t y . Constraints on development have been summarized in several previous studies (Ministry of Economic Development, 1977; Schroeter and Pan, 1982; Interministry Working Group on Northwest B r i t i s h Columbia, 1982; and O f f i c i a l s Committee on Northwest Economic Development, 1983). A number of key constraints have been reported as common to a l l undeveloped deposits, although these w i l l range in s e v e r i t y . The following constraints are e s p e c i a l l y important: Metal prices - Prices for copper, molybdenum, lead, and tungsten i n p a r t i c u l a r are presently depressed, r e f l e c t i n g general world economic conditions and e x i s t i n g inventory l e v e l s . This s i t u a t i o n i s beginning to show marginal signs for long-term r e v e r s a l . Transportation i n f r a s t r u c t u r e - Nonexistent to substandard road access to most deposits would require major c a p i t a l investment, and possibly amelioration of environmental consequences, to permit viable c a p i t a l inflow and commodity outflow. Cost effectiveness of r a i l and s l u r r y pipelines as a l t e r n a t i v e s i s unclear. Power - Lack of a regional scale i n d u s t r i a l power source(s) and p r o h i b i t i v e distances to e x i s t i n g grid services dictate comparatively c o s t l i e r , self-generation a l t e r n a t i v e s . Environment - Large mines and t h e i r support 31 i n f r a s t r u c t u r e , s u c h as power g e n e r a t i o n and t r a n s m i s s i o n f a c i l i t i e s and c o m m u n i t i e s w i l l have u n c e r t a i n c o n s e q u e n c e s on t e r r e s t r i a l , a q u a t i c , and a m e n i t y r e s o u r c e s . E x i s t i n g d a t a b a s e s make i t d i f f i c u l t t o e s t i m a t e r e l i a b l y t h e p o t e n t i a l e n v i r o n m e n t a l i m p a c t s and m i t i g a t i v e a l t e r n a t i v e s . Community i n f r a s t r u c t u r e - Medium t o l a r g e m ines w i l l r e q u i r e w o r k f o r c e s r a n g i n g f r o m 200 t o g r e a t e r t h a n 500. C o s t s and o p t i o n s f o r h o u s i n g r e q u i r e f u r t h e r s t u d y . The l e v e l o f g o v ernment i n v o l v e m e n t i s u n c e r t a i n . S o c i a l i m p a c t s - I n d i v i d u a l and c u m u l a t i v e i m p a c t s o f mine d e v e l o p m e n t must r e c o g n i z e s o c i a l p r i o r i t i e s o f e x i s t i n g r e s i d e n t s . N a t i v e l a n d c l a i m s a r e u n s e t t l e d . E x t e r n a l i m p a c t s - P o t e n t i a l t r a n s b o u n d a r y (B.C.-Yukon; B . C . - A l a s k a ) i m p a c t s , p r i m a r i l y w a t e r r e s o u r c e s , and t o a l e s s e r d e g r e e t r a n s p o r t a t i o n , need i d e n t i f i c a t i o n i n o r d e r t o e s t a b l i s h a p p r o p r i a t e management s t r a t e g i e s . Government - D e v e l o p m e n t p o l i c i e s and i m p l e m e n t a t i o n s t r a t e g i e s r e q u i r e r e f i n e m e n t . I n d u s t r y p e r c e p t i o n s o f g o v e r n m e n t p o l i c y c a n e i t h e r h i n d e r o r a c t as a b e n e f i c i a l c a t a l y s t . M e t a l l u r g i c a l - B u l k b e n e f i c i a t i o n s t u d i e s and a d v a n c e d m e t a l l u r g i c a l r e c o v e r y t e c h n i q u e s f o r m i n e r a l o g i c a l l y complex o r e s and l o w g r a d e o r e s o f c e r t a i n c o m m o d i t i e s r e q u i r e f u r t h e r i n v e s t i g a t i o n f o r s e v e r a l d e p o s i t s . O t h e r e c o n o m i c - F u t u r e c o s t t r e n d s of f a c t o r s of p r o d u c t i o n a r e d i f f i c u l t t o p r e d i c t . L i k e w i s e , p o l i t i c a l c l i m a t e and t a x l a w s c a n be s i g n i f i c a n t d e t e r m i n a n t s o f p r o j e c t f e a s i b i l i t y . 32 00 Q O O I Z;IN EADJ ( ( l LACER I r JADfe (1 ASBESTOS (3) GOLD ro r, BY I L V E R (n ac LC ES.TE GROS INERAI 2) COE AIT 14 Rl E I E£ EEE (1 RE Mf TED II £12 SE C lUt Gi 01 W B) CI 01 (O^QDjTJE!i TE}GC El T E N MCW BBEt (UM (] ) I I E G E I I D I E£ E l V E S f EQIl M t . IAFG1 JNI> VERY NUMEER OF SmaJ 1 dijawn id i:x S: Zl! KEPOillTS DI:PQS Depps at t h )P JE < ING i LARGE T S U E P R 3 S E N T E J ts cannotibe s ; sea (9 M N SS DEPOSITS 8 9 10 11 12 13 14 15 16 17 18 I i F i g u r e 3 . T o t a l E s t i m a t e d G r o s s V a l u e o f A l l D e p o s i t s ( $ B i l l i o n s ) 2.4.4 A SENSE OF DEVELOPMENT TIMING Perhaps the greatest area of uncertainty regarding mining i n the northwest i s i n the anticipated timing of development. This i s the r e a l l y important question for which there are few r e l i a b l e answers. Forecasts of development are based on d i f f e r i n g assumptions regarding trends and events pertaining to the primary factors determining a project's f e a s i b i l i t y . The O f f i c a l ' s Committee on Northwest Economic Development (1982) has based i t s most recent timing forecasts on the attainment of the following pre-conditions: i ) An early and stable world economic recovery allowing investor confidence to develop; i i ) An early and sustained increase in base metal and i n d u s t r i a l metal prices and export markets; i i i ) A v a i l a b i l i t y of the following i n f r a s t r u c t u r e : low-cost power supply, improved and d i v e r s i f i e d highway system, possible r a i l or commodity p i p e l i n e , new or expanded ports, s t r a t e g i c a l l y located communities; and iv) Resolution of s o c i a l , environmental and trans-boundary issues. Preconditions are influenced in two ways: by external market forces and by government p o l i c i e s and. actions. Strategic government involvement can therefore enhance development timing. The B.C. government's recent attempt to gauge i t s 34 C o p p e r P r i c e 1 9 8 0 U . S . S / l b . 19 7 5 7 6 7 7 78 79 80 81 82 83 84 85 86 87 88 * Actuals x Major U.S. Commodities for e c a s t i n g group 0 Energy, Mines and Resources, Canada Modified from: Northwest Development Planning - Status Report, Interministry Working Group on Northwest. Economic Development, 1982 F i g u r e 4. Copper P r i c e F o r e c a s t s KUTCHO CREEK. COPPER AND ZINC. 50.000 TPY. 12 YRS (LARGE) ADANAC. MOLYBDENUM. 50.000 TPY. 20 YRS (LARGE) LETAIN• ASBESTOS. 50.000 TPY. 15 YRS (MEDIUM) RED-CHRIS. COPPER. 37.000 TPY. 20 YRS (MEDIUM) KLAPPAN C0AL r 5 MILLION TPY. 20 YRS (LARGE) SCHAFT CREEK. COPPER AND MOLYBDENUM. 500.000 TPY. 25 YRS (LARGE) EAGLEHEAD. COPPER & MOLY. 50.000 TPY. 15 YRS (MEDIUM)  SUSTUT. COPPER 100.000 TPY. 8 YRS (MEDIUM) STTKTNF, COPPER 20 YRS (T .Alton) MIDWAY. LEAD AND SILVER. 30.000 TPY. 10 YRS (MEDIUM) CASSIAR. 110.000 TPY OF FIBRE (MEDIUM) ERICKSON. HANNA. VOLLAUG. VARIABLE PRODUCTION OF GOLD AND SILVER (SMALL) 1< 87 1^88 1989 I9I0 199^ 19)2 19^ 93 1994 19^5 1<96 l j ° 7 19^8 19^9 2J0O 2<Joi —I I I C t— 1 j [ 1 1 L 1 1 Source: Interministry Working Group on Northwest B r i t i s h Columbia - Executive Summary, 1982. Figure 5. Possible Production Schedule f o r P o t e n t i a l Medium and Large-scale Mines Scenario 1 - Optimistic Price/Economic Outlook a l t e r n a t i v e o p p o r t u n i t i e s f o r i n v o l v e m e n t i n n o r t h w e s t m i n e r a l d e v e l o p m e n t l e d t o t h e f o r m u l a t i o n o f two p r o d u c t i o n s c h e d u l e s c e n a r i o s f o r t h e n o r t h w e s t b a s e d l a r g e l y on a n t i c i p a t e d m e t a l p r i c e s f o r c o p p e r and molybdenum. The c o p p e r p r i c e f o r e c a s t s u s e d a r e shown i n F i g u r e 4, w h i l e S c e n a r i o 1, b a s e d on t h e o p t i m i s t i c p r i c e t r e n d i s shown i n F i g u r e 5. S c e n a r i o 2, t h e more p e s s i m i s t i c o u t l o o k , e s s e n t i a l l y d e f e r s d e v e l o p m e n t on a v e r a g e f o r 5 y e a r s . R e a s s e s s m e n t o f t h e a s s u m p t i o n s u s e d t o d e r i v e t h e g o v e r n m e n t ' s a n t i c i p a t e d p r o d u c t i o n s c h e d u l e s s u g g e s t s t h e l i k e l i h o o d o f a somewhat a l t e r e d f u t u r e p r o f i l e . F i r s t , t h e s u s t a i n e d i n c r e a s e i n m e t a l p r i c e s s p a n n i n g 8-10 y e a r s , w h i l e p o s s i b l e , a r e i m p r o b a b l e b a s e d on h i s t o r i c a l e v i d e n c e ( B . C . M i n i s t r y o f E n e r g y , M i n e s , and P e t r o l e u m D e v e l o p m e n t , 1978; and Galway, 1 9 7 4 ) . As p r i c e s r i s e c o r r e s p o n d i n g t o w o r l d i n v e n t o r y r e d u c t i o n s , a r e s u m p t i o n o f p r o d u c t i o n f r o m dormant mines a l o n g w i t h new p r o d u c t i o n f r o m m i n e s co m i n g on s t r e a m w i l l c a u s e downward p r e s s u r e on p r i c e s w i t h i n p e r h a p s 4 t o 6 y e a r s . I n a d d i t i o n , s u b s t i t u t i o n e f f e c t s s u c h as t h o s e b e i n g e x p e r i e n c e d i n t h e t e l e c o m m u n i c a t i o n s i n d u s t r y , where f i b e r - o p t i c s a r e i n c r e a s i n g l y u s e d , w i l l e x e r t downward p r e s s u r e on c o p p e r demand and, t h e r e f o r e , p r i c e s . P r i c e c o r r e c t i o n s w i l l r e s u l t i n a h i a t u s i n p r o j e c t s c oming on s t r e a m i n t h e n o r t h w e s t u n t i l p r i c e s i m p r o v e , p o s s i b l y i n t h e e a r l y t o m i d - 1 9 0 0 ' s . A f u r t h e r i m p o r t a n t f a c t o r t o c o n s i d e r i s t h e v o l a t i l e p o l i t i c a l i n f l u e n c e o f c o p p e r - p r o d u c i n g d e v e l o p i n g c o u n t r i e s , h a v i n g a n a t i o n a l i z e d 37 i n d u s t r y . D e v e l o p i n g c o u n t r y p r o d u c e r s have c a u s e d d i s t o r t i o n s i n s u p p l y / d e m a n d r e l a t i o n s h i p s d u r i n g p e r i o d s o f r i s i n g p r i c e s , and e x a c e r b a t e d w o r l d - w i d e i n v e n t o r y s t o c k p i l e r e d u c t i o n a t t e m p t s d u r i n g p e r i o d s o f d e c l i n i n g p r i c e s ( W e s t e r n M i n e r , 1 9 8 3 ) . T h e s e a c t i v i t i e s t e n d t o d i s c o u r a g e i n v e s t m e n t i n s u c h t r a d i t i o n a l l y h i g h e r c o s t m i n i n g a r e a s as n o r t h e r n C a n a d a . M a j o r mine d e v e l o p m e n t g e n e r a l l y r e q u i r e s g r e a t e r t h a n 2 y e a r s o f i n f r a s t r u c t u r e c o n s t r u c t i o n p r i o r t o p r o d u c t i o n . A s s u m i n g m a j o r government f i n a n c i n g o f i n f r a s t r u c t u r e s u c h as t r a n s p o r t a t i o n and c o m m u n i t i e s , as has been e x p r e s s e d i n r e c e n t p o l i c y d o c u m e n t s , t h e n g o vernment w i l l be r e q u i r e d t o d e f i c i t f i n a n c e a t l e a s t p a r t i a l l y d u r i n g t h e 1980's. The a l t e r n a t i v e i s t o d e l a y g o vernment i n v o l v e m e n t p e n d i n g p r o n o u n c e d i m p r o v e m e n t i n t h e economy and g e n e r a l r e v e n u e s . Government i n v o l v e m e n t i s t h e r e f o r e a n t i c i p a t e d t o be s t e p - w i s e i n n a t u r e , r e l y i n g i n i t i a l l y on p r o v i d i n g i n d u s t r y w i t h i n c e n t i v e s s u c h as r e v i s e d t a x s t r u c t u r e s ( f o r e x a m p l e , P a r s o n , 1 9 8 5 ) , w h i l e g r a d u a l l y i n c r e a s i n g e x p e n d i t u r e s i n t h e t r a n s p o r t a t i o n s e c t o r and p e r h a p s e v e n t u a l l y c o m m i t t i n g f i n a n c i n g t o community d e v e l o p m e n t i f j u s t i f i e d . The r e s u l t w i l l be t h a t t h e l a r g e s t m ines r e q u i r i n g t h e most e l a b o r a t e i n f r a s t r u c t u r e w i l l be f u r t h e r d e l a y e d . S m a l l - t o m e d i u m - s i z e d mines w i t h i n f r a s t r u c t u r e c a p a b l e o f b e i n g c a p i t a l i z e d by an i n d i v i d u a l c o r p o r a t i o n w i l l be b r o u g h t i n t o p r o d u c t i o n . i n i t i a l l y . B a s e d on t h e f o r e g o i n g d i s c u s s i o n , t h e f o l l o w i n g a l t e r n a t e s c e n a r i o f o r mine d e v e l o p m e n t i s a n t i c i p a t e d : i ) S u s t a i n e d i n c r e a s e s i n m e t a l p r i c e s f o r c o p p e r , 3 8 molybdenum, z i n c , and t u n g s t e n may c a t a l y z e d e v e l o p m e n t o f c o m p a r a t i v e l y r i c h e r and s m a l l e r p r o j e c t s w i t h t h e l e a s t i n f r a s t r u c t u r e r e q u i r e m e n t s . T h e s e would i n c l u d e s m a l l - s c a l e p r e c i o u s m e t a l g o l d - s i l v e r d e p o s i t s i n t h e Toodoggone and C a s s i a r a r e a s , and s e l e c t i v e d e v e l o p m e n t o f m e d i u m - s i z e d base m e t a l d e p o s i t s s u c h as Midway and K u t c h o C r e e k , w i t h t h e p o s s i b i l i t y o f a d d i t i o n a l m e d i u m - s i z e d p o r p h y r y c o p p e r - m o l y b d e n u m d e p o s i t s w i t h s i g n i f i c a n t p r e c i o u s m e t a l s , s u c h as RED-CHRIS and E a g l e h e a d . i i ) P r o g r e s s i v e g o v ernment i n v o l v e m e n t w i l l o c c u r i n i n f r a s t r u c t u r e c r e a t i o n , a l t h o u g h t h i s may become h i n d e r e d by r e g i o n a l p o l i t i c a l and e n v i r o n m e n t a l u n c e r t a i n t i e s . i i i ) A m e t a l p r i c e p l a t e a u or p e r i o d o f d e c l i n i n g p r i c e s i s a n t i c i p a t e d f o r t h e l a t e 1980's o r e a r l y 1990's, d e f e r r i n g d e v e l o p m e n t o f l a r g e d e p o s i t s ( w i t h p o s s i b l e e x c e p t i o n o f S c h a f t C r e e k ) s u c h as A d a nac, S t i k i n e C o p p e r , and W i n d y - C r a g g y . i v ) Molybdenum d e p o s i t s n o t i n t o p r o d u c t i o n by t h e l a t e 1980's when U.S. B o r a x ' s Q u a r t z H i l l molybdenum d e p o s i t i n s o u t h e a s t e r n A l a s k a i s s c h e d u l e d f o r p r o d u c t i o n w i l l be i n d e f i n i t e l y p o s t p o n e d . v) O v e r a l l , d e v e l o p m e n t i s a n t i c i p a t e d t o o c c u r as i t has h i s t o r i c a l l y , on a p i e c e m e a l b a s i s , i n r e a c t i o n t o v o l a t i l e m e t a l m a r k e t s , w i t h a b i a s t o w a r d s e a r l i e r d e v e l o p m e n t o f c o m p a r a t i v e l y h i g h e r v a l u e t o volume, s m a l l - t o m e d i u m - s i z e d d e p o s i t s r e q u i r i n g l e s s c a p i t a l i n v e s t m e n t , and c o n t a i n i n g an i m p o r t a n t p r e c i o u s m e t a l ( g o l d , s i l v e r ) component. 39 Kilometres 20 0 City, Town, District, Village with Government Agent ® Post Office o Community, Locality # Hospital ® A i r p o r t (publ ic l icence, land) Seaplane Customs Port *=c ROADS Trunk Main Local Winter Ferry (Auto) and route Railway Boundary Internationa! Boundary Interprovincial Park over 1200 hectares [ Park (inset maps) over 120 hectares Glacier or Icefield QUITS' Customs Port of Entry C 2.5 ENERGY RESOURCES: 2.5.1 DISTRIBUTION AND DEVELOPMENT STATUS C u r r e n t power g e n e r a t i o n f a c i l i t i e s i n t h e n o r t h w e s t a r e c o m p r i s e d o f m u l t i p l e d i e s e l g e n e r a t o r u n i t s t o s e r v e l o c a l community and m i n i n g demands ( T a b l e I I I ) . I n c r e a s e s i n demand a r e met by p e r i o d i c i n s t a l l a t i o n o f a d d i t i o n a l g e n e r a t i n g u n i t s . F u t u r e power s u p p l y o p t i o n s f o r t h e r e g i o n i n c l u d e : h y d r o e l e c t r i c i t y , t h e r m a l c o a l , g e o t h e r m a l , g r i d e x t e n s i o n , and p o t e n t i a l l y b i o m a s s , w i n d , and n a t u r a l g a s . None o f t h e s e a r e p r e s e n t l y o p e r a b l e a l t h o u g h t h e f i r s t t h r e e have been c o n s i d e r e d as a l t e r n a t i v e s t o d i e s e l g e n e r a t i o n f o r mine d e v e l o p m e n t s . D i v e r s e h y d r o e l e c t r i c power o p p o r t u n i t i e s , r e s u l t i n g f r o m c o m b i n e d f a v o u r a b l e t o p o g r a p h y and c l i m a t e , r a n g e f r o m 100 kW m i c r o h y d r o s i t e s i d e n t i f i e d f o r c o m m u n i t i e s s u c h as E d d o n t e n a j o n , t o t h e 2765 MW S t i k i n e - I s k u t and 3700 MW Y u kon-Taku d i v e r s i o n m e g a p r o j e c t s . D e c i s i o n s t o p r o c e e d w i t h m e g a p r o j e c t s w i l l c e r t a i n l y have p o s i t i v e b e n e f i t s f o r r e g i o n a l i n d u s t r i a l d e v e l o p m e n t , however, t h e i r p r i m a r y j u s t i f i c a t i o n must come f r o m p r o v i n c i a l power p l a n n i n g . M i c r o and s m a l l h y d r o f a c i l i t i e s a r e b e i n g i n c r e a s i n g l y c o n s i d e r e d as a l t e r n a t i v e s t o c o s t l y d i e s e l g e n e r a t i o n . C o a l d e p o s i t s w i t h t h e r m a l - e l e c t r i c p o t e n t i a l a r e f o u n d i n t h r e e l o c a t i o n s . The f i r s t i s t h e Groundhog c o a l f i e l d l o c a t e d a t t h e h e a d w a t e r s o f t h e S k e e n a , Nass, and S p a t s i z i R i v e r s , s t r a d d l i n g t h e p r o p o s e d B.C.R. r a i l w a y g r a d e ( R i c h a r d s and G i l c h r i s t , 1 9 7 9 ) . Mt. K l a p p a n a n t h r a c i t e d e p o s i t , l o c a t e d a t t h e n o r t h e r n end o f t h i s c o a l f i e l d , c o n t a i n s an e s t i m a t e d 900 m i l l i o n 41 TABLE I I I . E x i s t i n g D i e s e l Power Generating F a c i l i t i e s LOCATION OWNERSHIP CAPACITY (kW) END USE A t l i n B.C. Hydro 1750 C Dease Lake B.C. Hydro 1650 C Eddontenajon B.C. Hydro 800 C Telegraph Creek B.C. Hydro 1150 C Stewart B.C. Hydro 7250 C Bob Quinn M i n i s t r y of Trans- 375 C/I portat i o n and Hwys C a l l i s o n Ranch P r i v a t e 50 e s t . R Days Ranch P r i v a t e 50 e s t . R I n k l i n P r i v a t e 50 e s t . R McDame Pri v a t e 50 e s t . R P i t t Point P r i v a t e 50 e s t . R Pleasant Camp Pr i v a t e 50 e s t . R Porter Landing P r i v a t e 50 e s t . R Scotia Bay Pri v a t e 50 e s t . R Sheslay P r i v a t e 50 e s t . R Surprise P r i v a t e 50 e s t . R Tahltan P r i v a t e 50 e s t . R Taku P r i v a t e 50 e s t . R Tatogga Lake P r i v a t e 25 e s t . R Tulsequah P r i v a t e 50 e s t . R Warm Bay Pr i v a t e 50 e s t . R/I Erickson Gold Mine 990 M Hanna Gold Mine 800 e s t . M Vollaug Gold Mine 800 e s t . M Baker Gold Mine 750 e s t . C/M Cassiar 19,000 C/M Cry Lake Jade 100 e s t . M 36,140 kW ^End Categories: C - Community; I - I n d u s t r i a l ; R - R e s i d e n t i a l , Resort and Seasonal I n d u s t r i a l ; M - Mining. Sources: Interministry Working Group on Northwest B r i t i s h Columbia, 1982. The Northwest Region - A B r i t i s h Columbia Regional Study, 1982. M i n i s t r y of Industry and Small Business Development, Province of B r i t i s h Columbia, 140 p. Energy, Mines, and Resources Canada, 1980a. Micro Hydro - Volume I: A Survey of P o t e n t i a l Micro Hydro Developments for Use by Remote Communities i n B r i t i s h Columbia. Report ER 80-9E, Ottawa. 42 tonnes of d r i l l indicated and i n f e r r e d reserves. Mt. Klappan i s under i n v e s t i g a t i o n by Gulf Canada Resources for i t s export pote n t i a l and a production decision i s anticipated for 1985 (Western Miner, 1984a; i b i d , 1984b). The deposit's proximity to northwest met a l l i c mineral deposits suggests pot e n t i a l for onsite power generation and regional transmission. The second area of coal deposits i s i n the Tuya-Tahltan River area between Telegraph Creek and Dease Lake. Extensive further exploration i s required to assess the appropriateness of t h i s poor quality l i g n i t e coal for power generation. L i g n i t i c coal deposits also occur s p o r a d i c a l l y over a 50 square kilometre northwest-trending basin which straddles the Rapid River east of Cassiar. Few coal qu a l i t y data are a v a i l a b l e (Dolmage, Campbell, and Associates, 1975). Geothermal energy po t e n t i a l adjacent to the Recent Mt. Edziza volcanic p i l e i s under current i n v e s t i g a t i o n by Energy, Mines, and Resources of Canada (Western Miner, 1983; Jessop e_t a l , 1984). Proximity to the Schaft Creek copper-molybdenum deposit and Red Dog gold deposit suggest e l e c t r i c a l generation or space heating applications may be areas for further i n v e s t i g a t i o n . However, as inv e s t i g a t i o n s are preliminary, estimates of the size and quality of t h i s resource are premature . B.C. Hydro has investigated the costs .of extending e x i s t i n g grid service northwards to serve l o c a l mines in the Stikine area. A 230 kV to 287 kV l i n e from Telkwa or Skeena substations would cost on the order of $100-140 m i l l i o n (1982) 43 and r e q u i r e 7 y e a r s f r o m d e s i g n t h r o u g h a p p r o v a l and c o n s t r u c t i o n t o c o m p l e t i o n ( I n t e r m i n i s t r y W o r k i n g Group on N o r t h w e s t B r i t i s h C o l u m b i a , 1 9 8 2 ) . The c o s t o f t h i s o p t i o n i s c o n s i d e r e d p r o h i b i t i v e a t t h i s t i m e . A f u r t h e r p o s s i b i l i t y i s g r i d e x t e n s i o n t o t h e A t l i n o r C a s s i a r a r e a f r o m t h e Yukon s h o u l d one o r more p r o p o s e d h y d r o e l e c t r i c f a c i l i t i e s t o s e r v e m i n i n g , aluminum s m e l t i n g , or p i p e l i n e e l e c t r i f i c a t i o n p r o c e e d . T h i s p o s s i b i l i t y seems re m o t e a t p r e s e n t . E x t e n s i v e n o n - c o m m e r c i a l f o r e s t s i n t h e n o r t h w e s t may p r o v i d e a f u e l s o u r c e f o r power g e n e r a t i o n f o r s m a l l demand c e n t r e s . T h i s r e n e w a b l e e n e r g y s o u r c e a l o n g w i t h o t h e r s , s u c h as wind and s o l a r , have y e t t o be i n v e s t i g a t e d f o r t h e i r p o t e n t i a l c o n t r i b u t i o n t o n o r t h e r n power s u p p l y . 2.5.2 DEVELOPMENT STIMULI Growth i n r e g i o n a l e n e r g y demand i s p r e d i c a t e d on a c t i v i t y i n two p r i n c i p a l s e c t o r s : community e x p a n s i o n and m i n i n g d e v e l o p m e n t i n c l u d i n g s u p p o r t i n f r a s t r u c t u r e . P r o v i n c i a l e n e r g y demand g r o w t h w i l l f u r t h e r B.C. H y d r o ' s e f f o r t s t o c o n t i n u e i n v e s t i g a t i o n o f m e g a p r o j e c t s s u c h as t h e S t i k i n e - I s k u t , w h i c h may have i m p o r t a n t i m p l i c a t i o n s f o r i n i t i a t i n g r e g i o n a l demand t h r o u g h t h e a v a i l a b i l i t y o f p o t e n t i a l l y l o w - c o s t power. I n c r e a s e d power demands r e s u l t i n g f r o m e x p a n s i o n o f e x i s t i n g c o m m u n i t i e s i s a n t i c i p a t e d t o c o n t i n u e t o be met by a d d i t i o n a l d i e s e l g e n e r a t o r i n s t a l l a t i o n w i t h p o s s i b l e l i m i t e d 4 4 s u b s t i t u t i o n o f m i c r o h y d r o . Mine d e v e l o p m e n t s w i l l c o n t i n u e t o be t h e p r i n c i p a l i n d u s t r i a l s o u r c e o f power demand. S m a l l p r e c i o u s m e t a l mines w i l l c o n t i n u e t o r e l y p r i m a r i l y on d i e s e l b e c a u s e o f t u r n k e y c o n v e n i e n c e and s h o r t d u r a t i o n o f t h e s e m i n i n g o p e r a t i o n s . M i c r o and s m a l l h y d r o p r o j e c t s may i n c r e a s i n g l y s u p p l y base l o a d o r s u b s t i t u t e f o r d i e s e l when a s u i t a b l e s i t e i s l o c a t e d w i t h i n e c o n o m i c t r a n s m i s s i o n d i s t a n c e . Medium- and l a r g e - s i z e d m i n e s w i l l r e s u l t i n t h e most p r o f o u n d g r o w t h i n r e g i o n a l e n e r g y demand i n t h e f o r e s e e a b l e f u t u r e . The l o c a t i o n and t i m i n g o f t h e s e p r o j e c t s , as d e t e r m i n e d by t h e p r o g r e s s i v e r e m o v a l o f d e v e l o p m e n t c o n s t r a i n t s p r e v i o u s l y o u t l i n e d , w i l l d e t e r m i n e t h e n a t u r e o f e n e r g y s u p p l y o p t i o n s and w h e t h e r p r o j e c t s a r e d e v e l o p e d s i n g u l a r l y o r on a s h a r e d b a s i s . I n c r e a s e d a c t i v i t y i n t h e f o r e s t s e c t o r , a l t h o u g h d i f f i c u l t t o f o r e c a s t , w i l l r e s u l t i n a l o w e r l e v e l o f new power demands t h a n m i n i n g . 2.5.3 POWER SUPPLY REQUIREMENTS FOR MINING M e t a l m i n e s and m i n e r a l p r o c e s s i n g f a c i l i t i e s a r e e n e r g y i n t e n s i v e o p e r a t i o n s . S p e c i f i c a l l y , w i t h l a r g e t o n n a g e , l o w - g r a d e c o p p e r - m o l y b d e n u m d e p o s i t s s u c h as t h o s e p r e v a l e n t i n t h e s t u d y a r e a , e n e r g y c o n s u m p t i o n i n t h e e x t r a c t i o n and m i l l i n g p r o c e s s c o u l d become t h e most i m p o r t a n t f a c t o r i n d e c i d i n g mine f e a s i b i l i t y ( J o e , 1 9 7 9 ) . F o r example, t h e M i n i n g A s s o c i a t i o n o f B r i t i s h C o l u m b i a ' s a n n u a l s u r v e y o f p r o d u c i n g 45 mines i n B r i t i s h Columbia determined that t o t a l energy costs of production now exceed 13% of t o t a l production costs and are among the f a s t e s t r i s i n g cost factors of production. The Schaft Creek copper-molybdenum deposit, the largest deposit i n the region, for example, would require nearly 80 MW i n s t a l l e d capacity for mine, m i l l , and townsite. Capital cost of power supply and d i s t r i b u t i o n are estimated to be 22% of t o t a l project c a p i t a l costs (Ministry of Energy, Mines, and Petroleum Resources, 1983). Table IV l i s t s the anticipated power supply requirements for several other p o t e n t i a l mines i n the region. Comparing these data with Table I I I , i t i s evident that power requirements for one or more mines could s u b s t a n t i a l l y overshadow t o t a l e x i s t i n g i n s t a l l e d capacity i n the region. Understanding the possible timing of various mineral deposits would permit s t r a t e g i c planning of power generation f a c i l i t i e s to take advantage of economies of scale and optimize transmission distances, thereby reducing the cost of power and enhancing mine f e a s i b i l i t y . Power generating f a c i l i t i e s large enough to serve several mines, however, w i l l require greater lead times for design, a p p l i c a t i o n , and construction. Indeed the sole j u s t i f i c a t i o n for these projects would be to supply power to p o t e n t i a l mines and so firm commitments would have to be made by mining companies i n advance. Unfortunately, the anticipated timing .of mineral development during the l a t t e r 1980's and early 1990's i s subject to considerable uncertainty as a r e s u l t of unsettled metal prices and other development-related constraints alluded 46 t o e a r l i e r . F a c e d w i t h t h i s s i t u a t i o n , owners o f s m a l l - t o m e d i u m - s i z e d d e p o s i t s , g i v e n m e t a l p r i c e s s u f f i c i e n t l y e n c o u r a g i n g t o d e c i d e on p r o d u c t i o n , w i l l have one o f two power g e n e r a t i o n a l t e r n a t i v e s t o c h o o s e f r o m : p u r s u e s e l f - g e n e r a t i o n o f a l e a s t c o s t a l t e r n a t i v e , or d e f e r p r o d u c t i o n u n t i l a l a r g e r l o w - c o s t power s o u r c e i s d e v e l o p e d among s e v e r a l p r o d u c e r s or t h r o u g h g o v e r n m e n t i n v o l v e m e n t . The f o r e g o i n g u n c e r t a i n r e l a t i o n s h i p s between f u t u r e r e g i o n a l power g e n e r a t i o n and m i n e r a l d e v e l o p m e n t t i m i n g l e d t o t h e p r e s e n t s t u d y ' s d e s i r e t o i n v e s t i g a t e a l t e r n a t e f o r m s o f power g e n e r a t i o n f o r m e d i u m - s i z e d d e p o s i t s and i n p a r t i c u l a r t o e s t a b l i s h a m e t h o d o l o g y a t t h e r e c o n n a i s s a n c e l e v e l c a p a b l e o f e v a l u a t i n g and s e l e c t i n g t h e most p r e f e r r e d a l t e r n a t i v e s . TABLE IV. E s t i m a t e d Power R e q u i r e m e n t s f o r S e l e c t e d  M i n e r a l D e p o s i t s DEPOSIT EST. INSTALLED CAPACITY K u t c h o C r e e k L e t a i n S t i k i n e C o p p e r S c h a f t C r e e k Adanac R e d - C h r i s S u s t u t 3.5 8.5 4 8 4.5 10 13 MW 15 MW 55 MW 80 MW 13 MW 15 MW 30 MW S o u r c e s : 1 M i n i s t r y of E c o n o m i c D e v e l o p m e n t , N o r t h w e s t R e p o r t , 1977 P l u n k e t t , P.D. E v a l u a t i o n o f S m a l l H y d r o , in_ p r o c . S m a l l Hydro f o r I n d u s t r y , C r i p p e n C o n s u l t a n t s , 1980 B.C. Hydro C o r p o r a t e Group, 1983. N o r t h w e s t E c o n o m i c D e v e l o p m e n t S t u d i e s — P o w e r S u p p l y O p t i o n s , p r e p a r e d f o r M i n i s t r y o f I n d u s t r y and S m a l l B u s i n e s s D e v e l o p m e n t and M i n i s t r y o f E n e r g y , M i n e s and P e t r o l e u m R e s o u r c e s . 47 2.6 CONCLUSIONS This chapter has presented a synopsis of the primary resource sectors of the 150,000 km2 study area encompassing northwestern-most B.C. The region contains a d i v e r s i t y of f o r e s t , w i l d l i f e , f i s h e r i e s , mineral, energy, and recreational-amenity resources. While there i s common acknowledgement that these resources are at the same time abundant and u n d e r u t i l i z e d , a paucity of comprehensive substantive data, with the exception of minerals, has i n h i b i t e d comparison and analysis of future management options. Public preferences regarding the use, a l l o c a t i o n , and management of these resources range from those who desire a cautious, environmentally sound, slow pace of economic development i n order to preserve a quality wilderness l i f e s t y l e and give time to resolution of aboriginal land claims, to those who view an enhanced pace of economic development primarily through d i v e r s i f i e d mining, f o r e s t r y , and energy a c t i v i t i e s as providing the cornerstone for future regional prosperity and s t a b i l i t y . Mineral resource development i s gaining momentum as the region's major economic resource a c t i v i t y for the foreseeable future. However, constraints associated with transportation, power, metal prices, and environmental uncertainties w i l l have to dimish in order to r e a l i z e production of metals from current reserves estimated to exceed $46 b i l l i o n in value. The remote setting of e x i s t i n g and pot e n t i a l mines has underlined the need to further investigate power supply options 48 ( M i n i s t r y o f E c o n o m i c D e v e l o p m e n t , 1977; S c h r o e t e r and Pan, 1982; M i n i s t r y o f I n d u s t r y and S m a l l B u s i n e s s D e v e l o p m e n t , 1 9 8 2 ) . P r e s e n t l y , t h e l a c k o f a r e g i o n a l power s o u r c e and p r o h i b i t i v e d i s t a n c e s t o e x i s t i n g p u b l i c u t i l i t y t r a n s m i s s i o n n e t w o r k s d i c t a t e s e l f - g e n e r a t i o n a l t e r n a t i v e s . T h e s e a r e p e r c e i v e d t o be c o s t l i e r . G i v e n t h e f o r e g o i n g s i t u a t i o n i n c o m b i n a t i o n w i t h t h e u n c e r t a i n t y o f t i m i n g f o r i n d i v i d u a l m i n e r a l d e v e l o p m e n t s , i t i s c o n c l u d e d t h a t t h e n e x t s t e p i n i n v e s t i g a t i o n f r o m a p u b l i c p l a n n i n g p e r s p e c t i v e l i e s i n t h e d e v e l o p m e n t of a s t r a t e g i c a n a l y t i c a l f r a mework t h a t c a n be a p p l i e d t o t h e a s s e s s m e n t o f power g e n e r a t i o n a l t e r n a t i v e s f o r i n d i v i d u a l m i n e s . To add r e l e v a n c e t o t h i s t a s k , t h e framework w i l l need t o f o c u s on p o t e n t i a l mines whose power r e q u i r e m e n t s f a l l s h o r t o f t h e r e g u l a t e d s t a n d a r d s imposed by t h e B.C. U t i l i t i e s C o m m i s s i o n A c t y e t have s u f f i c i e n t d u r a t i o n t o j u s t i f y c o n s i d e r a t i o n o f o t h e r t h a n d i e s e l powered g e n e r a t i o n . The r e m a i n d e r o f t h i s s t u d y d e v e l o p s t h i s theme i n t h r e e s t a g e s . F i r s t , a g e n e r a l r e v i e w i s c o n d u c t e d o f t h e e v a l u a t i o n l i t e r a t u r e , f o l l o w e d by a f o c u s e d r e v i e w o f e v a l u a t i o n t e c h n i q u e s w i t h s p e c i f i c a p p l i c a t i o n t o t h e p r o b l e m . The e s s e n t i a l e l e m e n t s i d e n t i f i e d i n t h e t h e o r y r e p r e s e n t t h e b a s i s f o r d e v e l o p i n g s u b s e q u e n t c h a p t e r s . S e c o n d l y , a r e c o n n a i s s a n c e l e v e l m e t h o d o l o g y i s p r o p o s e d f o r e v a l u a t i n g power, s u p p l y o p t i o n s f o r u n c e r t a i n m i n e r a l d e v e l o p m e n t f u t u r e s . F i n a l l y , t h e power r e q u i r e m e n t s o f an ' a v e r a g e ' m i n e r a l d e p o s i t , RED-CHRIS, a r e i n v e s t i g a t e d and power s u p p l y o p t i o n s s e l e c t e d , t h r o u g h an a p p l i c a t i o n o f t h e p r o p o s e d m e t h o d o l o g y . 49 CHAPTER THREE THEORY AND PRINCIPLES OF EVALUATION 3.1 PURPOSE AND INTRODUCTION The p r i n c i p a l i n t e n t o f t h i s c h a p t e r i s t o o u t l i n e c o n c e p t s i n e v a l u a t i o n t h e o r y and t o d e s c r i b e t e c h n i q u e s commonly u s e d by p u b l i c and c o r p o r a t e i n t e r e s t s t o c a r r y o u t e n e r g y p r o j e c t e v a l u a t i o n . The f i r s t p a r t o f t h e c h a p t e r r e v i e w s t h e l i t e r a t u r e on e v a l u a t i o n t h e o r y , and o u t l i n e s t h e b a s i c e l e m e n t s o f n o r m a t i v e e v a l u a t i o n w h i c h f o r m t h e b a s i s f o r s p e c i f i c d e c i s i o n - m a k i n g a p p r o a c h e s . The s e c o n d p a r t o f t h e c h a p t e r d i s t i n g u i s h e s between c o r p o r a t e and v a r i o u s p u b l i c ( g o v e r n m e n t a l ) d e c i s i o n - m a k i n g p e r s p e c t i v e s by d e s c r i b i n g how t h e y a r e r e f l e c t e d and e m p h a s i z e d i n d i f f e r e n t e n e r g y p r o j e c t e v a l u a t i o n a p p r o a c h e s . F o r e xample, s i n c e i t i s t h e mandate o f t h e g o vernment t o c o n s i d e r m u l t i p l e o b j e c t i v e s , and t h e r e f o r e t r a d e - o f f s between e q u i t y and e f f i c i e n c y , and m u l t i p l e p a r t i c i p a n t s , s u c h as n a t i v e g r o u p s and n o n - r e s i d e n t s , t h e g o v e r n m e n t a l a p p r o a c h t o p r o j e c t e v a l u a t i o n i s d e s i g n e d t o a d d r e s s b r o a d s o c i a l p e r s p e c t i v e s . I n c o m p a r i s o n , c o r p o r a t e d e c i s i o n - m a k i n g mandates a r e much more n a r r o w l y f o c u s e d on a t t a i n i n g e c o n o m i c p r o f i t s w i t h i n c e r t a i n minimum s o c i a l c o n s t r a i n t s , and t h e r e f o r e t h e e n e r g y p r o j e c t e v a l u a t i o n a p p r o a c h i s c o m p a r a t i v e l y s i m p l i f i e d . I t i s i m p o r t a n t t o u n d e r s t a n d t h i s d i s t i n c t i o n b e c a u s e i t d e t e r m i n e s t h e manner i n w h i c h t h e i s s u e s i d e n t i f i e d i n t h e p r e c e d i n g c h a p t e r a r e r e s o l v e d i n t e r m s o f c h o o s i n g between a l t e r n a t i v e e n e r g y p r o j e c t s . 50 T h i s c h a p t e r t h e r e f o r e l i n k s t h e i s s u e s i d e n t i f i e d f o r t h e p r o b l e m e n v i r o n m e n t i n t r o d u c e d i n C h a p t e r 2, t o g e t h e r w i t h t h e o r e t i c a l and p r a c t i c a l e v a l u a t i o n p r o c e d u r e s , t o t h e d e v e l o p m e n t and a p p l i c a t i o n o f an e n e r g y p r o j e c t e v a l u a t i o n m e t h o d o l o g y p r o p o s e d i n s u b s e q u e n t c h a p t e r s . 3.2 OVERVIEW OF EVALUATION THEORY 3.2.1 E v a l u a t i o n T e c h n i q u e s The c e n t r a l p u r p o s e o f e v a l u a t i o n i s t o h e l p i n d i v i d u a l s j u d g e t h e d e s i r a b i l i t y o f p r o p o s e d a c t i o n s b a s e d on an o r g a n i z e d a n a l y s i s o f t h e b e s t a v a i l a b l e i n f o r m a t i o n p e r t a i n i n g t o c o s t s , b e n e f i t s and r i s k s , w h e t h e r q u a n t i f i a b l e o r n o t . An e a s i l y u n d e r s t o o d e v a l u a t i o n m e t h o d o l o g y f o u n d e d on c l e a r l y e n u n c i a t e d p r i n c i p l e s t h e r e f o r e p r o v i d e s t h e c o r n e r s t o n e o f a w e l l o r c h e s t r a t e d d e c i s i o n - m a k i n g p r o c e s s . A g r e a t v a r i e t y o f e v a l u a t i o n t e c h n i q u e s have been f o r m u l a t e d f o r use i n n o r m a t i v e d e c i s i o n - m a k i n g p r o c e s s e s . A l l s h a r e i n common a number o f a t t r i b u t e s . The framework o u t l i n e d b elow c o m b i n e s t h e f i v e common b a s i c e l e m e n t s as o u t l i n e d i n M c A l l i s t e r ( 1 9 8 0 ) and Quade ( 1 9 8 2 ) . 1. I d e n t i f y o r f o r m u l a t e t h e p r o b l e m and c l a r i f y o b j e c t i v e s . 2. D e s i g n a l t e r n a t e s o l u t i o n s by e x a m i n i n g d a t a and r e l a t i o n s h i p s . 3. E v a l u a t e a l t e r n a t i v e s . 4. Recommend or d e c i d e on a c t i o n ( s ) f o r i m p l e m e n t a t i o n . 5. M o n i t o r t h e r e s u l t s and where p o s s i b l e v e r i f y c o n c l u s i o n s . 51 I n p r a c t i c e , m o ving f r o m s t e p 1 t h r o u g h 5 i s s e l d o m a s t r a i g h t f o r w a r d p r o c e s s . I n s t e a d t h e r e a r e u s u a l l y c o m p l e t e o r p a r t i a l i t e r a t i o n s as new i n f o r m a t i o n , m o d i f i e d o b j e c t i v e s , a l t e r n a t i v e s and e v a l u a t i o n t e c h n i q u e s e v o l v e o v e r t i m e , and as u n c e r t a i n t y i s i n c r e a s i n g l y managed. F i g u r e 7 i l l u s t r a t e s t h i s a s p e c t . A r e v i e w o f t h e l i t e r a t u r e f o r n o r m a t i v e c o n c e p t s p e r t a i n i n g t o e a c h s t e p i s p r e s e n t e d i n t h e f o l l o w i n g s e c t i o n s . U n c e r t a i n t y , as a f e a t u r e t h a t p e r v a d e s t h e e n t i r e d e c i s i o n - m a k i n g p r o c e s s , i s e x a m i n e d s e p a r a t e l y . CONCLUSIONS Recommendations / INTERPRETATION ->ISSUE OR PROBLEM Symptoms \ FORMULATION VERIFICATION EVALUATION and RANKING o f ALTERNATIVES \ COMPARISON \ IMPACTS 4r FEEDBACK ITERATION ASSUMPTIONS OBJECTIVES M e a s u r e s of E f f e c t i v e n e s s CRITERIA SEARCH B e n e f i t s C o s t s S p i l l o v e r s ALTERNATIVES MODELS F i g u r e 7 I t e r a t i o n i n t h e D e c i s i o n - M a k i n g P r o c e s s f r o m Quade (19 8 2 ) 52 3.2.1.A. P r o b l e m F o r m u l a t i o n and O b j e c t i v e C l a r i f i c a t i o n F o r m u l a t i n g t h e p r o b l e m i n v o l v e s f i r s t , an i n t u i t i v e r e c o g n i t i o n t h a t a p r o b l e m e x i s t s , and s e c o n d l y , d e f i n i n g p a r a m e t e r s o r c o n s t r a i n t s i n r e s p o n s e t o an e x p l i c i t s e t o f p o l i c y a s s u m p t i o n s w i t h i n w h i c h t h e p r o b l e m i s bounded. I t w i l l be u s e f u l t o know what, i f any, p r i o r d e c i s i o n s have been made and how t h e y have been m a n i f e s t i n d e t e r m i n i n g c o n s t r a i n t s on t h e c u r r e n t p r o b l e m . A c l e a r u n d e r s t a n d i n g and c o n s e n s u s on a s s u m p t i o n s , among p a r t i c i p a t i n g i n t e r e s t s i n t h e p r o c e s s , i s v i t a l t o f o r m u l a t i n g o b j e c t i v e s . D e t e r m i n a t i o n o f what o b j e c t i v e s a r e , or s h o u l d be, i s o f t e n t h e most d i f f i c u l t t a s k f a c e d by t h e a n a l y s t (Quade, 1 9 8 2 ) . Keeney and R a i f f a ( 1 9 7 6 ) have c o n c e p t u a l i z e d t h e p r o b l e m o f c l a r i f y i n g o b j e c t i v e s c o r r e s p o n d i n g t o v e c t o r a t t r i b u t e s e x i s t i n g a t a h i g h l e v e l w i t h i n t h e h i e r a r c h y w h i c h a r e c o m p o s i t e s o f l o w e r l e v e l s c a l a r a t t r i b u t e s c o r r e s p o n d i n g t o l o w e r l e v e l o b j e c t i v e s . O b j e c t i v e s c a n be g e n e r a t e d by a v a r i e t y o f means. MacCrimmon (1 9 6 9 ) s u g g e s t s e x a m i n a t i o n o f t h e r e l e v a n t l i t e r a t u r e , a n a l y t i c a l s t u d y and c a s u a l e m p i r i c i s m . Keeney and R a i f f a ( 1 9 7 6 ) a d d i t i o n a l l y s u g g e s t s u r v e y s and e x p e r t g r o u p c h o i c e . K a t z ( 1 9 7 1 ) c o n c l u d e d t h a t ambiguous o b j e c t i v e s or o b j e c t i v e s p o o r l y r e l a t e d t o t h e p r o b l e m a r e a c a n be r e f i n e d by d e t e r m i n i n g t h e i n t e r e s t s o f t h o s e e n t e r p r i s e s i n i t i a t i n g a d e c i s i o n - m a k i n g p r o c e s s , as w e l l as i d e n t i f y i n g a f f e c t e d s e c o n d a r y p a r t i e s drawn i n t o t h e p r o c e s s . Where m u l t i p l e c o m p e t i n g i n t e r e s t s h i n d e r o b j e c t i v e c l a r i f i c a t i o n , c o n c e p t s 53 such as value s e n s i t i v i t y analysis proposed by Nash, Pearce and Stanley (1973) are useful for a n t i c i p a t i n g evaluation outcomes i n response to a l t e r n a t i v e value sets. Value preferences of p a r t i c i p a n t s i n the decision-making process must be e x p l i c i t l y recognized when i d e n t i f y i n g objectives; for as Lindblom (1959) has su c c i n c t l y stated, "Soc i a l objectives do not always have the same r e l a t i v e values." Keeney and Raiffa's (1976) approach to dealing with d i f f e r i n g value preferences has been to develop more than one hierarchy of objectives corresponding to each value set in order to elucidate trade-offs that might otherwise not be recognized. This technique i m p l i c i t l y acknowledges that a t t a i n i n g c e r t a i n objectives w i l l require trade-offs with others. Resource use preferences i d e n t i f i e d in the present study range from environmentally s e n s i t i v e slow-pace development to accelerated i n d u s t r i a l development. This range of preferences exemplifies a decision environment with complex i n t e r a c t i o n s . Because of considerable uncertainty i n the nature of energy resource a v a i l a b i l i t y to mining, i t i s anticipated that more precise d e f i n i t i o n of the problem environment, and the implied consequences of sol u t i o n s , w i l l permit the i n i t i a l objectives of i n t e r e s t groups to become progressively refined and modified. Value preferences of a l l groups w i l l need to be f l e x i b l e to accommodate these changes. 54 3.2.I.B. Design of A l t e r n a t i v e s A l t e r n a t i v e s are the c h o i c e s or o p t i o n s a v a i l a b l e to the decision-maker by which he hopes to a t t a i n h i s o b j e c t i v e s and improve h i s p a r t i c u l a r s i t u a t i o n (Quade, 1982; Mack, 1971). C o n s i d e r a t i o n of the broadest p o s s i b l e number of a l t e r n a t i v e s i s g e n e r a l l y d e s i r a b l e at the onset of e v a l u a t i o n so that p o t e n t i a l l y d e s i r a b l e ones are not excluded l a t e r i n the process ( L i c h f i e l d , K e t t l e and Whitbread, 1975). The s t a t u s - q u o , n o - a c t i o n , and newly i n v e n t e d a l t e r n a t i v e s should a l l be c o n s i d e r e d as contenders i n the f i r s t i n s t a n c e . Because of the i t e r a t i v e nature of a n a l y s e s , l e a d i n g to p o s s i b l e r e d e f i n e d problems and o b j e c t i v e s , a n a l y s t s cannot be bound to an immutable set of a l t e r n a t i v e s , but r a t h e r must c o n t i n u a l l y a p p r a i s e t h e i r v a l i d i t y . Where an i n i t i a l l i s t of a l t e r n a t i v e s i s l a r g e , these may be pre-screened on the b a s i s of f e a s i b i l i t y , e f f i c i e n c y , p o l i t i c a l d e s i r a b i l i t y , or other prime c r i t e r i a , to a c h i e v e a manageable number. The remaining a l t e r n a t i v e s would then r e p r e s e n t the most l i k e l y c a n d i d a t e s f o r e v e n t u a l s e l e c t i o n ; however, o p p o r t u n i t i e s must be a v a i l a b l e d u r i n g s u c c e s s i v e i t e r a t i o n s of the e v a l u a t i o n p rocess to r e i n s t a t e e a r l i e r d i s c a r d e d a l t e r n a t i v e s or accommodate new ones as s u p p o r t i v e i n f o r m a t i o n becomes apparent or o b j e c t i v e s are p o t e n t i a l l y m o d i f i e d . (Keeney and R a i f f a , 1976; Mack, 1971). 55 3 . 2 . l . C . E v a l u a t i o n o f A l t e r n a t i v e s E v a l u a t i o n o f a l t e r n a t i v e s c o n c e r n s t h a t p a r t o f t h e d e c i s i o n - m a k i n g p r o c e s s where t h e a t t r i b u t e s o r d e c i s i o n c r i t e r i a v a l u e s a r e c r i t i c a l l y e x a m i n e d i n o r d e r t o d e t e r m i n e w h i c h a l t e r n a t i v e s b e s t a t t a i n t h e o b j e c t i v e s . A t t h e end o f t h e e v a l u a t i o n s t a g e , a l o n g l i s t o f a l t e r n a t i v e s w i l l have been n a r r o w e d , by v i r t u e o f r a t i n g c o s t s , b e n e f i t s , and o t h e r c o n s e q u e n c e s , t o t h o s e few t h a t e i t h e r m e r i t a more d e t a i l e d l o o k o r can now be f o r w a r d e d f o r d e c i s i o n . M c A l l i s t e r (198G) has r e a s o n e d t h a t t h e e v a l u a t i o n s t a g e must be c a r r i e d o u t i n a s t r a t e g i c manner t o f o c u s a t t e n t i o n on t h o s e f a c t o r s j u d g e d most c a p a b l e o f c r i t i c a l l y d i s t i n g u i s h i n g among a l t e r n a t i v e s . I m p a c t s and a t t r i b u t e s t h a t a r e r e l a t i v e l y i n v a r i a n t among a l t e r n a t i v e s can be a s s i g n e d a low p r i o r i t y or i g n o r e d . H i c k l i n g ( 1975) has s u b d i v i d e d t h e p r o c e s s i n t o two i n t e r c o n n e c t e d s t e p s , v a l u a t i o n and e v a l u a t i o n . V a l u a t i o n i n v o l v e s u n d e r s t a n d i n g f o r e a c h a l t e r n a t i v e , t h e i r d a t a r e l a t i o n s h i p s t o a s p e c i f i e d s e t o f f u n c t i o n a l p a r a m e t e r s or a t t r i b u t e s . An i n t e g r a l p a r t o f v a l u a t i o n i s t h e e s t a b l i s h m e n t o f c r i t e r i a , t h e means o f measurement, w h i c h a l l o w t h e a n a l y s t t o keep t r a c k o f d i f f e r e n c e s between a l t e r n a t e c h o i c e s i n t e r m s o f t h e i r e f f e c t s . E v a l u a t i o n a t t e m p t s t o r a n k t h e a l t e r n a t i v e s as t o d e s i r a b i l i t y on t h e b a s i s o f t h e v a l u a t i o n ( s ) . T h e r e a r e s e v e r a l s u b - s t e p s t o be u n d e r t a k e n and a v a r i e t y o f f a c t o r s t o c o n s i d e r d u r i n g b o t h v a l u a t i o n and e v a l u a t i o n . i ) V a l u a t i o n - H i c k l i n g ( 1 9 7 5 ) has i d e n t i f i e d t h r e e 56 a s p e c t s of v a l u a t i o n p e r t a i n i n g to the consequences of a l t e r n a t i v e s by which they may be compared: the range of e f f e c t s , meaning which e f f e c t s should be c o n s i d e r e d and who i s a f f e c t e d ; the s c a l e of e f f e c t s , i n p a r t i c u l a r how much of each k i n d of e f f e c t i s apparent and the nature of d i s t r i b u t i o n a l e f f e c t s ; and f i n a l l y the value of e f f e c t s , i n other words the u t i l i t y or t r a d e - o f f s e x p e r i e n c e d . H i c k l i n g ' s typology of c r i t e r i a can be r e i n f o r c e d by i n c o r p o r a t i n g the f o l l o w i n g o p e r a t i o n a l p r o p e r t i e s i d e n t i f i e d by Keeney and R a i f f a (1976) f o r each aspect of the t y p o l o g y . The d e s i r a b l e p r o p e r t i e s a r e : completeness i n order to adequately cover the important a s p e c t s of the problem; o p e r a t i o n a l i m p l y i n g meaningfulness so t h a t a l t e r n a t i v e i m p l i c a t i o n s are e v i d e n t ; decomposable, so t h a t a s p e c t s of the e v a l u a t i o n process can be d i s a g g r e g a t e d ; nonredundancy, to a v o i d d o u b l e - c o u n t i n g of consequences; and minimum s i z e , so t h a t the problem dimension i s c o n s t r a i n e d to examining c r i t i c a l t r a d e - o f f s . Workers i n the f i e l d of environmental a n a l y s i s have used the concept of i n d i c a t o r s , "measures of system behaviour i n terms of meaningful and p e r c e p t i b l e a t t r i b u t e s " ( H o l l i n g , 1978) to f u l f i l l the analogous r o l e of c r i t e r i a . I n d i c a t o r s can be c l a s s i f i e d a c c o r d i n g to economic, e c o l o g i c a l or s o c i a l a f f i n i t i e s . i i ) E v a l u a t i o n - E v a l u a t i o n i s a complex process i n v o l v i n g q u a n t i t a t i v e comparison, value judgement, and i n t u i t i v e r e c k o n i n g . During t h i s stage, r e f e r r e d to as 57 "post-design" by M c A l l i s t e r (1980), c r i t e r i a may be aggregated, weighed, assigned ratings and compared. Where the decision environment i s characterized by a few c r i t e r i a , evaluation can be straightforward. More commonly, decision environments involve multiple objectives and are characterized by multiple c r i t e r i a . Specialized techniques developed to deal with these complex si t u a t i o n s include simple step-wise s e l e c t i o n based on dominance, s a t i s f i c i n g (meeting minimum c r i t e r i a ) , and abstract mathematical non-metric scaling procedures (MacCrimmon, 1968). Most of these techniques have a s t a t i s t i c a l or economic bias and th e i r underlying premise rests on the assumption that choice w i l l be c a r r i e d out by r a t i o n a l man. i i i ) Method - Cost-benefit analysis (CBA), cost-effectiveness analysis (CEA), goals-achievement matrix (GAM), planning balance sheet (PBS), environmental evaluation system (EES), and planning, programming budgeting system (PPBS), represent the more common techniques that are well documented i n the l i t e r a t u r e (Canada Treasury Board Sec r e t a r i a t , 1976); M c A l l i s t e r , 1980; R i v l i n , 1972; McLoughlin, 1969; Weiss, 1972; H i l l , 1968). G i l l i l a n d (1975) and Bowles (1981) discuss techniques such as net energy analysis and s o c i a l impact assessment which are e s p e c i a l l y important to energy project evaluation. These techniques, although widely used., have also been extensively c r i t i q u e d . In some instances th e i r value has been judged as equivocal (Williams, 1972). In fact there appears to be general consensus in the l i t e r a t u r e , despite widespread 58 usage of the techniques, that t h e i r primary value i s in guidance of the s e l e c t i o n process rather than as means by which choices are determined (McLoughlin, 1969). For example, regarding cost-benefit analysis, Mishan (1974) cautions against the use of CBA with p o l i t i c a l l y set prices to guide s o c i a l p o l icy for the reason i t may be impossible to present a clear i n t e r p r e t a t i o n of r e s u l t s or support them because of obvious inadequacies in the technique's a b i l i t y to consider d i s t r i b u t i o n a l e f f e c t s and equity. Thus he reasons that CBA can only be a part of evaluation. As Nemetz e_t al_ (1979) so cogently remind us: The question i s not whether quantitative analysis i s better, but what are the safeguards to ensure meaningful measurement and int e g r a t i o n of quantitative analysis into a p o l i t i c a l , informed choice process. The quantitative decision process should be used only to screen options and provide information about trade-offs. . . . Whatever s p e c i f i c technique i s chosen, i t s main role i s to focus the i n t u i t i v e - p o l i t i c a l choice process by presenting reasonable options which meet ce r t a i n formal demands as well as presenting some ad d i t i o n a l information about the i n t e r r e l a t i o n s h i p of these options and the constraints. (p. 275) 3.2.I.D. Interpretation, Decision, and Implementation i ) Deciding to Decide - Making a decision requires consideration of several ways to achieve a desired r e s u l t . Decisions are based on a coalescence, i n t e r p r e t a t i o n and judgement of information currently at hand regarding good and bad consequences of an a l t e r n a t i v e course of action. A reassessment of assumptions and an understanding of value preference structures are most important. With such a 59 m u l t i t u d e of c o n s i d e r a t i o n s , i t i s not s u r p r i s i n g then, t h a t d e c i s i o n - m a k i n g , d e c i d i n g how to d e c i d e , can be the most complex stage i n the p r o c e s s . H i c k l i n g (1975) has mapped three p o s s i b l e r o u t e s t h a t a d e c i s i o n can take: an a c t i o n route wherein d e c i s i o n s to c a r r y out c e r t a i n a c t i o n s are immediately acted on, i n c l u d i n g g a t h e r i n g f u r t h e r i n f o r m a t i o n p r i o r to implementation; a contingency route wherein a s p e c i f i e d procedure w i l l take p l a c e when c e r t a i n events occur, or c o n s t r a i n t s w i l l be imposed on p o s s i b l e outcomes; and a delayed a c t i o n route wherein s o l u t i o n s to f o r e s e e a b l e problems are s p e c i f i e d but these are p r o v i s i o n a l or c o n d i t i o n a l i n some way, with s p e c i f i c a t i o n of the nature of f o r e s e e a b l e problems, p o s s i b l e t i m i n g , and dependent c o n d i t i o n s . i i ) D e c i s i o n F a c t o r s - S e v e r a l authors have suggested g u i d e l i n e s to a s s i s t the d e c i s i o n maker. For example, R i v l i n (1972) reviewed f o u r f a c t o r s to c o n s i d e r from the p e r s p e c t i v e t h a t d e c i s i o n s u l t i m a t e l y i n v o l v e c h o i c e s among a l t e r n a t i v e uses of s c a r c e r e s o u r c e s . F i r s t l y , d e c i s i o n makers are urged to be e x p l i c i t about what a l t e r n a t i v e r e s o u r c e a l l o c a t i o n s are being c o n s i d e r e d , by means of a t t a c h i n g q u a n t i t a t i v e dimensions to c r i t e r i a . Secondly, d e c i s i o n s w i l l be improved i f t r a d e - o f f s are made e x p l i c i t . T h i r d l y , the dimensions or ve c t o r a t t r i b u t e s must be c l e a r l y s p e c i f i e d .for a l t e r n a t i v e s capable of a t t a i n i n g the same o b j e c t i v e . F i n a l l y , R i v l i n c a u t i o n s f o r the need to t r a c e d i s t r i b u t i o n a l e f f e c t s as a means f o r d i s t i n g u i s h i n g among a l t e r n a t i v e s . 60 F o u r a d d i t i o n a l f a c t o r s n o t d i s c u s s e d by R i v l i n ( 1 9 7 2 ) a r e a l s o i m p o r t a n t f o r d e c i s i o n m a k e r s . V a l u e t r a d e - o f f s and p r e f e r e n c e s a r e i n v e s t i g a t e d i n a l e n g t h y work by Keeney and R a i f f a ( 1976) i n w h i c h t h e y i n d i c a t e t h a t t h e n a t u r e o f p r e f e r e n c e s and p r o c e d u r e s by w h i c h t h e c o n s e q u e n c e s , d i s t r i b u t i o n a l e f f e c t s and o t h e r a t t r i b u t e s o f p a r t i c u l a r a l t e r n a t i v e s become a g g r e g a t e d c a n s i g n i f i c a n t l y a l t e r t h e c o u r s e o f d e c i s i o n m a k i n g . The w r i t e r s p o i n t o u t t h e i m p o r t a n c e o f a s s e s s i n g p r e f e r e n c e s t r u c t u r e s , e s s e n t i a l l y a h i e r a r c h y o f v a l u e s a t t a c h a b l e t o t h e d e c i s i o n maker and h i s c o n s t i t u e n t s , e x p l i c i t l y i n c l u d i n g i n t e r p e r s o n a l c o m p a r i s o n o f p r e f e r e n c e s . The f i r s t h i e r a r c h y o f p r e f e r e n c e s w o u l d be e x p e c t e d t o c o r r e s p o n d c l o s e l y w i t h h i g h l e v e l o b j e c t i v e s and a t t r i b u t e s as p r e v i o u s l y d i s c u s s e d u nder o b j e c t i v e s . S i m i l a r i l y , l o w e r h i e r a r c h y p r e f e r e n c e s would c o i n c i d e w i t h l o w - l e v e l a t t r i b u t e s . i i i ) V a l u e P r e f e r e n c e s - V a l u e p r e f e r e n c e s a r e o f t e n c l o s e l y r e l a t e d t o p e r c e p t i o n s o f e q u i t y . The c o n c e p t o f e q u i t y c o n c e r n s t h e d i s t r i b u t i o n o f c o s t s and b e n e f i t s among members o f s o c i e t y ( M c A l l i s t e r , 1 9 8 0 ) . E q u i t y o b j e c t i v e s must be e x p l i c i t y f a c e d and c o n s i d e r e d a l o n g s i d e e c o n o m i c e f f i c i e n c y c r i t e r i a i f c o n s e q u e n c e s r e l a t i n g t o a l t e r n a t i v e s a r e t o be t r u l y r e p r e s e n t e d i n t h e d e c i s i o n - m a k i n g p r o c e s s (Leman and N e l s o n , 1981; C l a w s o n , 1 9 8 0 ) . i v ) E x t e r n a l i t i e s - E x t e r n a l i t y i m p l i c a t i o n s of m u l t i - o b j e c t i v e , m u l t i - a t t r i b u t e p r o b l e m s can become i m p o r t a n t i f t h e d e c i s i o n e n v i r o n m e n t embraces a r e g i o n a l p e r s p e c t i v e . 61 R u s s e l l ( 1982) d e f i n e s e x t e r n a l i t y a s : . . . [ a p p l y i n g ] g e n e r a l l y t o s i t u a t i o n s i n w h i c h f i r m ( o r i n d i v i d u a l ) A c r e a t e s t h r o u g h i\ts a c t i v i t i e s a c o s t o r a b e n e f i t f o r f i r m ( o r i n d i v i d u a l ) B but does n o t t a k e t h i s c o s t or b e n e f i t i n t o a c c o u n t i n m aking i t s d e c i s i o n s a b o u t i t s own p r o d u c t i o n o r c o n s u m p t i o n . R u s s e l l r e c o g n i z e s t h r e e k i n d s o f e x t e r n a l i t y : p e c u n i a r y e x t e r n a l i t i e s ( w h i c h ) i n v o l v e m a r k e t i n t e r a c t i o n s ; r e a l e x t e r n a l i t i e s ( w h i c h ) i n v o l v e d i r e c t i n t e r a c t i o n s t h r o u g h c o m p e t i t i o n f o r a common p r o p e r t y r e s o u r c e ; and p o l i t i c a l e x t e r n a l i t i e s ( w h i c h a p p l y t o ) s i t u a t i o n s i n w h i c h t h e d e s i g n ( c o n s t i t u t i o n ) o f our p o l i t i c a l i n s t i t u t i o n s c r e a t e s c o n f l i c t s by e x c l u d i n g f r o m c o l l e c t i v e d e c i s i o n s t h e v o i c e s o f l e g i t i m a t e l y i n t e r e s t e d p a r t i e s , and t o s i t u a t i o n s i n w h i c h t h e d e c i s i o n s o r a c t i o n s t h e m s e l v e s p r e v e n t t h e r e s o l u t i o n o f c o n f l i c t s a r i s i n g f r o m a n o t h e r t y p e o f e x t e r n a l i t y . D e a l i n g e f f e c t i v e l y w i t h e x t e r n a l i t y i n v o l v e s c o n s i d e r a t i o n o f e q u i t y o v e r v a r i o u s t i m e h o r i z o n s , a s s e s s m e n t o f v a l u e p r e f e r e n c e s o v e r t i m e , and a w i l l i n g n e s s t o a d a p t d e c i s i o n s t o smooth ou t s h o r t - t e r m c o n s e q u e n c e s w h i l e m a i n t a i n i n g l o n g e r t e r m o b j e c t i v e s . v) U n c e r t a i n t y - S i n c e t h e f u t u r e i s a l w a y s u n c e r t a i n , e v a l u a t i o n s c a n n e v e r r e a l l y be p r e d i c t i v e and h ence t h e outcome o f d e c i s i o n s c a n n e v e r r e a l l y be c e r t a i n ( H o l l i n g , 1 9 7 8 ) . U n c e r t a i n t y p e r v a d e s t h e e n t i r e d e c i s i o n - m a k i n g p r o c e s s . U n c e r t a i n t y c o n c e r n s f a c t o r s t h a t a r e n o t p r e d i c t a b l e and t h a t a f f e c t t h e s u c c e s s o f a c o u r s e o f a c t i o n (Quade, 1 9 8 2 ) . W h i l e u n c e r t a i n t y c a n n o t be removed, i t c e r t a i n l y can be i n t e r p r e t e d , c l a s s i f i e d , and even managed f o r . The l i t e r a t u r e i s r e p l e t e w i t h s t u d i e s e x a m i n i n g u n c e r t a i n t y i n t h e c o n t e x t o f d e c i s i o n a n a l y s i s ( H o l l i n g , 1978; H i c k l i n g 1975; Quade ( 1 9 8 2 ) . U n c e r t a i n t y and a r e l a t e d theme, 62 r i s k , w i l l be d i s c u s s e d i n g r e a t e r d e t a i l i n S e c t i o n 3.2.2. In summary, the process of making a d e c i s i o n , or d e c i d i n g to d e c i d e , i s a complex t a s k . I t r e q u i r e s a high standard of i n t e r p r e t a t i o n and judgement of m u l t i p l e a t t r i b u t e s and consequences of competing a l t e r n a t i v e s . In p r a c t i c e , l i m i t a t i o n s on r e s o u r c e s a v a i l a b l e to the d e c i s i o n makers and a n a l y s t o f t e n r e s u l t i n incomplete data, u n s p e c i f i e d assumptions, c o n f l i c t i n g value p r e f e r e n c e s and a host of other problems, a l l adding f u r t h e r u n c e r t a i n t y . I n e v i t a b l y , the d e c i s i o n maker must apply h i s best judgement to the most e x p l i c i t l y s t a t e d a v a i l a b l e mix of i n t u i t i v e , p o l i t i c a l and a n a l y t i c a l f a c t o r s . 3.2.I.E. M o n i t o r i n g and V e r i f i c a t i o n Once a d e c i s i o n has been implemented, the a f f e c t e d p a r t i e s may wish to v e r i f y the consequences. T h i s can be accomplished by comparison with p r e v i o u s l y c o l l e c t e d b a s e l i n e i n f o r m a t i o n , by e x p e r i m e n t a l s i m u l a t i o n , or by i n v e s t i g a t i v e a c t i v i t i e s of o u t s i d e p r o f e s s i o n a l a n a l y s t s . Problems that r e q u i r e a sequence of d e c i s i o n s and implementation phases may i n c o r p o r a t e f u t u r e m o n i t o r i n g and v e r i f i c a t i o n i n f o r m a t i o n i n t o the e v a l u a t i v e process p r e c e d i n g subsequent d e c i s i o n s . In s i t u a t i o n s of c o n s i d e r a b l e u n c e r t a i n t y , a c o n t i n u i n g c y c l e of m o n i t o r i n g , assessment and adapting, f u t u r e d e c i s i o n s to new i n f o r m a t i o n w i l l o c c u r . The e v a l u a t i o n stage of d ecisionmaking w i l l , i n such s i t u a t i o n s , become i n d i s t i n g u i s h a b l e from ongoing management. 63 3.2.2. UNCERTAINTY 3.2.2.A. D e f i n i t i o n U n c e r t a i n t y was i n t r o d u c e d i n t h e p r e c e d i n g s e c t i o n as an i n t e g r a l p a r t o f d e c i s i o n - m a k i n g p r o c e s s e s . U n c e r t a i n t y a r i s e s b e c a u s e o f d e f i c i t s i n k n o w l e d g e r e q u i r e d t o p r o d u c e c o r r e c t d e c i s i o n s . T h e r e f o r e , u n c e r t a i n t y c an be d e f i n e d as " t h e u n p r e d i c t a b i l i t i e s i n f a c t o r s t h a t a f f e c t t h e s u c c e s s o f a c o u r s e o f a c t i o n " (Quade, 1 9 8 2 ) . U n c e r t a i n t y i s i m p o r t a n t t o t h e d e c i s i o n maker p r i m a r i l y b e c a u s e i t c a n n o t be e l i m i n a t e d , and t h e r e f o r e i s d i f f i c u l t t o d e s i g n f o r , i n d e c i s i o n s t h a t have i m p l i c a t i o n s f o r t h e f u t u r e . Mack (1 9 7 1 ) has r e a s o n e d t h a t t h e l e v e l o f u n c e r t a i n t y d i r e c t l y a f f e c t s t h e a s p i r a t i o n l e v e l o f a d e c i s i o n — t h a t l e v e l o f f i n e s s e a p p r o p r i a t e t o a d e c i s i o n , s i n c e a h i g h l e v e l o f u n c e r t a i n t y r e d u c e s a v a i l a b l e c h o i c e s . U n c e r t a i n t y s h o u l d n o t be i g n o r e d i n t h e hope t h a t i t w i l l be i n c o n s e q u e n t i a l . The o n l y l o g i c a l t a c t t h e r e f o r e i s t o accommodate u n c e r t a i n t y by a n a l y z i n g i t s s o u r c e s , c l a s s i f y i n g i t s t y p e s , and d e v i s i n g management a p p r o a c h e s t o i n c o r p o r a t e i t i n t o t h e v a r i o u s s t a g e s o f e v a l u a t i o n and d e c i s i o n - m a k i n g . 3.2.2.B. U n c e r t a i n t y v s . R i s k At t h i s p o i n t i t w i l l be u s e f u l t o d i s t i n g u i s h u n c e r t a i n t y f r o m r i s k , as t h e y a r e o f t e n c o n f u s e d or u s e d i n t e r c h a n g e a b l y . R i s k s a r e t r a d i t i o n a l l y d e f i n e d as " s t o c h a s t i c u n c e r t a i n t i e s whose p r o b a b i l i t y d i s t r i b u t i o n s a r e 64 known" (Quade, 1982). Recent workers i n the growing f i e l d of r i s k - b e n e f i t a n a l y s i s have expanded t h i s d e f i n i t i o n to i n c l u d e s o c i e t a l p e r c e p t i o n s of r i s k . Thus r i s k can be c o n s i d e r e d as a product of the p r o b a b i l i t y of an event o c c u r r i n g , and the p e r c e i v e d s e v e r i t y of each event (Wilson and Crouch, 1982). L i k e u n c e r t a i n t y , r i s k s cannot be e l i m i n a t e d . The o b j e c t i v e of a s s e s s i n g r i s k s t h e r e f o r e , i s to minimize the p o t e n t i a l occurrence of n e g a t i v e consequences of d e c i s i o n s . Understanding of ways to reduce r i s k can be accomplished by r i g o r o u s a n a l y s i s and e x t r a p o l a t i o n of h i s t o r i c a l data where the c l a s s e s of r i s k are w e l l known, and by h i s t o r i c a l analogy and model development where r i s k s have no h i s t o r i c a l precedent (Wilson and Crouch, 1982). The common causes of u n c e r t a i n t y i n r i s k a n a l y s i s are incomplete or i n a c c u r a t e raw d a t a , ignorance about causes and e f f e c t , and value judgements on r i s k and e q u i t y (Ramsay, 1981). 3.2.2.C. Kinds of U n c e r t a i n t y U n c e r t a i n t y can be c l a s s i f i e d i n t o three k i n d s based on the r e s p e c t i v e sources ( H i c k l i n g , 1975). The f i r s t of these i s u n c e r t a i n t y i n the o p e r a t i n g environment, r e s u l t i n g from i n a d e q u a c i e s i n i n f o r m a t i o n to be used f o r q u a n t i t a t i v e or q u a l i t a t i v e comparison. The second i s u n c e r t a i n t y about p o l i c y values r e s u l t i n g from u n c l e a r , u n s p e c i f i e d o.r c o n f l i c t i n g o b j e c t i v e s . The o b j e c t i v e h i e r a r c h y approach d i s c u s s e d i n d e t a i l by Keeney and R a i f f a (1976), which was i n t r o d u c e d i n the preceding s e c t i o n , i s s p e c i f i c a l l y aimed at r e d u c i n g t h i s k i n d 65 o f u n c e r t a i n t y . The f i n a l k i n d o f u n c e r t a i n t y c o n c e r n s c h o i c e s i n r e l a t e d a r e a s o f d e c i s i o n . T h i s a r i s e s f r o m t h e o b v i o u s need t o c o n s t r a i n a p r o b l e m a r e a a t t h e e x p e n s e o f n o t e x p l i c i t l y i n c l u d i n g i n t e r r e l a t e d a r e a s and f u t u r e d e c i s i o n s o u t s i d e t h e d e c i s i o n e n v i r o n m e n t t h a t may a l t e r t h e c o n s e q u e n c e s or a s p i r a t i o n l e v e l o f t h e d e c i s i o n s a t h a nd. 3.2.2.D. D e a l i n g W i t h U n c e r t a i n t y S i n c e u n c e r t a i n t y c a n n o t be i g n o r e d , t h e r e a r e two methods o f d e a l i n g w i t h i t ; one way i s t o a c c e p t and r e s o l v e i t t h r o u g h a v a r i e t y o f management a p p r o a c h e s . The s e c o n d method i s t o r e d u c e i t by f o r m u l a t i n g a scheme o r c o n t i n g e n c y p l a n t h a t makes u n c e r t a i n t y i n c o n s e q u e n t i a l ( H i c k l i n g , 1975; Quade, 1 9 8 2 ) . I f u n c e r t a i n t y i s a c c e p t e d , t e c h n i q u e s s u c h as r i s k a n a l y s i s , s u r p r i s e l i m i t s a n a l y s i s , and t h e B a y e s i a n a p p r o a c h t o d e c i s i o n a n a l y s i s ( a n a l y s i s o f j u d g e m e n t a l p r o b a b i l i t i e s ) c a n be u t i l i z e d t o h e l p u n d e r s t a n d t h e r e l a t i o n s h i p s o f u n c e r t a i n t y t o t h e d e c i s i o n p r o b l e m . I d e a l l y , s o l u t i o n s w i l l e x h i b i t t r a i t s o f a d a p t i v e n e s s : t h e a b i l i t y t o c h ange and keep o p t i o n s open; and, r o b u s t n e s s , t h e l a c k o f s e n s i t i v i t y t o o u t s i d e i n f l u e n c e ( H i c k l i n g , 1 9 7 5 ) . S i n c e i n s t i t u t i o n s and i n d i v i d u a l s can o n l y l i v e s u c c e s s f u l l y w i t h u n c e r t a i n t y by m a i n t a i n i n g an a b i l i t y t o r e s p o n d t o change,, management t e c h n i q u e s must be c a p a b l e o f improvement t h r o u g h e x p e r i e n c i n g u n c e r t a i n t y ( H o l l i n g , 1 9 7 8 ) . I f e f f o r t s t o d e a l w i t h u n c e r t a i n t y a r e d i r e c t e d a t 66 a t t e m p t s t o r e d u c e i t , t h e t h r e e k i n d s o f u n c e r t a i n t y o u t l i n e d a bove must be e x a m i n e d i n d e t a i l by e s t a b l i s h i n g a h i e r a r c h y o f d i s a g g r e g a t e d component p a r t s . T e c h n i q u e s s u c h as c o s t - e f f e c t i v e n e s s and s e n s i t i v i t y a n a l y s i s c a n t h e n be a p p l i e d . A c h e c k l i s t s u c h as t h a t o u t l i n e d by Mack (1971) can be a u s e f u l p r o c e d u r e f o r i t e m i z i n g t h e t y p e s o f u n c e r t a i n t y t o be r e d u c e d . Whatever t e c h n i q u e i s c h o s e n , t h e p r i m a r y b e n e f i t w i l l l i e i n c o n v e y i n g a b e t t e r u n d e r s t a n d i n g o f u n c e r t a i n t y s u c h t h a t b e t t e r d e c i s i o n s a r e a p p r o a c h a b l e . 3.3. MULTIPLE OBJECTIVES AND EVALUATION DESIGN 3.3.1. I n t e r e s t Group P e r s p e c t i v e s and A p p r o a c h e s t o E n e r g y P r o j e c t E v a l u a t i o n I n any m u l t i p l e - i n t e r e s t d e c i s i o n - m a k i n g e n v i r o n m e n t , t h e r e must be an e x p l i c i t r e c o g n i t i o n o f t h e m a j o r i n t e r e s t g r o u p s r e p r e s e n t e d , and t h e i r p r i n c i p a l o b j e c t i v e s . T h i s p r o v i d e s i n f o r m a t i o n f o r t h e a n a l y s t a b o u t t h e s c o p e o f v a l u e s t h a t i n f l u e n c e d e c i s i o n - m a k i n g . However, s i n c e i t i s g e n e r a l l y i m p o s s i b l e t o o p t i m i z e m a j o r i n t e r e s t g r o u p o b j e c t i v e s s i m u l t a n e o u s l y , as Keeney and R a i f f a ( 1 9 7 6 ) , and Quade (1982) have p o i n t e d o u t , a l o g i c a l a p p r o a c h i s t o i d e n t i f y key o b j e c t i v e f u n c t i o n s f o r w h i c h i t i s p o s s i b l e t o p r o v i d e c r i t i c a l i n f o r m a t i o n i n a r e a s o f g r e a t e s t u n c e r t a i n t y t o h e l p d i s t i n g u i s h between a l t e r n a t i v e s ( M c A l l i s t e r , 1 9 8 0 ) . T y p i c a l l y , f o r e n e r g y r e s o u r c e a l l o c a t i o n i s s u e s , a 67 m u l t i t u d e o f s o c i e t a l and p r i v a t e p r e f e r e n c e s and o b j e c t i v e s a r e d i s c e r n i b l e . F o r example, s o c i a l o b j e c t i v e s w i l l r o u t i n e l y i n t e r n a l i z e q u e s t i o n s o f e q u i t y and d i s t r i b u t i o n s u c h as t h o s e r e l a t e d t o e n v i r o n m e n t a l c o s t s , as p a r t o f e c o n o m i c e f f i c i e n c y , w h i l e p r i v a t e o b j e c t i v e s o f a r e s o u r c e c o r p o r a t i o n w i l l be c o n c e r n e d w i t h t h e s e q u e s t i o n s o n l y as e x t e r n a l c o n s t r a i n t s on m a x i m i z a t i o n o f i n v e s t m e n t r e t u r n . I t f o l l o w s t h e r e f o r e , t h a t t h e i n f o r m a t i o n n e e d s o f g r o u p s w i l l d i f f e r , and so t o o w i l l t h e c o r r e s p o n d i n g a n a l y t i c a l t e c h n i q u e s u s e d t o measure t h e e f f e c t i v e n e s s o f a l t e r n a t e d e c i s i o n s a g a i n s t o b j e c t i v e s . E n e r g y p r o j e c t e v a l u a t i o n s have a t t a i n e d w i d e s p r e a d p r o m i n e n c e i n s o c i e t y d u r i n g t h e l a s t d e c a d e as h e i g h t e n e d a w a r e n e s s o f e n e r g y ' s r o l e i n t h e f u n c t i o n i n g o f e c o n o m i e s emerged f o l l o w i n g t h e A r a b o i l embargo o f 1973. The r e s o l u t i o n o f e n e r g y p r o b l e m s , w h e t h e r o f i n d i v i d u a l o r n a t i o n a l s c a l e , must now be c o n s i d e r e d i n r e l a t i o n t o t h e c o n s t r a i n t s , i n f l u e n c e s , and v a l u e t r a d e - o f f s o f c o m p l e x l y i n t e r t w i n e d e c o n o m i c , s o c i a l , e n v i r o n m e n t a l and p o l i t i c a l s y s t e m s ( E d e n e_t a l , 1 9 8 1 ) . I n B r i t i s h C o l u m b i a , t h e U t i l i t i e s C o m m i s s i o n A c t ' s E n e r g y P r o j e c t R e view P r o c e s s i s an example where c o m p r e h e n s i v e a n a l y s i s o f a p r o j e c t i s b r o u g h t i n t o t h e p o l i t i c a l a r e n a when l a r g e p r o d u c e r s o r c o n s u m e r s o f e n e r g y a r e i n v o l v e d . E n e r g y s u p p l y i s s u e s f o r e c o n o m i c d e v e l o p m e n t i n n o r t h w e s t e r n B.C. c o n t a i n e l e m e n t s o f a l l th.e f o r e g o i n g . E v a l u a t i n g e n e r g y s u p p l y o p t i o n s a v a i l a b l e t o m i n i n g t h u s i n v o l v e s c o n s i d e r a t i o n o f a v a r i e t y o f o b j e c t i v e s and t h e t r a d e - o f f s t h e y i m p l y . . R e s o u r c e use p r e f e r e n c e s o f c o r p o r a t e , 68 government, n a t i v e and d i v e r s e r e s i d e n t and n o n - r e s i d e n t c i t i z e n groups i d e n t i f i e d i n S e c t i o n 2.3 p r o v i d e the presen t framework w i t h i n which o b j e c t i v e s and t r a d e - o f f s w i l l be i n v e s t i g a t e d . At the p r e l i m i n a r y e v a l u a t i o n l e v e l examined h e r e i n , e f f e c t i v e r e p r e s e n t a t i o n of the v a r i e t y of o b j e c t i v e s determined f o r each p r e f e r e n c e group i s best a c h i e v e d by c o n c e n t r a t i n g on areas of c r i t i c a l i n f o r m a t i o n , and i d e n t i f y i n g the r e s p e c t i v e key e v a l u a t i v e c r i t e r i a f o r energy p r o j e c t a p p r a i s a l c o r r e s p o n d i n g to these p r e f e r e n c e groups. For p r a c t i c a l purposes, o b j e c t i v e s can be combined i n t o a number of groups to which i t i s p o s s i b l e to a s s i g n s p e c i f i c e v a l u a t i o n approaches. Each e v a l u a t i o n approach r e p r e s e n t s a s p e c i a l i z e d a p p l i c a t i o n of decisionmaking elements i n t r o d u c e d i n the f i r s t p a r t of t h i s c h a p t e r . The f o l l o w i n g f o u r - p a r t c l a s s i f i c a t i o n based on g e n e r a l i z e d i n t e r e s t group o b j e c t i v e s i s proposed. 1) Mining C o r p o r a t i o n s - T h i s group r e f l e c t s the re s o u r c e development end member of the range of res o u r c e use p r e f e r e n c e s . For the present problem area i t i s r e p r e s e n t e d by a mining company p e r s p e c t i v e . The p r i n c i p a l o b j e c t i v e of a c o r p o r a t i o n engaged i n the mining i n d u s t r y i s to c r e a t e investments t h a t p r o v i d e a p o s i t i v e r e t u r n to s h a r e h o l d e r s e q u i t y . Energy supply i s but one co s t f a c t o r of a mining endeavour. Mining c o r p o r a t i o n s w i l l be concerned p r i m a r i l y with c r i t e r i a r e l a t e d to p r o j e c t f e a s i b i l i t y from a standard t e c h n i c a l and busi n e s s a s p e c t . T h i s i s commonly r e f e r r e d to as 6 9 an e n g i n e e r i n g e v a l u a t i o n . 2) S o c i e t a l I n t e r e s t s - T h i s g r o u p r e f l e c t s a b r o a d r a n g e o f s o c i e t a l p r e f e r e n c e s . I t d i f f e r s f r o m Group 1 by a b r o a d e r i n c l u s i o n o f human and e n v i r o n m e n t a l w e l f a r e c o n c e r n s i n t o t h e p r o c e s s o f e n e r g y p r o j e c t e v a l u a t i o n . S p e c i f i c a l l y i n c l u d e d a r e n a t i v e and n o n - n a t i v e n o r t h e r n r e s i d e n t s whose l i v e s and e n v i r o n m e n t a r e a p t t o be t r a n s f o r m e d by e l e c t r i c a l g e n e r a t i o n p r o j e c t s . They w i l l be v i t a l l y c o n c e r n e d w i t h a s s e s s i n g t h e b e n e f i t s / c o s t s , t i m i n g and s c a l e o f s u c h t r a n s f o r m a t i o n s . A t r a d i t i o n a l s o c i a l / b e n e f i t c o s t a n a l y t i c a l f r a m ework w i l l t h u s be ex a m i n e d as an e n e r g y p r o j e c t e v a l u a t i o n t e c h n i q u e f o r t h e s e s o c i a l c o n c e r n s . 3) P u b l i c E n e r g y P o l i c y I n t e r e s t s - A c o l l e c t i v e d e s i r e by s o c i e t y t o m a i n t a i n a h i g h q . u a l i t y o f l i f e has m a n i f e s t e d i t s e l f i n p u b l i c p o l i c i e s c o n c e r n e d w i t h e n e r g y f u t u r e s . A l t h o u g h e n e r g y p r o j e c t s o f t h e s c a l e c o v e r e d by t h i s s t u d y a r e i n s i g n i f i c a n t f r o m a p r o v i n c i a l and n a t i o n a l p e r s p e c t i v e , t h e i r c u m u l a t i v e e f f e c t u r g e s a s s e s s m e n t i n r e l a t i o n t o b r o a d e r p r o v i n c i a l o r n a t i o n a l e n e r g y p o l i c y . A c o n c e p t u a l b a s i s f o r e n e r g y p o l i c y i s i n t r o d u c e d and key o b j e c t i v e s and e v a l u a t i v e c r i t e r i a i d e n t i f i e d . O b j e c t i v e s and c r i t e r i a a r e i m p o r t a n t t o a wide r a n g e o f r e s o u r c e use i n t e r e s t s b o t h w i t h i n and o u t s i d e t h e r e g i o n . T h i s o b j e c t i v e s e t c a n be r e g a r d e d as a s p e c i a l i z e d s u b s e t o f ( 2 ) . 4) I n s t i t u t i o n a l I n t e r e s t s - T h i s g r o u p r e p r e s e n t s r e s o u r c e use p r e f e r e n c e s r e l a t e d t o government and o t h e r i n s t i t u t i o n a l o b j e c t i v e s . They o v e r l a p many o f ( 1 ) , ( 2 ) , and 70 ( 3 ) a b o v e , but a r e a d d i t i o n a l l y m a n i f e s t e d i n l e g a l , r e g u l a t o r y , and f i n a n c i a l c o n s t r a i n t s and r e q u i r e m e n t s . T h e s e a r e i m p o r t a n t as t h e y r e p r e s e n t c o s t s t o t h e p r o p o n e n t and s a f e g u a r d s t o s o c i e t y w h i c h i n f l u e n c e t h e a t t a i n m e n t o f t h e i r r e s p e c t i v e o b j e c t i v e s . T h i s a s p e c t o f e n e r g y p r o j e c t e v a l u a t i o n i s r e v i e w e d p r i m a r i l y f r o m t h e p e r s p e c t i v e o f t h e p r o j e c t d e v e l o p e r i n t e r m s o f c o n s t r a i n t s on t h e p r o j e c t w h i c h a r e l i k e l y t o be e x p e r i e n c e d . Once a g a i n , i n s t i t u t i o n a l o b j e c t i v e s a r e r e a l l y a s p e c i a l i z e d s u b s e t o f ( 2 ) . G r o u p s 1 t o 4 a r e r e v i e w e d i n t h e f o l l o w i n g s e c t i o n s . One a s p e c t t o be n o t e d , i s t h a t w h i l e t h e r e a r e o b v i o u s o v e r l a p s i n t e c h n i q u e s and c r i t e r i a o f e v a l u a t i o n , t h e d i s c u s s i o n s have a d o p t e d a somewhat n a r r o w e d v i e w f o r e a c h o b j e c t i v e s e t . The r e a s o n f o r t h i s i s t o h e i g h t e n t h e r e a l and a p p a r e n t d i s s i m i l a r i t i e s . Thus f o r e x a m p l e , w h i l e b o t h e n g i n e e r i n g p r o j e c t a n a l y s i s and s o c i a l / b e n e f i t c o s t a n a l y s i s u t i l i z e f o r m s o f b e n e f i t / c o s t a n a l y s i s d e r i v e d f r o m t h e same b a s i c c o n c e p t s , t h e way i n w h i c h t h e t e c h n i q u e i s a p p l i e d d i f f e r s as a r e s u l t o f c o n t r a s t i n g o b j e c t i v e s and v a l u e s o f t h e p r i v a t e f i r m and g o v e r n m e n t s . 3.3.1.A. E n g i n e e r i n g E v a l u a t i o n i ) I n t r o d u c t i o n t o T e c h n i q u e A m i n i n g company engaged i n t h e d e v e l o p m e n t o f a m i n e r a l d e p o s i t i s c o n c e r n e d w i t h t h e e v a l u a t i o n o f numerous components, i n c l u d i n g m i n i n g , m i l l i n g , t r a n s p o r t a t i o n , h o u s i n g , 71 and e n e r g y s u p p l y . The p u r p o s e o f t h i s s e c t i o n i s t o r e l a t e t h e c o r p o r a t e a p p r o a c h t o e v a l u a t i o n o f t h e e n e r g y s u p p l y component. The s t a n d a r d e n g i n e e r i n g a p p r o a c h t o e n e r g y p r o j e c t i n v e s t m e n t has as i t s p r i m e o b j e c t i v e t h a t o f p r o d u c i n g maximum o u t p u t o f e l e c t r i c power of optimum q u a l i t y by t h e most e c o n o m i c a l l y f e a s i b l e method w i t h i n p r e d e t e r m i n e d d e s i g n p a r a m e t e r s . O s s e n b r u g g e n ( 1 9 8 4 ) o u t l i n e s t h r e e i m p o r t a n t i n v e s t m e n t f a c t o r s t o c o n s i d e r : F i r s t , t h e s e l e c t i o n p r o c e s s i s c o m p e t i t i v e , and n o t a l l o p p o r t u n i t i e s a r e w o r t h y o f i n v e s t m e n t . S e c o n d , t h e r e a r e r i s k s t h a t must be c o n s i d e r e d . T h i r d , t h e a n t i c i p a t e d e a r n i n g s o r b e n e f i t s a r e n o t r e c e i v e d a t t h e t i m e o f t h e e x c h a n g e o f money but a r e r e c e i v e d a t a l a t e r t i m e . The c e n t r a l i s s u e s i n v o l v e d i n p r o j e c t e v a l u a t i o n t h e r e f o r e r e l a t e t o t e c h n i c a l and d e s i g n f e a s i b i l i t y and e n g i n e e r i n g economy. The f o l l o w i n g s t e p s a r e t y p i c a l f o r e v a l u a t i o n o f a l t e r n a t e e n e r g y p r o j e c t s d e s t i n e d t o s e r v e r e m o t e l o a d c e n t r e s s u c h as m i n i n g d e v e l o p m e n t s ( E n e r g y , M i n e s and R e s o u r c e s C a n a d a , 1 9 8 0 ) . A t t h e p r e l i m i n a r y o r r e c o n n a i s s a n c e l e v e l where l i m i t a t i o n s o f t i m e and r e s o u r c e s e n t e r t h e e v a l u a t i o n , however, t h e a n a l y s t must make use o f a s m a l l e r number o f c r i t i c a l t e c h n i c a l d e c i s i o n s . 1) S t u d y d e f i n i t i o n s and p r o c e d u r e e s t a b l i s h e d 2) C o n c e p t u a l p l a n n i n g and b a s i c d a t a c o l l e c t i o n 3) D e t a i l e d p l a n n i n g 4) C o s t e s t i m a t i o n 72 5) E c o n o m i c a n a l y s i s 6) C o m p a r i s o n o f a l t e r n a t i v e s 7) D e c i s i o n and i m p l e m e n t a t i o n o r . . . 8) P r o c e e d t o n e x t l e v e l o f d e t a i l The b a s i c i n f o r m a t i o n needs t o c o m p l e t e s t e p s 2 t h r o u g h 6, a t t h e r e c o n n a i s s a n c e l e v e l a r e d i s c u s s e d b e l o w . S t e p 2. C o n c e p t u a l P l a n n i n g and B a s i c D a t a C o l l e c t i o n . Once t h e s c o p e o f t h e e n g i n e e r i n g p r o j e c t has been d e f i n e d and t h e t i m i n g and r e l a t i o n s h i p s t o o t h e r p r o j e c t s have been a s s e s s e d , i t i s p o s s i b l e t o p r o c e e d t o t h e c o n c e p t u a l p l a n n i n g and b a s i c d a t a c o l l e c t i o n s t a g e . At t h e end o f t h i s s t a g e t h e a n a l y s t hopes t o have i d e n t i f i e d t h o s e a l t e r n a t i v e s w h i c h a r e c o m m e r c i a l l y f e a s i b l e and f o r w h i c h c o s t c o m p a r i s o n s can be f o r m u l a t e d . T h e r e a r e e s s e n t i a l l y f o u r s t e p s t o c o n s i d e r . i ) A l t e r n a t i v e s e l e c t i o n - I d e n t i f y a l t e r n a t i v e s f o r e x a m i n a t i o n a t a p r e l i m i n a r y l e v e l o f d e t a i l . T h i s s e l e c t i o n i s b a s e d p r i m a r i l y on t e c h n o l o g y a s s e s s m e n t and e n e r g y r e s o u r c e a v a i l a b i l i t y . O n l y c o m m e r c i a l l y a v a i l a b l e t e c h n o l o g i e s c an be compared e q u a l l y ( O s s e n b r u g g e n , 1 9 8 4 ) . I f t h e majo r p r o j e c t ( m i n e ) becomes d e f e r r e d , a d v a n c e d e n e r g y s u p p l y t e c h n o l o g i e s may be p r o g r e s s i v e l y c o n s i d e r e d . i i ) P h y s i c a l e n v i r o n m e n t f o r p r o j e c t s i t i n g - D e t e r m i n e t h e p h y s i c a l e n v i r o n m e n t o f t h e p r o p o s e d e n e r g y p r o j e c t , i n c l u d i n g g e o g r a p h y , c l i m a t e , h y d r o l o g y , g e o t e c h n i c a l , l e v e l o f c e r t a i n t y o f r e s o u r c e s u p p l y . D e t e r m i n e t h e p r e l i m i n a r y n a t u r e 73 o f any c o n s t r a i n t s , i n c l u d i n g e n v i r o n m e n t a l , t o a s c e r t a i n t h e l i k e l y c o s t s o f m i t i g a t i o n d e s i g n r e q u i r e m e n t s . i i i ) L o a d demand and g r o w t h - R e f i n e t h e o v e r a l l p r o j e c t e l e c t r i c a l demand and e s t i m a t e t h e p o t e n t i a l f o r l o a d g r o w t h . D e t e r m i n e t h e p o t e n t i a l n a t u r e o f w a s t e p r o c e s s h e a t r e c o v e r y o r o t h e r e f f i c i e n c y e n h a n c e m e n t s . i v ) P r e l i m i n a r y d e s i g n - On t h e b a s i s o f t h e f o r e g o i n g a s s e s s m e n t s and d a t a , t h e a n a l y s t c a n p l a n t h e p r e l i m i n a r y d e s i g n o f c i v i l e n g i n e e r i n g f e a t u r e s f o r t h e v a r i o u s a l t e r n a t i v e s . M a j o r components a r e a c c e s s and s i t e p r e p a r a t i o n , c i v i l , m e c h a n i c a l , and e l e c t r i c a l s t r u c t u r e s , o p e r a t i o n and m a i n t e n a n c e r e q u i r e m e n t s . F o r t e c h n o l o g i e s n o t y e t p r o v e n c o m m e r c i a l , c r i t i c a l i n f o r m a t i o n n e e d s i n t h e s e a r e a s c a n be i d e n t i f i e d . S t e p 4. C o s t E s t i m a t i o n C o s t e s t i m a t i o n o f p r e l i m i n a r y d e s i g n components i s f a c i l i t a t e d by j u d i c i o u s r e f e r e n c e t o s t a n d a r d e n g i n e e r i n g c o s t c u r v e s and c o m p a r i s o n t o s i m i l a r i n - s e r v i c e p r o j e c t s . M a j o r c o s t components v a r y f o r d i f f e r e n t e l e c t r i c a l power p r o d u c t i o n t e c h n o l o g i e s — a s a c o m p a r i s o n o f g e o t h e r m a l c o s t s ( R o b e r t s , 1978) and h y d r o e l e c t r i c c o s t s ( C h e n , 1979) d e m o n s t r a t e — s o t h e s e d i f f e r e n c e s and any a s s u m p t i o n s must be n o t e d . G e n e r a l l y , f o r most p r o j e c t s , t h e s e components i n c l u d e : c a p i t a l i n v e s t m e n t i n p l a n t e q u i p m e n t and p o s s i b l y f u e l s t o r a g e o r e l e c t r i c i t y t r a n s m i s s i o n o p e r a t i n g c o s t , p e r s o n n e l and f u e l c o s t s ; m a i n t e n a n c e c o s t s i n c l u d i n g r e p l a c e m e n t e q u i p m e n t , 74 downtime v a l u e s , a c c e s s m a i n t e n a n c e ; i n t e r e s t on b o r r o w e d money, and e x t e r n a l management f e e s ; t a x e s , r e g u l a t o r y , l e g a l and p e r m i t t i n g c o s t s . At t h e c o n c l u s i o n o f t h i s e x e r c i s e a c o s t p r o f i l e r a n g e s h o u l d be a v a i l a b l e f o r e a c h a l t e r n a t i v e . S t e p 5. E c o n o m i c A n a l y s i s The d e s i r e d outcome o f an e c o n o m i c a n a l y s i s i s a measure o f t h e e c o n o m i c f e a s i b i l i t y o f an e n g i n e e r i n g p r o j e c t . I n g e n e r a l , a n a l y s e s a r e c a r r i e d o u t u s i n g t h e c o n c e p t s o f c a p i t a l and consumer t h e o r y and t i m e v a l u e o f money ( O s s e n b r u g g e n , 1 9 8 4 ) . S i n c e e n g i n e e r i n g p r o j e c t s and t h e i r e f f e c t s a r e o f t e n i n t r a c t a b l e , t h e a n a l y s t must have a means f o r d i r e c t c o m p a r i s o n o f a l l b e n e f i t s and c o s t s . The use o f m o n e t a r y v a l u e s s e r v e s t h i s r o l e . F u r t h e r m o r e , s i n c e c o s t s and b e n e f i t s o c c u r u n e q u a l l y o v e r t i m e , t h e a n a l y s t must c o n s i d e r t h e t i m e v a l u e o f money, n o r m a l l y by e s t a b l i s h i n g a d i s c o u n t r a t e . Some o f t h e more common methods u s e d t o c o n d u c t an e c o n o m i c a n a l y s i s i n c l u d e a v e r a g e a n n u a l r e t u r n , s i m p l e p a y b a c k p e r i o d , n e t p r e s e n t v a l u e , and d i s c o u n t e d c a s h f l o w ( J o h n s o n and B e n n e t t , 1 9 6 9 ) . Of t h e s e , n e t p r e s e n t v a l u e and d i s c o u n t e d c a s h f l o w methods a r e p a r t i c u l a r l y s u i t a b l e f o r m i n i n g - r e l a t e d e c o n o m i c a n a l y s i s b e c a u s e t h e y a c c o u n t f o r a t i m e s t r e a m o f a c t u a l c o s t s and b e n e f i t s and t h e t i m e r a t e .of money d e t e r m i n e d by t h e i n v e s t o r as an e x p r e s s i o n o f h i s r i s k p r e f e r e n c e , t o p e r m i t p r e s e n t v a l u e c a l c u l a t i o n s . S i m p l e p a y b a c k i s l e s s i n f o r m a t i v e b e c a u s e i t i g n o r e s c o s t s , b e n e f i t s , and t i m e v a l u e 75 o f money be y o n d a p o i n t i n t h e p r o j e c t ' s l i f e where t h e i n i t i a l i n v e s t m e n t i s r e c o u p e d . The f i n a n c i a l i n g r e d i e n t s o f an a n a l y s i s i n c l u d e : a measure o f t h e i n i t i a l i n v e s t m e n t , d i s c o u n t e d t i m e s t r e a m o f o p e r a t i n g c o s t s , d i s c o u n t e d t i m e s t r e a m o f a n t i c i p a t e d r e v e n u e s and d i s c o u n t r a t e p r e f e r e n c e s o f i n v e s t o r s . T h i s l i s t i s g r e a t l y o v e r s i m p l i f i e d and f u r t h e r m o r e w i l l be s u b j e c t t o u n c e r t a i n t y i n a t l e a s t t h e f o l l o w i n g c a t e g o r i e s (Raymond, 1976; O'Hara, 1 9 8 0 ) : ( i ) U n c e r t a i n t y o v e r t h e g e o l o g i c a l c h a r a c t e r i s t i c s o f t h e o r e b o d y i n c l u d i n g g r a d e and d i s t r i b u t i o n o f m i n e r a l i z a t i o n , m i n i n g c h a r a c t e r i s t i c s o f o r e , and m e t a l l u r g i c a l p r o p e r t i e s o f o r e w h i c h d e t e r m i n e m e t a l r e c o v e r i e s . ( i i ) U n c e r t a i n t y o v e r f u t u r e c o s t s o f l a b o u r , e q u i p m e n t f o r mine e x p a n s i o n or r e p l a c e m e n t e q u i p m e n t , and e n v i r o n m e n t a l p r o g r a m s . ( i i i ) U n c e r t a i n t y o v e r f u t u r e e x p e c t e d r e v e n u e s a s s o c i a t e d w i t h p r o d u c t p r i c e s , s m e l t e r c o s t s , and g o v e r n m e n t t a x a t i o n . The f o r e g o i n g l i s t o f u n c e r t a i n t i e s u n d e r l i n e t h e i m p o r t a n c e o f e n g i n e e r i n g e c o n o m i c a n a l y s e s t o i n c r e a s i n g l y a c c o m o d a t e r i s k a s s e s s m e n t s . The l e v e l o f r i s k d e t e r m i n a t i o n and t o l e r a n c e i s v e r y o f t e n an a r b i t r a r y a p p r a i s a l by management w h i c h m a n i f e s t s i t s e l f i n a d j u s t m e n t o f t h e d i s c o u n t r a t e a p p l i e d t o t h e t i m e v a l u e o f money ( L e s s o , 1 9 8 2 ) . H i g h e r r i s k p e r c e p t i o n s a r e r e f l e c t e d i n h i g h e r d i s c o u n t r a t e s . S e n s i t i v i t y a n a l y s i s and Monte C a r l o s i m u l a t i o n a r e t e c h n i q u e s u s e d i n c r e a s i n g l y t o a s s e s s i n v e s t m e n t r i s k s f r o m a m o n e t a r y p e r s p e c t i v e ( H a r r i s ejt a_l, 1 9 7 1 ) . S i n c e t h e f o c u s o f t h e p r e s e n t s t u d y i s a n a l y s i s o f 76 energy supply p r o j e c t s , i t i s important to mention two commonly used standards of comparison. The f i r s t of these i s a gross investment c o s t per i n s t a l l e d u n i t of c a p a c i t y , r e p r e s e n t e d as d o l l a r s per k i l o w a t t - h o u r . The second common denominator i s r e f e r r e d to as a 'bus-bar' f i g u r e of energy c o s t expressed i n m i l l s per k i l o w a t t - h o u r ( m i l l s / k W h ) . (A m i l l r a t e charge of 10 mills/kWh i s e q u i v a l e n t to 1 cent per thousand watts of power consumed f o r one hour.) When both val u e s are low, economic d e s i r a b i l i t y of a p r o j e c t i s enhanced. Step 6. Comparison of A l t e r n a t i v e s On completion of the economic a n a l y s e s , i t i s hoped t h a t a l l p r o j e c t s , having been t r e a t e d e q u a l l y , can now be compared. The a n a l y s t a s p i r e s to have a c l e a r i n d i c a t i o n of e i t h e r : (a) the best c a n d i d a t e d e s i g n , or (b) a much narrower number of a l t e r n a t i v e s f o r f u r t h e r d e t a i l e d a n a l y s i s . Summary of Economic D e c i s i o n C r i t e r i a The f o l l o w i n g g e n e r a l i z e d c r i t e r i a r e f l e c t o v e r a l l economic d e s i r a b i l i t y and e f f i c i e n c y from an e n g i n e e r i n g p e r s p e c t i v e on energy p r o j e c t e v a l u a t i o n : i ) Low co s t per i n s t a l l e d c a p a c i t y i i ) Low annual energy c o s t i i i ) High r a t e of r e t u r n i v ) High system c a p a c i t y f a c t o r 77 v) I n f l a t i o n " r e s i s t a n t " fuels v i ) Favourable tax provisions v i i ) Well proven and r e l i a b l e technology with scope for design advancement at low cost 3.3.I.B. S o c i a l Benefit-Cost Analysis i ) Introduction to Technique Residents of northwestern B.C. have a d i f f e r e n t perception of a l l o c a t i n g l o c a l resources and the consequences of energy projects for mining than the private firms and residents who wish to see enhancement of mining and energy opportunities. For t h i s reason a s o c i a l perspective on the evaluation of energy projects requires a conceptual framework within which a broad range of market, non-market and subjective i n t e r e s t s can be appraised. S o c i a l benefit-cost analysis i s a widely used method purporting to formalize the process of evaluating alternate public and private actions with s o c i a l consequences (Treasury Board S e c r e t a r i a t , 1976; Hartle, 1979; Pearce, 1971; Pearce and Nash, 1981). The p r i n c i p a l objective of s o c i a l benefit-cost analysis i s to compare s o c i a l benefits and costs using monetary measures. Where monetary measures, also referred to as e f f i c i e n c y objectives by economists, are inappropriate, benefit-cost analysis o f f e r s opportunities to i d e n t i f y trade-offs between non-commensurable objectives, and a means by 78 which the degree of objective attainment can be assessed (Treasury Board Se c r e t a r i a t , 1976). The following discussion w i l l review i n an abbreviated manner the "standard" approach to benefit-cost analysis as put forward by the Treasury Board Secretariat (1976). While their standard approach has evolved to encompass more ambitious attempts to incorporate intangible data, the author i s in agreement with Copp and Levy (1982) who argue that these well meaning ambitions d i s t o r t and decrease the u t i l i t y of the concept. The procedures of s o c i a l benefit-cost analysis are s i m i l a r to steps one through seven used by the business analyst as described in the previous section. E s s e n t i a l l y t h i s e n t a i l s estimating the expected rate of return of alternate investment opportunities by estimating and then discounting to the present, monetary flow of benefits and costs for these a l t e r n a t i v e s . The a l t e r n a t i v e selected exhibits the highest rate of return, net present value, benefit-cost r a t i o or other decision r u l e , given that t h i s rate or r a t i o exceeds that which i s obtainable from investing the funds elsewhere (Hartle, 1979). As s i m p l i f i e d as t h i s decision rule may seem, the use of discounted present value as c r i t e r i a for public investments can become mired by overuse of elaborate formulae and the analyst i s constantly urged to examine these- c r i t e r i a from a s i m p l i f i e d perspective (Mishan, 1980). Soc i a l benefit-cost analysis does have procedural differences from the business analyst's approach. Regarding 79 t h e p r e v i o u s l y o u t l i n e d s e v e n s t e p s , t h e s e d i f f e r e n c e s c o n c e r n a d d i t i o n a l e m p h a s i s p l a c e d on i d e n t i f i c a t i o n o f s o c i a l and p h y s i c a l c o n s t r a i n t s d u r i n g p l a n n i n g and c o n c e p t u a l i z i n g t h e p r o j e c t , and t h e q u a n t i f i c a t i o n o f a g r e a t e r r a n g e o f s o c i a l , e n v i r o n m e n t a l , and e x t e r n a l b e n e f i t s and c o s t s and g e n e r a l l y a g r e a t e r a t t e m p t a t n o t i n g t h e i r d i s t r i b u t i o n a l e f f e c t s . i i ) B a s i c T e n e t s S o c i a l b e n e f i t - c o s t a n a l y s i s i n c l u d e s t h e f o l l o w i n g b a s i c t e n e t s : a) R a t i o n a l c h o i c e f r o m a s o c i a l p e r s p e c t i v e u s e s a b r o a d e r d e f i n i t i o n f o r t h e c r i t e r i o n , e c o n o m i c e f f i c i e n c y , t h a n a p r i v a t e p e r s p e c t i v e . T h i s stems f r o m a s o c i a l d e s i r e t o m a x i m i z e human w e l f a r e and t h e r e f o r e c r i t e r i a must a d d i t i o n a l l y encompass a b r o a d r a n g e o f i n t a n g i b l e s s u c h as a m e n i t y or c u l t u r a l r e s o u r c e s . To i g n o r e t h i s s o c i a l v s . p r i v a t e d i s c r e p a n c y , r i s k s m i s a l l o c a t i o n o f r e s o u r c e s ( H a r t l e , 1 9 7 9 ) . b) S i n c e b e n e f i t - c o s t a n a l y s i s u s e s m o n e t a r y m e a s u r e s as a b a s i s f o r c o m p a r i s o n , n o n - m a r k e t goods v a l u e d by s o c i e t y must have i m p u t e d d o l l a r v a l u e s (shadow p r i c e s ) a s s i g n e d t o them ( T r e a s u r y B o a r d S e c r e t a r i a t , 1 9 7 6 ) . W i l l i n g n e s s t o pay i s a c r i t e r i o n u s e d t o e s t a b l i s h i m p u t e d v a l u e s a l t h o u g h c o m p a r i s o n w i t h t h e c r i t e r i o n o f minimum c o m p e n s a t i o n would seem p r u d e n t ( B a n f o r d , K n e t s c h , M a u s e r , 1 9 8 0 ) . c ) As t h e m a g n i t u d e o f i m p u t e d c o s t s and b e n e f i t s i n c r e a s e s r e l a t i v e t o m a r k e t c o s t s and b e n e f i t s , t h e a n a l y s i s w i l l be more s u b j e c t i v e and o f f e r l e s s c o n v i n c i n g g u i d a n c e t o 80 d e c i s i o n makers ( H a r t l e , 1 9 7 9 ) . d) . . . b e n e f i t - c o s t a n a l y s i s r a r e l y a c h i e v e s t h e i d e a l o f m e a s u r i n g a l l b e n e f i t s and c o s t s i n money t e r m s , and must t h e r e f o r e be a c c o m p a n i e d by i n d i c a t o r s o f t h e n o n - e f f i c i e n c y o b j e c t i v e s f o r d e c i s i o n - m a k i n g a t t h e p o l i t i c a l l e v e l . ( T r e a s u r y B o a r d S e c r e t a r i a t , 1976) i i i ) L i m i t a t i o n s o f t h e T e c h n i q u e s H a v i n g t h u s i n t r o d u c e d s o c i a l b e n e f i t - c o s t a n a l y s i s , t h e r e m a i n d e r o f t h e d i s c u s s i o n w i l l c o n c e n t r a t e on t h e common l i m i t a t i o n s o f t h e c o n c e p t and some c o n s i d e r a t i o n s f o r a p p l i c a t i o n t o e n e r g y p r o j e c t a n a l y s i s . The f o l l o w i n g p r o b l e m a r e a s p o t e n t i a l l y l i m i t t h e u s e f u l n e s s o f s o c i a l b e n e f i t - c o s t a n a l y s i s and t h e r e f o r e r e q u i r e s p e c i f i c a t t e n t i o n . a) V a l u e s - D e s p i t e t h e i n t e n t o f s o c i a l b e n e f i t c o s t - a n a l y s i s t o be o b j e c t i v e , w h i c h i m p l i e s somehow b e i n g v a l u e f r e e , t h e r e a r e t h r e e r e a s o n s f o r a c o n t r a r y v i e w . F i r s t , v a l u e s a r e i n c l u d e d o n l y when t h e y c a n be r e p r e s e n t e d i n t h e m a r k e t , and t h e r e f o r e n o n - m a r k e t v a l u e s a r e o m i t t e d . S e c o n d l y , a s o c i a l p e r s p e c t i v e t h a t e x t e n d s r a t i o n a l i t y i n d e c i s i o n - m a k i n g beyond e c o n o m i c e f f i c i e n c y must depend on ju d g e m e n t e x e r c i s e d by t h e a n a l y s t t o d e t e r m i n e t h e k i n d s and n a t u r e o f n o n - m a r k e t v a l u e s and t h e i r a p p r o p r i a t e d i s c o u n t r a t e s t o be i n c l u d e d i n t h e a n a l y s i s (Copp and L e v y , 1 9 8 2 ) . T h i r d l y , i m p u t e d v a l u e s f o r non - m a r k e t items., u s u a l l y r e f l e c t a n a l y s t ' s or c o n s u m e r ' s w i l l i n g n e s s t o pay b i a s . b) T r e a t m e n t o f Time - The c h o i c e o f an a p p r o p r i a t e d i s c o u n t r a t e i s v i t a l t o t h e a n a l y s i s as t h i s w i l l a f f e c t t h e 81 p r o f i l e of the stream of benefits and costs obtained unequally over time ( M c A l l i s t e r , 1980). The use of a high s o c i a l rate of discount w i l l tend to favour private business investments and short-term public programs. Conversely, the use of a low s o c i a l rate of discount w i l l increase the number of long-term c a p i t a l intensive projects and favour future generations. Arguments supporting higher or lower discount rates r e l a t e to economic perceptions of e f f i c i e n c y , and as Pearce and Nash (1981, p. 164) have pointed out, i s the subject of equivocal consensus for both present and future generations. A l o g i c a l approach i s to test the s e n s i t i v i t y of r e s u l t s to a range of discount rates (Treasury Board Se c r e t a r i a t , 1976, p. 26). c) Shadow Prices - Shadow prices are the imputed prices of a l l o c a t i v e benefits and costs determined i n the abscence of, or presence of d i s t o r t e d , market prices (Treasury Board Sec r e t a r i a t , 1976). The obvious d i f f i c u l t i e s stem from deciding whose values are to be used for assignment of shadow prices and i n the assessment of how far shadow prices have influenced benefit-cost analysis beyond standard non-shadow priced e f f i c i e n c y c r i t e r i a (Copp and Levy, 1982). d) Risk and Uncertainty - The conceptual basis for r i s k and uncertainty was outlined in section 3.2.2. Concerning r i s k , one standard approach i s to "'adjust' our decision rule in such a way that the cost of risk-bearing .(CRB) i s deducted from the expected value of the net s o c i a l benefit of the project" (Pearce and Nash, 1981, p. 69). The common way of accounting for th i s adjustment i s through a modified discount 82 r a t e ; a " r i s k y " d i s c o u n t r a t e i s h i g h e r t h a n a " r i s k - l e s s " d i s c o u n t r a t e . The c e n t r a l p r o b l e m o f u n c e r t a i n t y i n s o c i a l b e n e f i t - c o s t a n a l y s i s c o n c e r n s t h e d i f f i c u l t y o f a s s i g n i n g p r i c e s t o u n c e r t a i n e v e n t s whose p r o b a b i l i t i e s c a n n o t be d e t e r m i n e d . T h u s , t h e r e i s no g e n e r a l l y a c c e p t a b l e method o f f o r m a l l y t r e a t i n g u n c e r t a i n t y i n s o c i a l b e n e f i t - c o s t a n a l y s i s ( M c A l l i s t e r , 1 9 8 0 ) . M u l t i - c r i t e r i a d e c i s i o n - m a k i n g t e c h n i q u e s s u c h as s e n s i t i v i t y a n a l y s i s c a n t e s t t h e l i m i t s o f r i s k b u t c a n n o t e l i m i n a t e u n c e r t a i n t y . As a r e s u l t , key u n c e r t a i n t i e s a r e u l t i m a t e l y b e s t r e s o l v e d t h r o u g h t h e p o l i t i c a l p r o c e s s , a f t e r much a n a l y s e s . e) D i s t r i b u t i o n a l E f f e c t s - S o c i a l b e n e f i t - c o s t a n a l y s i s r e q u i r e s e x p l i c i t r e f e r e n c e t o t h e i m p o r t a n t d i s t r i b u t i o n a l e f f e c t s o f a l t e r n a t e p r o j e c t c o s t s and b e n e f i t s i n o r d e r t o gauge t h e d e g r e e t o w h i c h t h e p u b l i c ' s v a r y i n g o b j e c t i v e s have been r e a l i z e d . M o r e o v e r , d i s t r i b u t i o n a l e f f e c t s c o n n o t e e q u i t y , and e q u i t y i n c l u d e s f a i r n e s s t o f u t u r e g e n e r a t i o n s (Ramsay, 1 9 8 1 ) . The i n c l u s i o n o f t h e s e f a c t o r s i n t o t h e s t a n d a r d d e c i s i o n r u l e c r i t e r i a i s l e s s t h a n p e r s u a s i v e ( H a r t l e , 1 9 7 9 ) . f ) E x t e r n a l i t i e s - The c o n c e p t o f e x t e r n a l i t i e s was d e s c r i b e d i n S e c t i o n 3.3.1. In t h e c o n t e x t o f s o c i a l b e n e f i t - c o s t a n a l y s i s e x t e r n a l i t i e s c o n c e r n ."Costs or b e n e f i t s w h i c h do n o t c o n t r i b u t e t o t h e i n d i v i d u a l f i r m ' s or c o n s u m e r ' s d e c i s i o n s . . ." ( E d e n e_t a_l, 1981, p. 2 1 6 ) . The e x t e n t t o w h i c h e x t e r n a l i t i e s a r e i n c l u d e d i n t h e a n a l y s i s r e s t s w i t h t h e 83 method o f i m p u t i n g shadow p r i c e s . g) Summary - T h e r e a r e no " s p e c i a l " o r " m y s t e r i o u s " a p p l i c a t i o n s o f s o c i a l b e n e f i t - c o s t a n a l y s i s t o t h e e v a l u a t i o n o f e n e r g y p r o j e c t s . The main v i r t u e o f s o c i a l b e n e f i t - c o s t a n a l y s i s i n e n e r g y p r o j e c t a s s e s s m e n t s a t t h e r e c o n n a i s s a n c e l e v e l l i e s i n i t s c a p a c i t y t o a c c o u n t f o r and c l e a r l y e x p r e s s s o c i a l and e n v i r o n m e n t a l b e n e f i t s and c o s t s e x t e r n a l t o t h e c o n c e r n s o f t h e f i r m i n i t i a t i n g t h e e n e r g y p r o j e c t . I n d e e d s o c i a l b e n e f i t - c o s t a n a l y s i s i s c l e a r l y a p u b l i c d e c i s i o n - m a k i n g t o o l , p e r m i t t i n g a wide r a n g e o f p u b l i c p e r c e p t i o n s on r i s k , r e s o u r c e a l l o c a t i o n , and c o n s e q u e n c e s o f l i f e s t y l e c h a n g e s , f o r e x ample, t o g u i d e t h e c h o i c e o f a l t e r n a t e e n e r g y p r o j e c t s . A f i r m w i l l be a d v e r s e t o i n t e r n a l i z i n g t h e s e c o n c e r n s w i t h o u t an e x t e r n a l s o c i a l c o m p u l s i o n t o do s o , as any r e l a t e d c o s t s w i l l u n n e c e s s a r i l y d e t e r i o r a t e t h e p r o f i t a b i l i t y o f an i n v e s t m e n t . A l t e r n a t i v e s t h a t " f a i l " or " p a s s " t h e b u s i n e s s a n a l y s t ' s a p p r o a c h , but w h i c h have s i g n i f i c a n t s o c i a l v i r t u e , o r m a r g i n a l s o c i a l b e n e f i t r e s p e c t i v e l y , c a n be i d e n t i f i e d f o r f u r t h e r d e t a i l e d i n v e s t i g a t i o n . As a h y p o t h e t i c a l example o f t h e l a t t e r , t h e r e s u l t o f i n c l u d i n g s o c i a l o b j e c t i v e s i n t h e b e n e f i t - c o s t l e d g e r m i g h t c a u s e a l e s s t e c h n i c a l l y e f f i c i e n t and more l a n d use i n t e n s i v e e n e r g y t e c h n o l o g y t o be c o n s i d e r e d i n p r e f e r e n c e t o o t h e r a l t e r n a t i v e s i f g r e a t e r employment a n d e n h a n c e d m a n u f a c t u r i n g o p p o r t u n i t i e s were a f f o r d e d . Not a l l e x t e r n a l c o n s e q u e n c e s o f e n e r g y p r o j e c t s w i l l be q u a n t i f i a b l e i n a s o c i a l b e n e f i t c o s t a p p r o a c h , however t h e 84 t e c h n i q u e e n h a n c e s t h e p r e c i s i o n w i t h w h i c h t h e y a r e i d e n t i f i e d ; t h e a n t i c i p a t e d n e t r e s u l t w i l l be b e t t e r i n f o r m e d p o l i t i c a l d e c i s i o n s . 3 . 3 . l . C . P u b l i c E n e r g y P o l i c y i ) C o n c e p t u a l B a s i s f o r P o l i c y The d r a m a t i c w o r l d r i s e i n t h e p r i c e o f p e t r o l e u m - d e r i v e d f u e l s i n t h e mid-1970's c a u s e d v i r t u a l l y e v e r y n a t i o n t o r e - e x a m i n e i t s l o n g - t e r m e n e r g y f u t u r e s . The C a n a d i a n s e l f - e x a m i n a t i o n has s h i f t e d g r a d u a l l y f r o m a p r e o c c u p a t i o n x w i t h p e t r o l e u m and n u c l e a r e n e r g y t o a more b a l a n c e d s t r a t e g y a d v o c a t i n g " m u l t i p l e - o p t i o n , r e g i o n a l l y o r i e n t e d e n e r g y s u p p l y " ( E n e r g y , M i n e s and R e s o u r c e s , 1976; 1977; D e p a r t m e n t o f t h e E n v i r o n m e n t , 1 9 8 2 ) . T h r o u g h o u t , t h e C a n a d i a n g o a l o f e n e r g y s e l f - r e l i a n c e has been paramount ( E n e r g y , M i n e s and R e s o u r c e s , 1976; S c i e n c e C o u n c i l o f C a n a d a , 1 9 7 9 ) . I n c o m p a r i s o n , t h e g o a l o f s e l f - s u f f i c i e n c y has e v o k e d c o n s i d e r a b l e p u b l i c d e b a t e ( R o s s , 1980; M c N i c h o l a s , 1980; G o r b e t , 1980; Swain e t a l , 1 9 7 9 ) . S t a t e d p r o v i n c i a l o b j e c t i v e s i n g e n e r a l have m i r r o r e d n a t i o n a l g o a l s as i l l u s t r a t e d by t h e f o l l o w i n g B r i t i s h C o l u m b i a M i n i s t r y o f E n e r g y , M i n e s and P e t r o l e u m R e s o u r c e s ' (1980) e n e r g y p o l i c y s t a t e m e n t . E n e r g y s e c u r i t y i s t h e f u n d a m e n t a l o b j e c t i v e o f B r i t i s h C o l u m b i a ' s e n e r g y p o l i c y . E n e r g y s e c u r i t y means t h a t s u f f i c i e n t e n e r g y i s a v a i l a b l e t o meet o u r d e m a n d s — a t a l l t i m e s , a t f a i r m a r k e t p r i c e s , and w i t h as l i t t l e v u l n e r a b i l i t y t o e x t e r n a l f o r c e s as p o s s i b l e . I t i s a l s o t h e aim o f t h e G o v e r n m e n t ' s p o l i c y t o 85 a c h i e v e e n e r g y s e c u r i t y i n a c c o r d a n c e w i t h t h e p r i o r i t i e s o f i t s o v e r a l l s o c i a l and e c o n o m i c p o l i c y : i n c r e a s i n g s t a b i l i t y , employment and income g r o w t h , m a i n t a i n i n g h i g h s t a n d a r d s o f e n v i r o n m e n t a l q u a l i t y , and b a l a n c i n g r e g i o n a l d e v e l o p m e n t . C l e a r l y t h e i n s e p a r a b l e l i n k between t h e d e v e l o p m e n t o f e n e r g y r e s o u r c e s , a t any s c a l e , and t h e d e s i r e t o m a x i m i z e t h e e c o n o m i c and s o c i a l w e l l - b e i n g o f s o c i e t y w i l l be t h e g u i d i n g i m p e t u s o f f u t u r e e n e r g y p o l i c i e s . I n r e c e n t y e a r s , C a n a d i a n i n d u s t r y a c c o u n t e d f o r a b o u t 32 p e r c e n t o f n a t i o n a l e n e r g y use ( M i n i s t r y o f S t a t e S c i e n c e and T e c h n o l o g y , 1 9 8 2 ) . T h i s compares w i t h a b o u t 49 p e r c e n t o f B r i t i s h C o l u m b i a ' s e n e r g y b u d g e t b e i n g consumed by i n d u s t r y ( B r i t i s h C o l u m b i a E n e r g y C o m m i s s i o n , 1 9 7 8 ) . M i n i n g , as a m a j o r p a r t o f t h e p r o v i n c i a l i n d u s t r i a l economy, i s a c k n o w l e d g e d as one o f t h e more e n e r g y i n t e n s i v e s e c t o r s ( E n e r g y , M i n e s and R e s o u r c e s , 1976; J o e , 1979; M i n i s t r y o f E n e r g y , M i n e s and P e t r o l e u m R e s o u r c e s , 1 9 8 0 ) . I n 1979 f o r example, 62.46 p e t a j o u l e s ( P J ) , e q u i v a l e n t t o 15% o f i n d u s t r i a l and 7.3% o f P r o v i n c i a l c o n s u m p t i o n , were consumed by t h e m i n i n g and p r i m a r y m i n e r a l s i n d u s t r y ( M i n i s t r y o f E n e r g y , M i n e s and P e t r o l e u m R e s o u r c e s , 1 9 8 1 ) . G i v e n t h e m a g n i t u d e and e n e r g y i n t e n s i v e n a t u r e o f m i n i n g i t c a n be e x p e c t e d t h a t e n e r g y c o n s u m p t i o n a t newly d e v e l o p e d mines w i l l c o n t i n u e t o come un d e r p u b l i c s c r u t i n y t o a s s e s s w h e t h e r e n e r g y e c o n o m i c s and s u p p l y a r e c o n s i s t e n t w i t h t h e a s p i r a t i o n s o f p o l i t i c a l , and r e g i o n a l e n t i t i e s w i t h r e s p e c t t o s e c u r i t y o f e n e r g y s u p p l y , and b e t t e r m e n t o f s o c i a l w e l f a r e . 86 i i ) E v a l u a t i o n C r i t e r i a The c o r n e r s t o n e n a t i o n a l and p r o v i n c i a l e n e r g y p o l i c i e s a r e t h e c r i t e r i a f o r t h i s e v a l u a t i o n . P o l i c i e s p o t e n t i a l l y r e l e v a n t t o t h e e n e r g y s u p p l y s i t u a t i o n f o r m i n i n g i n n o r t h w e s t B.C. a r e l i s t e d b e l o w . i ) c a p i t a l i z e on i n d i g e n o u s e n e r g y r e s o u r c e s , i i ) e n c o u r a g e s u b s t i t u t i o n o f f o i l a t e x i s t i n g o i l - f i r e d e l e c t r i c a l g e n e r a t i o n f a c i l i t i e s , and f o r p e t r o l e u m f u e l b a s e d t r a n s p o r t a t i o n s y s t e m s , i i i ) e n c o u r a g e c o n s e r v a t i o n t h r o u g h e f f i c i e n t e n e r g y u s e , i . e . , c o g e n e r a t i o n , w a s t e h e a t r e c o v e r y , i v ) e n c o u r a g e use o f r e n e w a b l e e n e r g y t e c h n o l o g i e s , v) i n c r e a s e e f f i c i e n c y i n e n e r g y c o n v e r s i o n , t r a n s p o r t , s t o r a g e , m a t e r i a l s h a n d l i n g , and p r o c e s s i n g a c t i v i t i e s , v i ) expand r e s e a r c h and d e v e l o p m e n t o f more e f f i c i e n t and e n v i r o n m e n t a l l y b e n i g n e n e r g y c o n v e r s i o n t e c h n o l o g i e s , v i i ) e v a l u a t e t o t a l s y s t e m e f f i c i e n c i e s t h r o u g h an e n e r g y b a l a n c e f r a m e w o r k s u c h as n e t e n e r g y a n a l y s i s . i i i ) Summary The i m p l e m e n t a t i o n o f t h e s e p o l i c i e s f o r m i n i n g e n d e a v o u r s i n n o r t h w e s t B.C. w i l l be te m p e r e d by p r a c t i c a l c o n s t r a i n t s i m p o s e d by c l i m a t e , g e o g r a p h y , d u r a t i o n o f m i n i n g a c t i v i t i e s , r e m o t e n e s s , and e n v i r o n m e n t a l an-d s o c i a l u n c e r t a i n t i e s . M i n i n g c o m p a n i e s w i l l be v o l u n t a r i l y m o t i v a t e d t o p u r s u e e f f i c i e n t e n e r g y d e s i g n s b e c a u s e t h e need t o be s e l f - r e l i a n t w i l l have e f f e c t i v e l y i n t e r n a l i z e d many o f t h e 87 c o s t s o f e n e r g y p r o d u c t i o n . As w e l l , t h e p o t e n t i a l f e a s i b i l i t y o f new m ines c a n be r e g a r d e d as s e n s i t i v e t o e n e r g y c o s t s , s i n c e t h e s e now e x c e e d 13 p e r c e n t o f t o t a l p r o d u c t i o n c o s t s ( M i n i n g A s s o c i a t i o n o f B r i t i s h C o l u m b i a , 1 9 8 3 ) . An e x c e l l e n t example o f s u c h v o l u n t a r y m o t i v a t i o n i s t h e P o l a r i s Mine on L i t t l e C o r n w a l l i s I s l a n d i n t h e A r c t i c , where a t o t a l e n e r g y c o n c e p t u t i l i z i n g t h e e f f i c i e n c y c r i t e r i a o f maximum waste h e a t r e c o v e r y and optimum e q u i p m e n t r e l i a b i l i t y a t an i n t e g r a t e d m i n e / m i l l / s e t t l e m e n t complex a c h i e v e d maximum e f f i c i e n c y i n t e r m s o f e n e r g y i n p u t o f 96 p e r c e n t , d i s c o u n t i n g a u x i l i a r y power p l a n t s ( N i e l s e n , 1 9 8 4 ) . 3.3.I.D. I n s t i t u t i o n a l C o n s i d e r a t i o n s Many p u b l i c o b j e c t i v e s c o n c e r n i n g h e a l t h and e n v i r o n m e n t a l p r o t e c t i o n , s o c i a l e q u i t y , and management o f crown r e s o u r c e s a r e a t t a i n e d t h r o u g h g o vernment e n a c t e d l e g i s l a t i o n and c o r r e s p o n d i n g r e g u l a t i o n s . S e v e r a l r e c e n t s t u d i e s w h i c h i n v e s t i g a t e d t h e o p p o r t u n i t i e s f o r t h e p r i v a t e s e c t o r t o d e v e l o p s m a l l s c a l e e n e r g y p r o j e c t s i n B r i t i s h C o l u m b i a have c i t e d i n s t i t u t i o n a l u n c e r t a i n t i e s as p o t e n t i a l c o n s t r a i n t s t o p r o j e c t d e v e l o p m e n t ( N e v i n S a d l i e r - B r o w n G o o d b r a n d , 1981; Sigma E n g i n e e r i n g L i m i t e d , 1984; C r i p p e n C o n s u l t a n t s , 1 9 8 0 ) . The c r i t e r i a ( c o n s t r a i n t s ) f a l l i n t o two c a t e g o r i e s : g o v e rnment r e g u l a t i o n s and i n c e n t i v e s , and p r i v a t e f i n a n c i n g . . 88 i ) Government R e g u l a t i o n s and I n c e n t i v e s I n t h e f i r s t c a t e g o r y a r e i n c l u d e d r e g u l a t o r y a c t i v i t i e s p e r t a i n i n g t o a p p l i c a t i o n and p e r m i t t i n g o f e n e r g y p r o j e c t s , h e a l t h and s a f e t y s t a n d a r d s d u r i n g c o n s t r u c t i o n , o p e r a t i o n and m a i n t e n a n c e , d e s i g n s t a n d a r d s , and e n v i r o n m e n t a l p r o t e c t i o n . T a b l e V o u t l i n e s l e g i s l a t i o n w i t h p o s s i b l e i m p l i c a t i o n s f o r e n e r g y p r o j e c t s d e p e n d i n g on t h e t y p e o f p r o j e c t , i t s s c a l e , t i m i n g and s i t i n g . I t i s beyond t h e s c o p e o f t h e p r e s e n t s t u d y t o summarize e a c h p i e c e o f l e g i s l a t i o n ; t h e p o i n t i s t o i n d i c a t e t o t h e a n a l y s t t h e t y p e s o f l e g i s l a t i o n o f p o s s i b l e i m p o r t a n c e t o t h e p r e l i m i n a r y e v a l u a t i o n o f a l t e r n a t e p r o j e c t s . Government i n c e n t i v e s r e l a t e d t o power g e n e r a t i o n p r o j e c t s i n t h e p r i v a t e s e c t o r e x i s t a t b o t h t h e f e d e r a l and p r o v i n c i a l l e v e l . I n c e n t i v e s may o c c u r i n t h e a r e a o f r e s o u r c e s u p p l y a s s e s s m e n t , as a d v o c a t e d f o r g e o t h e r m a l by N e v i n S a d l i e r - B r o w n G o o d b r a n d ( 1 9 8 1 ) , o r as i n c e n t i v e s l i n k e d t o use o f i m p r o v e d c o n v e n t i o n a l or n o n c o n v e n t i o n a l e n e r g y c o n v e r s i o n t e c h n o l o g i e s , s u c h as t h o s e p r o m o t i n g l e s s d e p e n d e n c e on o i l - f i r e d f u e l s . 89 TABLE V B.C. P r o v i n c i a l L e g i s l a t i o n with Implications for Energy B.C. UTILITIES COMMISSION ACT c.60 COAL MINE ACT c.51 COAL ACT c.52 ELECTRICAL ENERGY INSPECTION ACT c.194 ENVIRONMENT MANAGEMENT ACT FISHERIES ACT c.137 FOREST ACT c.140 GEOTHERMAL RESOURCES ACT c.154 GREENBELT ACT c.157 HERITAGE CONSERVATION ACT c.165 LAND ACT c.214 MINES ACT c.263.5 MINING REGULATION ACT c.265 MINING RIGHT OF WAY ACT c.266 PARK ACT c.309 PIPELINE ACT c.328 WASTE MANAGEMENT ACT WATER ACT c.429 WATER UTILITY c.430 WILDLIFE ACT c.433 90 I n c e n t i v e s a r e a l s o a v a i l a b l e i n r e l a t i o n t o i n c r e a s e d l o c a l employment o r j o b t r a i n i n g . The n e t f a v o u r a b l e r e s u l t s o f g o v e r n m e n t i n c e n t i v e s w o u l d be t o e n h a n c e t h e e c o n o m i c a t t r a c t i v e n e s s o f t h e q u a l i f y i n g e n e r g y p r o j e c t w h i l e s i m u l t a n e o u s l y p r o v i d i n g p r e v i o u s l y u n a v a i l a b l e s o c i a l b e n e f i t s t o t h e r e g i o n . i i ) P r i v a t e F i n a n c i n g F i n a n c i n g i s t h e s e c o n d c r i t e r i o n i d e n t i f i e d a b o v e . Where a m i n i n g company i s r e q u i r e d t o s e e k c o m m e r c i a l f i n a n c i n g t o c o n s t r u c t e n e r g y s u p p l y f a c i l i t i e s , t h e f e a s i b i l i t y o f c e r t a i n p r o j e c t s may be d i s a d v a n t a g e d . I n p a r t i c u l a r , f o r a l t e r n a t i v e s s u c h as s m a l l h y d r o , g e o t h e r m a l , and c e r t a i n c o a l g e n e r a t i o n t e c h n o l o g i e s , where i n i t i a l c a p i t a l e x p e n d i t u r e s a r e h i g h b u t n e t u n i t e n e r g y c o s t s d e c l i n e o v e r t h e p r o j e c t l i f e , s e v e r a l i n i t i a l y e a r s o f n e g a t i v e c a s h f l o w a r e a n t i c i p a t e d . E v e n t h o u g h t h e p r o j e c t i s f i n a n c i a l l y v i a b l e on a n e t p r e s e n t v a l u e b a s i s , f i n a n c i n g by c o n v e n t i o n a l l e v e l payment, d e c l i n i n g b a l a n c e l o a n s may be d i f f i c u l t ( S i g m a E n g i n e e r i n g L t d . , 1 9 8 4 ) . F o r a mine d e v e l o p m e n t a n t i c i p a t e d t o have a s h o r t l i f e , f o r example l e s s t h a n 10 y e a r s , c o m m e r c i a l f i n a n c i n g f l e x i b i l i t y may be an i m p o r t a n t d e t e r m i n a n t f o r e n e r g y s u p p l y f e a s i b i l i t y . 3 . 4 . S U M M A R Y T h i s c h a p t e r has p r e s e n t e d o v e r v i e w s o f e v a l u a t i o n t h e o r y i n two p a r t s . The f i r s t p a r t i n t r o d u c e d t h e c o n c e p t o f 91 n o r m a t i v e e v a l u a t i o n as d e t e r m i n e d f r o m t h e l i t e r a t u r e on p l a n n i n g and d e c i s i o n t h e o r y . The l a t t e r p a r t c o n s i d e r e d how v a r i o u s p u b l i c and p r i v a t e o b j e c t i v e s m a n i f e s t t h e m s e l v e s i n t h e e v a l u a t i o n f r a m e w o r k s commonly a d o p t e d t o s e r v e t h e s e i n t e r e s t s . S p e c i a l r e f e r e n c e i s made t o t h e e n e r g y s u p p l y s i t u a t i o n f o r m i n i n g i n n o r t h w e s t e r n B.C. The n o r m a t i v e e v a l u a t i o n p r o c e s s i s c h a r a c t e r i z e d by t h e f o l l o w i n g b a s i c s t e p s : 1) I d e n t i f i c a t i o n o r f o r m u l a t i o n o f t h e p r o b l e m and c l a r i f i c a t i o n o f o b j e c t i v e s . 2) C o n c e p t u a l i z a t i o n o f a l t e r n a t i v e s t h r o u g h e x a m i n a t i o n o f d a t a and r e l a t i o n s h i p s 3) E v a l u a t i o n o f a l t e r n a t i v e s a c c o r d i n g t o m u t u a l l y e x c l u s i v e c r i t e r i a 4) I n t e r p r e t a t i o n o f t h e r e s u l t s and d e r i v a t i o n o f c o n c l u s i o n s p r i o r t o r e c o m m e n d a t i o n , i m p l e m e n t a t i o n o r f u r t h e r r e v i e w , and 5) M o n i t o r i n g o f t h e r e s u l t s and where p o s s i b l e v e r i f i c a t i o n o f e a r l i e r c o n c l u s i o n s . V a r i a t i o n s o f t h i s b a s i c p r o c e d u r e a r i s e b e c a u s e o f d i f f e r i n g p e r c e p t i o n s o f t h e t e c h n i q u e s t o o p t i m i z e t h e f o u r c h a r a c t e r i s t i c t e c h n i c a l - p o l i t i c a l t r a d e - o f f s t h a t p e r v a d e s u c h p r o c e s s e s . H i c k l i n g ( 1975) has a o t l y summarized t h e s e t r a d e - o f f s as f o l l o w s : The f i r s t ' t r a d e o f f ' c o n c e r n s t h e b a l a n c e between s i m p l i f i c a t i o n and t h e r e c o g n i t i o n o f c o m p l e x i t y — t h e e x t e n t t o w h i c h a p r o b l e m c a n be s i m p l i f i e d i n o r d e r t o 92 d e a l w i t h i t s i n h e r e n t c o m p l e x i t y w i t h o u t s a c r i f i c i n g t h e v a l i d i t y o f t h e s o l u t i o n . . . . The s e c o n d i s t h e c o n f l i c t between u r g e n c y and t h e l a c k o f i n f o r m a t i o n — b e t w e e n t h e p r e s s u r e t o make a d e c i s i o n , and t h e need t o c o l l e c t enough i n f o r m a t i o n t o do so s c i e n t i f i c a l l y . The t h i r d has t o do w i t h commitment and f l e x i b i l i t y — t h e b a l a n c e w h i c h has t o be f o u n d between t h e need f o r commitment and t h e d e s i r a b i l i t y o f k e e p i n g o n e ' s o p t i o n s o p e n . And t h e f o u r t h i s between i n c r e m e n t a l i t y and c o m p r e h e n s i v e n e s s i n d e c i s i o n - m a k i n g . D e c i s i o n s a r e more o f t e n t h a n n o t r e a c h e d i n a p i e c e m e a l f a s h i o n ; p r o b l e m s a r e n o t n e c e s s a r i l y c o m p l e t e l y s o l v e d i n one g o — f r e q u e n t l y p a r t s o f p l a n s a r e d e c i d e d , l e a v i n g t h e r e s t t o be f u r t h e r e x a m i n e d l a t e r as p a r t o f an o v e r a l l p r o c e s s o f r e c y c l i n g . P e r m e a t i n g a l l t h i s i s t h e c o n c e p t o f u n c e r t a i n t y . U n c e r t a i n t y e x i s t s p r i n c i p a l l y b e c a u s e o f k n o w l e d g e d e f i c i t s , a r i s i n g f r o m i n a d e q u a t e l y u n d e r s t o o d s y s t e m r e l a t i o n s h i p s . U n c e r t a i n t y c a n n o t be i g n o r e d and t h e r e f o r e must be d e a l t w i t h t h r o u g h v a r i o u s p r a c t i c a l and s p e c i a l i z e d a n a l y t i c a l t e c h n i q u e s s u c h as s e n s i t i v i t i y a n a l y s i s and a d v a n c e d d e c i s i o n t h e o r y . The s e c o n d p a r t o f t h e c h a p t e r e x a m i n e d a p p l i c a t i o n s o f t h e n o r m a t i v e f ramework by f o c u s i n g s p e c i f i c a l l y on t h e e v a l u a t i o n f r a m e w o r k and c r i t e r i a d o m i n a t i n g e n g i n e e r i n g , s o c i a l b e n e f i t - c o s t , and p u b l i c e n e r g y p o l i c y o b j e c t i v e s . I t was c o n c l u d e d on t h e b a s i s o f t h e r a n g e o f p u b l i c and p r i v a t e p r e f e r e n c e s r e l a t i n g t o n o r t h w e s t e r n r e s o u r c e management t h a t t h e s e f r a m e w o r k s c o u l d b e s t encompass t h e c r i t i c a l c r i t e r i a n e c e s s a r y t o e v a l u a t e e n e r g y o p t i o n s . The p r i n c i p a l e n g i n e e r i n g p r o j e c t c r i t e r i a o f i n t e r e s t t o t h e p r i v a t e f i r m t h a t were i d e n t i f i e d , i n c l u d e d t h e f o l l o w i n g : c o s t p e r i n s t a l l e d c a p a c i t y ($/kW), e n e r g y c o s t ( m i l l s / kWh), n e t p r e s e n t v a l u e , s i m p l e p a y b a c k , t e c h n o l o g i c a l and e n e r g y 93 r e s o u r c e f e a s i b i l i t y , and s y s t e m c a p a c i t y f a c t o r s . C r i t e r i a i d e n t i f i e d f o r a p u b l i c o r g o v e r n m e n t a l s o c i a l b e n e f i t - c o s t p e r s p e c t i v e , g e n e r a l l y i n c l u d e : n e t p r e s e n t v a l u e s and p o s s i b l y b e n e f i t / c o s t r a t i o s , b a s e d on a t a b u l a t i o n o f t h e b e n e f i t s and c o s t s r e l a t e d t o human r e s o u r c e s , l o c a l i ncome and employment, community w e l l - b e i n g , b i o p h y s i c a l i m p a c t , i m p a c t on g o v e r n m e n t and i n s t i t u t i o n a l s t r u c t u r e s . D i s t r i b u t i o n a l e f f e c t s and n o n - q u a n t i f i a b l e b e n e f i t s and c o s t s s h o u l d a l s o be i d e n t i f i e d . P u b l i c e n e r g y p o l i c y r e l a t e d t o a t t a i n m e n t o f n a t i o n a l s e l f - r e l i a n c e i n e n e r g y c o m p r i s e s t h e u l t i m a t e f a c e t o f e n e r g y p r o j e c t e v a l u a t i o n t h a t was c o n s i d e r e d . C r i t e r i a r e f l e c t e d b r o a d l e v e l n a t i o n a l p r o v i n c i a l p o l i c i e s a d v o c a t i n g a l o n g - t e r m v i e w t o w a r d s w i s e and e f f i c i e n t use o f e n e r g y r e s o u r c e s . C o n s e r v a t i o n , e f f i c i e n t u s e , i n v e s t m e n t i n r e s e a r c h and d e v e l o p m e n t , and t h e use o f e n e r g y a u d i t i n g p r o c e d u r e s a r e bench-mark i n d i c a t o r s t h a t p u b l i c p o l i c i e s a r e b e i n g p u r s u e d . I n s t i t u t i o n a l c o n s i d e r a t i o n s f o r e n e r g y p r o j e c t e v a l u a t i o n t h a t were b r i e f l y n o t e d , i n c l u d e g o v e r n m e n t l e g i s l a t i o n and r e g u l a t i o n s , and g o v ernment i n c e n t i v e s . F l e x i b i l i t y and e a s e o f e n e r g y p r o j e c t f i n a n c i n g was a l s o n o t e d as i m p o r t a n t t o mine d e v e l o p e r s who would r e q u i r e c o m m e r c i a l f i n a n c i n g o f uncommonly e m p l o y e d or u n c o n v e n t i o n a l e n e r g y s u p p l y p r o j e c t s . To c o n c l u d e , i t i s e v i d e n t t h a t p e r m u t a t i o n s o f t h e f u n d a m e n t a l t e n e t s o f n o r m a t i v e e v a l u a t i o n can a d d r e s s t h e i n f o r m a t i o n n e e d s c o r r e s p o n d i n g t o s o c i e t y ' s d i f f e r i n g 94 o b j e c t i v e s . U n d e r s t a n d i n g t h e b a s i c and s p e c i f i c t e c h n i q u e s a l l o w s f o r a r a n g e o f p r i o r i t y c r i t e r i a t o be i d e n t i f i e d . T h e s e c a n s u b s e q u e n t l y be u s e d t o d e r i v e a s t r a t e g i c a p p r o a c h t o r e s o l v i n g s h a r e d b u t d i f f e r e n t l y p e r c e i v e d p r o b l e m s . 95 CHAPTER FOUR A STRATEGIC METHODOLOGY FOR RECQNNAISANCE EVALUATION  OF ENERGY SUPPLY ALTERNATIVES 4.1 PURPOSE: The p u r p o s e o f t h i s c h a p t e r i s t o p r e s e n t a m e t h o d o l o g y f o r t h e r e c o n n a i s s a n c e l e v e l e v a l u a t i o n o f e n e r g y s u p p l y a l t e r n a t i v e s f o r t h e d e v e l o p m e n t o f medium s c a l e m i n e r a l d e p o s i t s i n n o r t h w e s t e r n B.C. The m e t h o d o l o g y i s b a s e d on e v a l u a t i o n f r a m e w o r k s r e v i e w e d i n C h a p t e r 3 and e l e m e n t s o f a s t r a t e g i c a p p r o a c h t o p o l i c y and a n a l y s i s as d e s c r i b e d i n t h e p r e s e n t c h a p t e r . The c h a p t e r c o n c l u d e s by d i s c u s s i n g t h e l i m i t a t i o n s o f t h e p r o p o s e d m e t h o d o l o g y . 4.2 ELEMENTS OF A STRATEGIC METHODOLOGY: A s t r a t e g i c a p p r o a c h t o p o l i c y a n a l y s i s c a n be d e f i n e d as s i m p l y a way o f d e a l i n g w i t h i n t e r c o n n e c t e d d e c i s i o n a r e a s i n an u n c e r t a i n e n v i r o n m e n t ( H i c k l i n g , 1975; Fox e_t a_l, 1 9 8 2 ) . E m p h a s i s i s p l a c e d on i d e n t i f y i n g p r i o r i t i e s f o r i n v e s t i g a t i o n , u n d e r s t a n d i n g t h e i n t e r r e l a t i o n s h i p s between i n f o r m a t i o n and d e c i s i o n c o m p o n e n t s , and managing f o r u n c e r t a i n t y , r a t h e r t h a n on t h e t a s k o f a r r i v i n g a t an answer t o t h e p r o b l e m i n t h e most e x p e d i e n t manner. The s u c c e s s f u l s t r a t e g i c a p p r o a c h i n c l u d e s t h e c o n c e p t o f i t e r a t i v e a n a l y s i s t o a c c o u n t f o r c h a n g i n g p r o b l e m d i m e n s i o n s and t o keep t h e a n a l y s i s f o c u s e d o v e r l e n g t h y p e r i o d s of t i m e . I n s o f a r as a s t r a t e g i c a p p r o a c h i s s u c c e s s f u l , i t w i l l p r o v i d e 96 g u i d a n c e f o r b e t t e r q u a l i t y d e c i s i o n s t o d a y , where t h e c o n s e q u e n c e s w i l l be f e l t i n an u n c e r t a i n f u t u r e . As C l a r k s o n ( 1 9 8 1 ) has p o i g n a n t l y n o t e d , s u r p r i s e i s t h e a n t i t h e s i s o f s u c c e s s f u l s t r a t e g i c p l a n n i n g . A t t r i b u t e s and p r i n c i p l e s w h i c h commonly f o r m t h e s t r a t e g i c b a s i s o f many p o l i c y a n a l y s i s f r a m e w o r k s a r e w e l l documented i n t h e l i t e r a t u r e ( H i c k l i n g , 1975; A n s o f f , 1977; K i n g and C l e l a n d , 1978; H o l l i n g , 1978; Fox e t a l , 1983; and A s c h e r and O v e r h o l t , 1 9 8 3 ) . The f o l l o w i n g a t t r i b u t e s and c r i t e r i a a r e c o n s i d e r e d e s p e c i a l l y r e l e v a n t t o t h e s t r a t e g i c r e c o n n a i s s a n c e l e v e l m e t h o d o l o g y p r o p o s e d i n t h e p r e s e n t s t u d y ; i ) E m p h a s i s on p r i o r i t i e s - C r i t i c a l a t t e n t i o n must be f o c u s e d d u r i n g t h e s t r a t e g i c a n a l y s i s on d e t e r m i n i n g t h e p r i o r i t y v a l u a t i o n and e v a l u a t i o n c r i t e r i a w h i c h measure t h e a t t a i n m e n t o f t h e s e o b j e c t i v e s . Two p u r p o s e s a r e s e r v e d by t h i s e m p h a s i s ; i t p r o m o t e s t h e e f f i c i e n t u s e o f s c a r c e a n a l y t i c a l r e s o u r c e s , and i t e n s u r e s t h a t o n l y t h e most r e l e v a n t and u s e f u l t y p e s o f i n f o r m a t i o n a r e b r o u g h t t o b e a r on t h e r e s o l u t i o n o f t h e p r o b l e m . I n t h i s way t h e s t r a t e g i c a n a l y s i s c a n r e s p o n d t o , and measure b e n e f i t s and c o s t s o f o p p o r t u n i t i e s , c o n s t r a i n t s , and s u r p r i s e s as t h e y a r i s e . i i ) C o n t i n u i t y o f a n a l y s i s - S t r a t e g i c a n a l y s i s must be a c o n t i n u i n g and an i t e r a t i v e p r o c e s s , t o p r o v i d e a c o m p r e h e n s i v e and c o h e r e n t p e r s p e c t i v e on t h e d e c i s i o n e n v i r o n m e n t and i t s p o s s i b l e s o l u t i o n s , n o t o b t a i n a b l e f r o m a o n c e - t h r o u g h e v a l u a t i o n . Thus w i t h t h e a n a l y s t c o n s t a n t l y a l e r t t o new and c h a n g i n g i n f o r m a t i o n , t h e r e l i a b i l i t y o f r e s u l t s w i l l t h e r e f o r e 97 be e n h a n c e d . i i i ) R o b u s t n e s s - A m e t h o d o l o g y i s r o b u s t i f i t s c o n c e p t u a l f r a m e w o r k and a n a l y t i c p r o c e s s e s a r e i n s e n s i t i v e t o t h e r e s o l u t i o n o f t h o s e u n c e r t a i n t i e s o u t s i d e o f t h e d e c i s i o n e n v i r o n m e n t o r t h e a n a l y s t ' s c o n t r o l . M o r e o v e r , a r o b u s t m e t h o d o l o g y c o n t a i n s t h e a b i l i t y t o accommodate and r e s p o n d p o s i t i v e l y t o c h a n g e s i n e x t e r n a l u n c e r t a i n t i e s . i v ) A d a p t i v e n e s s - A s t r a t e g i c m e t h o d o l o g y i s a d a p t i v e i f c u r r e n t d e c i s i o n c h o i c e s a r e i n t e r c h a n g e a b l e and f u t u r e o p t i o n s a r e m a i n t a i n e d . A d a p t i v e n e s s s h o u l d be d i s t i n g u i s h e d f r o m r e v e r s i b i l i t y w h i c h r e l a t e s t o t h e p o t e n t i a l f o r u n d o i n g t h e c o n s e q u e n c e s o f i m p l e m e n t e d d e c i s i o n s . The d e g r e e o f a d a p t i v e n e s s c a n be j u d g e d by t h e e x t e n t t o w h i c h t h e a n a l y s i s c an r e s p o n d a t t h e r i g h t t i m e w i t h i n f o r m a t i o n n e e ded t o i n f l u e n c e e v e n t u a l p r o j e c t s e l e c t i o n and d e v e l o p m e n t . S i n c e i t i s n e i t h e r p o s s i b l e , n o r d e s i r a b l e , t o remove a l l u n c e r t a i n t y f r o m t h e a n a l y s i s , i t i s n e c e s s a r y f o r t h e a n a l y t i c f ramework t o r e m a i n a d a p t i v e . The f o r e g o i n g a t t r i b u t e s and c r i t e r i a must have e x p r e s s i o n i n a c o n c e p t u a l f r amework i f a s t r a t e g i c a p p r o a c h i s t o be t r u l y a c h i e v e d . I n a r e c o n n a i s s a n c e l e v e l a n a l y t i c a l f r a m e w o r k , t h e d e g r e e t o w h i c h t h e y a r e m a n i f e s t i s d e t e r m i n e d by t h e t r a d e - o f f between s i m p l i c i t y and c o m p l e x i t y . S i m p l i f i c a t i o n p e r m i t s c o m p r e h e n s i o n , a p e r s p e c t i v e w i t h u n d e r s t a n d i n g and i n s i g h t on t h e p r o c e s s o f a n a l y s i s as i t r e l a t e s t o t h e component p a r t s , i n o r d e r t o a r r i v e a t t h e 98 d e s i r e d d e c i s i o n . C o m p l e x i t y a l l o w s d e t a i l s o f o b j e c t i v e s , d a t a and o t h e r i n t e r a c t i o n s t o be d e v e l o p e d so t h a t r i g o u r and r e l i a b i l i t y a r e m a i n t a i n e d . I n summary, t h e c o n c e p t o f a s t r a t e g i c a p p r o a c h t o m e t h o d o l o g i c a l d e v e l o p m e n t e m p h a s i z e s t h e i n t e r r e l a t i o n s h i p s o f s t r u c t u r e and o r g a n i z a t i o n , i n f o r m a t i o n , and d e c i s i o n c omponents i n t h e e v a l u a t i o n p r o c e s s . By i n c o r p o r a t i n g a t t r i b u t e s o f p r i o r i t y e m p h a s i s , c o n t i n u i t y , r o b u s t n e s s , and a d a p t i v e n e s s , a s t r a t e g i c m e t h o d o l o g y m a i n t a i n s a h i g h l e v e l o f r e s p o n s i v e n e s s t o an u n c e r t a i n p r o b l e m e n v i r o n m e n t . The m e t h o d o l o g i c a l f r a m e w o r k p r e s e n t e d i n t h e f o l l o w i n g s e c t i o n f o r t h e e v a l u a t i o n o f e n e r g y a l t e r n a t i v e s i n c o r p o r a t e s t h e f o r e g o i n g p r e m i s e s o f a s t r a t e g i c a p p r o a c h . 4.3 METHODOLOGY: 4.3.1 I n t r o d u c t i o n T h i s s e c t i o n i s s t r u c t u r e d i n two p a r t s , c o n s i s t i n g i n i t i a l l y o f t h e m e t h o d o l o g y ' s b a s i c s t r u c t u r e , and s e c o n d l y , an o u t l i n e o f t h e p r i n c i p a l e l e m e n t s o f t h e main s t r u c t u r a l p a r t s . D i a g r a m s s u p p l e m e n t t h e t e x t . The i n t e n t o f t h e m e t h o d o l o g y i s made c l e a r e r by an e x p l i c i t u n d e r s t a n d i n g o f two f r e q u e n t l y u s e d t e r m s ; r e c o n n a i s s a n c e and s t r a t e g i c . The use o f " r e c o n n a i s s a n c e " u n d e r l i n e s an i n t e n t t o s t r u c t u r e t h e m e t h o d o l o g y , a t an a p p r o p r i a t e l e v e l o f c o m p l e x i t y and c o m p r e h e n s i v e n e s s , t o d e a l w i t h p r e l i m i n a r y i n f o r m a t i o n r e g a r d i n g e n e r g y s u p p l y a l t e r n a t i v e s s u c h t h a t a 99 PROBLEM IDENTIFIED SCENARIO A-SCENARIO B SCENARIO C-SOLUTIONS FOR PREFEASIBILITY ANALYSIS F i g u r e 8 . G e n e r a l i z e d Methodology S t r u c t u r e 100 p r e f e a s i b i l i t y l e v e l o f a n a l y s i s may be s u b s e q u e n t l y e n t e r e d i n t o on t h e b a s i s o f a n a r r o w e d s e t o f a l t e r n a t i v e s . P r e l i m i n a r y i n f o r m a t i o n i s t h a t w h i c h i s a v a i l a b l e w i t h o u t f i e l d v i s i t a t i o n s o r s p e c i a l e x p e n d i t u r e s o f f u n d s . " S t r a t e g i c " r e f e r s t o e m p h a s i s p l a c e d on t h e p r o c e s s , i t s i n t e r r e l a t i o n s h i p s and management o f u n c e r t a i n t y ( H i c k l i n g , 1 9 7 5 ) . The i m p o r t a n c e and a t t r i b u t e s o f a s t r a t e g i c a p p r o a c h were d i s c u s s e d i n S e c t i o n 4.2. The a n t i c i p a t e d e f f e c t o f e m p h a s i z i n g t h e s e two c o n c e p t s i s a d e m o n s t r a b l e r e d u c t i o n i n u n c e r t a i n t y f a c i n g f u t u r e d e c i s i o n s . 4.3.2. P r o p o s e d Framework The m e t h o d o l o g y i s c o m p r i s e d o f t h r e e main s t r u c t u r a l p a r t s : t h e c o r e i n f o r m a t i o n e n v i r o n m e n t , and t h e b a s i c and p e r i p h e r a l e v a l u a t i o n e n v i r o n m e n t s . The c o r e i n f o r m a t i o n e n v i r o n m e n t i d e n t i f i e s and f o c u s e s on t h e p r o b l e m o f e n e r g y s u p p l y f o r a p a r t i c u l a r u n d e v e l o p e d m i n e r a l d e p o s i t ; t h e b a s i c e v a l u a t i o n e n v i r o n m e n t a s s e s s e s t h e v i a b i l i t y o f p o t e n t i a l a l t e r n a t i v e s t h r o u g h t h e a p p l i c a t i o n o f m u l t i p l e c r i t e r i a ; w h i l e t h e p e r i p h e r a l e n v i r o n m e n t c o v e r s s t r a t e g i c i n f o r m a t i o n , i n d e p e n d e n t o f t h e f o c u s e d p r o b l e m , t h a t i n f l u e n c e s b o t h t h e c o r e and b a s i c e n v i r o n m e n t s . F i g u r e 8 i l l u s t r a t e s t h e i r g e n e r a l r e l a t i o n s h i p s . The a r r o w s d e n o t e t h e d i r e c t i o n o f i n f o r m a t i o n f l o w s and s u g g e s t t h a t v a r i o u s p a r t s o f t h e a n a l y s i s c an be c a r r i e d o u t s i m u l t a n e o u s l y o r more t h a n o n c e . 101 E a c h e v a l u a t i o n e n v i r o n m e n t c o n t a i n s s t r a t e g i c d a t a b a s e s and a n a l y t i c a l p r o c e s s e s d e s i g n e d t o answer s p e c i f i c q u e s t i o n s so t h a t t h e a n a l y s t can p r o c e e d f r o m i n i t i a l p r o b l e m i d e n t i f i c a t i o n t o s e l e c t i o n o f key a l t e r n a t i v e s . S t r a t e g i c d a t a b a s e s a r e c o l l e c t i o n s o f c r i t i c a l , r e l a t e d i n f o r m a t i o n ( i . e . , t e c h n i c a l , p o l i t i c a l ) f r o m w h i c h c o n c l u s i o n s c a n be drawn t o a d v a n c e t h e u n d e r s t a n d i n g o f t h e p r o b l e m e n v i r o n m e n t o r p o t e n t i a l s o l u t i o n s . The r e l e v a n t i n f o r m a t i o n c o n t a i n e d i n a s t r a t e g i c d a t a b a s e must be c o n t i n u a l l y u p d a t e d and a n a l y z e d t o m a i n t a i n t h e r e a d i n e s s o f t h e o v e r a l l a n a l y t i c a l f r a m e w o r k ' s r e s p o n s e t o c h a n g i n g e x t e r n a l s t i m u l i . The c i r c u l a r a r r o w b o u n d i n g e a c h e v a l u a t i o n e n v i r o n m e n t i n F i g u r e 8 r e p r e s e n t s t h e i t e r a t i v e n a t u r e o f t h e s e i n t e r n a l a n a l y s e s . The c i r c u l a r a r r o w f o r t h e p e r i p h e r a l e n v i r o n m e n t i s shown as i n t e r m i t t e n t t o a c k n o w l e d g e t h a t t h e i n f o r m a t i o n c o n t a i n e d i n i t s s t r a t e g i c d a t a b a s e i s s u b j e c t t o a g r e a t e r d e g r e e o f u n c e r t a i n t y . C o n c l u s i o n s drawn f r o m s t r a t e g i c d a t a b a s e s a t v a r i o u s p o i n t s i n t h e a n a l y s i s p e r m i t t h e c o n s t r u c t i o n o f s c e n a r i o s . A s c e n a r i o i s a p o r t r a y a l o f t h e r e l a t i o n s h i p s o f t h e p e r c e i v e d p r o b l e m t o i t s e n v i r o n m e n t u n d e r e x i s t i n g a s s u m p t i o n s and p e r c e p t i o n s . S c e n a r i o s c o n s t r u c t e d e a r l y i n t h e a n a l y s i s a r e o f t h e e x p l o r a t o r y t y p e ; t h e y s t a r t w i t h h i s t o r i c a l c i r c u m s t a n c e s , p r o c e e d i n g up t o t h e p r e s e n t , and e x p l o r e t r e n d s and a l t e r n a t i v e f u t u r e s b a s e d on a c a r e f u l h y p o t h e s i z i n g o f a p e r c e i v e d l o g i c a l s e q u e n c e o f e v e n t s . By c o m p a r i s o n , s c e n a r i o s d e v e l o p e d a t t h e c o n c l u s i o n o f t h e a n a l y s i s a r e o f t h e 102 a n t i c i p a t o r y t y p e ; they c o n c e p t u a l i z e f e a s i b l e and d e s i r a b l e f u t u r e s based on a r e f i n e d s e t of o b j e c t i v e s and i n v e s t i g a t e the f e a s i b l e a l t e r n a t i v e s and a c c e p t a b l e consequences n e c e s s a r y t o a c h i e v e t h e s e f u t u r e s . S c e n a r i o c o n s t r u c t i o n i s v i t a l t o p o l i c y f o r m u l a t i o n and a n a l y t i c a l r e s o u r c e a l l o c a t i o n . Thus f a r the d i s c u s s i o n has d e a l t w i t h s t r u c t u r a l e l ements and p r o c e s s e s of the o v e r a l l m e t h o d o l o g i c a l framework. I t i s now n e c e s s a r y to d e s c r i b e i n g r e a t e r d e t a i l the f u n c t i o n a l a s p e c t s of the c o r e , b a s i c , and p e r i p h e r a l e n v i r o n m e n t s . 103 S t r a t e g i c Data Base Sets S t r a t e g i c Data Base 1 Interest Groups and Objectives i ) I d e n t i f y Interest Groups and Objectives i i ) Determine Objective Functions and Corresponding Variables i i i ) Examine Risks; r e l a t e d percep-ti o n s and management st r a t e g i e s S t r a t e g i c Data Base 2 Energy Demand i ) I d e n t i f y Mineral Deposit C h a r a c t e r i s t i c s ; geology, p h y s i c a l , h i s t o r i c a l i i ) Determine Conceptual Model fo r Processing and Development i i i ) Derive a Range of Energy Demanc Estimates Based on Various Production Schedules Determine Perspective f o r Subsequent Evaluation S t r a t e g i c Data Base 3 Regional Influences i ) I d e n t i f y and Examine Regional Influences; - nearby mineral deposit development - nearby non-mineral i n d u s t r i a l development - status of native land claims - major land use planning programs FOCUSED PROBLEM Figure 9. Core Information Environment 4.3.2.A. C o r e I n f o r m a t i o n E n v i r o n m e n t The c o r e i n f o r m a t i o n e n v i r o n m e n t i d e n t i f i e s and f o c u s e s on t h e p r o b l e m o f e n e r g y s u p p l y f o r m e d i u m - s c a l e m i n i n g . I t e s t i m a t e s t h e b o u n d a r y , s c o p e , s c a l e , and t i m i n g o f t h e e n e r g y s u p p l y p r o b l e m f o r a d e p o s i t as w e l l as i d e n t i f i e s t h e p r i n c i p a l i n t e r e s t s l i k e l y t o be i n v o l v e d i n f u t u r e d e c i s i o n s . T h r e e s t r a t e g i c d a t a b a s e s e t s a r e d e v e l o p e d f o r t h e c o r e i n f o r m a t i o n e n v i r o n m e n t . T h e s e c o v e r : a) m i n e r a l d e p o s i t g e o l o g i c a l p a r a m e t e r s b) key p a r t i c i p a n t s and t h e i r o b j e c t i v e f u n c t i o n s , and c ) e x t e r n a l f a c t o r s s u c h as m i n e r a l d e v e l o p m e n t and e c o n o m i c t r e n d s , r e g i o n a l p o p u l a t i o n g r o w t h , and l a n d use p a t t e r n s . The c o r e i n f o r m a t i o n e n v i r o n m e n t p u r p o r t s t o s e e k a n s w e r s t o t h e f o l l o w i n g key q u e s t i o n s : 1) What i s t h e n a t u r e o f t h e p r o b l e m i d e n t i f i e d ? How i s t h e p r o b l e m p e r c e i v e d i n c u r r e n t s c e n a r i o s o f m i n e r a l d e v e l o p m e n t ? 2) From whose p e r s p e c t i v e has t h e p r o b l e m been i d e n t i f i e d and t h e s c e n a r i o c o n s t r u c t e d ? 3) Who a r e t h e i n t e r e s t g r o u p s i n v o l v e d i n t h e a n a l y s i s ? 4) What a r e t h e i n t e r e s t g r o u p s i n v o l v e d i n t h e a n a l y s i s ? 5) How can t h e components o f t h e o b j e c t i v e f u n c t i o n s be u t i l i z e d t o f o c u s t h e p r o b l e m ? 105 6) What i s t h e n a t u r e o f p e r i p h e r a l i n f l u e n c e s on p r o b l e m d e f i n i t i o n ? 7) What i s t h e n a t u r e o f t h e f o c u s e d p r o b l e m ? 8) How i s t h e f o c u s e d p r o b l e m e x p r e s s e d i n a m o d i f i e d s c e n a r i o o f m i n e r a l d e v e l o p m e n t ? Not a l l o f t h e s e q u e s t i o n s may be a n s w e r a b l e i n a f i r s t a t t e m p t , and i t may be n e c e s s a r y t o p r o c e e d w i t h t h e a n a l y s i s , c y c l i n g back t o c o m p l e t e f o c u s i n g o f t h e p r o b l e m a t a l a t e r t i m e . F i g u r e 9 p r o v i d e s a s i m p l i f i e d i l l u s t r a t i o n o f t h e i n t e r r e l a t i o n s h i p s between key components o f t h e c o r e i n f o r m a t i o n e n v i r o n m e n t . 4.3.2.B. B a s i c E v a l u a t i o n E n v i r o n m e n t The b a s i c e v a l u a t i o n e n v i r o n m e n t d e l i n e a t e s power g e n e r a t i o n a l t e r n a t i v e s and a p p l i e s m u l t i o b j e c t i v e c r i t e r i a t o t h e a l t e r n a t i v e s t o d e r i v e a d a t a b a s e t h a t c an be u s e d t o a s s e s s t h e a b i l i t y o f e a c h a l t e r n a t i v e t o r e s o l v e t h e f o c u s e d p r o b l e m . B a s e d on m u l t i a t t r i b u t e d e c i s i o n - m a k i n g t e c h n i q u e s s u c h as do m i n a n c e and s a t i s f i c i n g , a n a r r o w e d s e t o f "most l i k e l y " a l t e r n a t i v e s i s d e f i n e d . T h e s e a l t e r n a t i v e s c a n be a d v a n c e d t o t h e p r e f e a s i b i l i t y s t a g e . S t r a t e g i c d a t a base s e t s d e v e l o p e d f o r t h e b a s i c e v a l u a t i o n e n v i r o n m e n t c o v e r : a) e n e r g y r e s o u r c e s u p p l y b) e n e r g y c o n v e r s i o n t e c h n o l o g i e s , e c o n o m i c s , and d e v e l o p m e n t t r e n d s , and 106 c ) power g e n e r a t i o n - r e l a t e d , r e g i o n a l e n v i r o n m e n t a l , and s o c i a l o p p o r t u n i t i e s and r i s k s . The b a s i c e v a l u a t i o n e n v i r o n m e n t a t t e m p t s t o s a t i s f y t h e f o l l o w i n g q u e s t i o n s and i n f o r m a t i o n r e q u i r e m e n t s : 1) What a r e t h e p a r t i c u l a r e n e r g y s u p p l y a l t e r n a t i v e s f o r a p a r t i c u l a r m i n e r a l d e p o s i t ? 2) How does t h e a n a l y t i c a l f r a mework a d d r e s s t h e o b j e c t i v e f u n c t i o n s i d e n t i f i e d i n t h e c o r e i n f o r m a t i o n e n v i r o n m e n t ? 3) From whose p e r s p e c t i v e i s t h e e v a l u a t i o n c o n d u c t e d ? 4) What a r e t h e p r i o r i t y v a l u a t i v e c r i t e r i a u s e d t o a s s e s s t h e a l t e r n a t i v e s ? 5) On t h e b a s i s o f a f o r m a l a p p l i c a t i o n o f m u l t c r i t e r i a d e c i s i o n - m a k i n g p r o c e d u r e s , w h i c h a l t e r n a t i v e ( s ) i s ( a r e ) b e s t s u i t e d t o s u p p l y e n e r g y t o t h e p o t e n t i a l mine? 6) What i s t h e n a t u r e o f t h e a n t i c i p a t o r y s c e n a r i o d e r i v e d f r o m t h e b a s i c e v a l u a t i o n e n v i r o n m e n t ? 4.3.2.C. P e r i p h e r a l E v a l u a t i o n E n v i r o n m e n t The p e r i p h e r a l e v a l u a t i o n e n v i r o n m e n t c o v e r s s t r a t e g i c i n f o r m a t i o n w h i c h i n f l u e n c e s t h e c o r e and b a s i c e v a l u a t i o n e n v i r o n m e n t s , but i s e s s e n t i a l l y i n d e p e n d e n t o f t h e f o c u s e d p r o b l e m . The p e r i p h e r a l e v a l u a t i o n e n v i r o n m e n t does n o t c o n t a i n an a n a l y t i c a l p r o c e s s a n a l o g o u s t o t h e o t h e r 107 FOCUSED.PROBLEM IDENTIFY PRIORITY EVALUATIVE CRITERIA 1 , CONCEPTUALIZE ALTERNATIVES Determine Research Requirements of S t r a t e g i c Data Base Sets Energy Resource Supply Technology Economics Environmental Opportunities and Risks S o c i a l Opportunities and Risks Apply C r i t e r i a to A l t e r n a t i v e s Based £ on C o l l e c t e d Data 31 1 I M T Apply Formal M u l t i - C r i t e r i a Decision-Making Procedures ( i ) S a t i s f i c i n g - set minimal i n i t i a l conditions ( i i ) Dominance - examine ob j e c t i v e f u n c t i o n and i n d i c a t e preference f o r a l t e r n a t i v e s - examine c o n s t r a i n t s imposed by external o b j e c t i v e function v a r i a b l e s - examine areas of r i s k ( i i i ) I n t e r p r e t , Select and Rank Narrowed Set of A l t e r n a t i v e s _±. L_L_ REJECTED ALTERNATIVES , / 5 Proceed to P r e f e a s i b i l i t y Analysis Figure 10. Basic Evaluation Environment 108 s t r u c t u r a l p a r t s . R a t h e r , i t p r o v i d e s a s t r a t e g i c i n f o r m a t i o n i n p u t mechanism a t v a r i o u s s t a g e s o f t h e o t h e r e v a l u a t i o n e n v i r o n m e n t s , t o a s s i s t i n r e d u c i n g u n c e r t a i n t y and a d j u s t i n g t h e d i r e c t i o n o f t h e o n g o i n g a n a l y s e s . S t r a t e g i c d a t a base s e t s o f t h e p e r i p h e r a l e v a l u a t i o n e n v i r o n m e n t c o v e r t h e f o l l o w i n g f o u r a r e a s : a) s t a t u s o f m i n e r a l d e p o s i t d e v e l o p m e n t s a d j a c e n t t o t h e d e p o s i t b e i n g r e v i e w e d , b) m i n e r a l commodity p r i c e , demand, and s u p p l y t r e n d s , c ) g o v e r n m e n t p o l i c y w i t h a p p l i c a t i o n t o r e g i o n a l m i n e r a l d e v e l o p m e n t , and d) c h a n g i n g l a n d use p a t t e r n s a d j a c e n t t o t h e m i n e r a l d e p o s i t . w h e r e c o m p e t i n g r e s o u r c e use p o t e n t i a l l y a l t e r s t h e t e n o r o f a n t i c i p a t e d e n e r g y p r o j e c t i m p a c t s and c o s t s . I n f o r m a t i o n on t h e e x t e r n a l c o n s e q u e n c e s o f a l t e r n a t i v e s , w h i c h a r e i d e n t i f i e d i n t h e b a s i c e v a l u a t i o n e n v i r o n m e n t , when c o n s i d e r e d t o g e t h e r w i t h t h e above s t r a t e g i c d a t a b a s e s , p r o v i d e s an u n d e r s t a n d i n g o f t h e d i s t r i b u t i o n a l e f f e c t s o f i m p l e m e n t i n g a l t e r n a t i v e s , and a i d s i n t h e c o n s t r u c t i o n o f s c e n a r i o s . 4.4 LIMITATIONS: I m p l e m e n t i n g t h e m e t h o d o l o g y i s l i m i t e d by a number of c o n s i d e r a t i o n s p e r t a i n i n g t o i t s s t r u c t u r e and p r a c t i c a b i l i t y . L i m i t a t i o n s stem f r o m t h e t r a d e - o f f s between s i m p l i c i t y and 109 c o m p l e x i t y , i n c r e m e n t a l i t y and c o m p r e h e n s i v e n e s s , l e v e l o f a n a l y t i c a l r e s o u r c e s , and u n c e r t a i n t y . S i m p l i c i t y and c o m p l e x i t y c o n c e r n t h e l e v e l a t w h i c h c o m p r e h e n s i o n o f t h e a n a l y t i c a l p r o c e s s i s a c h i e v e d a t t h e e x p e n s e o f a d e t a i l e d and r i g o r o u s y e t l e s s c o m p r e h e n s i b l e a n a l y s i s . U n d o u b t e d l y , t h e r e v i e w e r ' s p r i o r e x p o s u r e t o c o n c e p t s i n p o l i c y a n a l y s i s w i l l d i c t a t e t h i s a s s e s s m e n t t o some d e g r e e . D a t a a v a i l a b i l i t y and t h e c o s t o f d a t a p r o c e s s i n g l i m i t t h e t r a d e - o f f between i n c r e m e n t a l i t y and c o m p r e h e n s i v e n e s s . B e c a u s e o f t h e p r e l i m i n a r y n a t u r e o f t h e a n a l y s i s , c o m p r e h e n s i v e d a t a w i l l n o t be a t t a i n a b l e , or a t t a i n a b l e a t h i g h c o s t , and i t may t h e r e f o r e become i m p o s s i b l e t o c a r r y t h r o u g h t h e a n a l y s i s w i t h o u t i n c r e m e n t a l and r e c u r s i v e s t e p s . M o r e o v e r , t h e a s p i r e d l e v e l o f c o n f i d e n c e i n r e s u l t s w i l l v a r y f r o m one d e p o s i t t o a n o t h e r owing t o t h e s t a t u s o f e x p l o r a t i o n and t h e q u a l i t y o f i n f o r m a t i o n a v a i l a b l e . C o s t o f r e s o u r c e s r e q u i r e d t o c o n d u c t t h e a n a l y s i s i s u n c l e a r . However, i t i s l i k e l y t h e r e w i l l be no i m m e d i a t e r e t u r n , and no g u a r a n t e e o f l o n g - t e r m r e t u r n , u n l e s s p r o d u c t i o n i s a c h i e v e d . A dilemma t h e r e f o r e a r i s e s ; does one c o n d u c t a n a l y s e s on e n e r g y s u p p l y o p t i o n s i f t h e f e a s i b i l i t y o f t h e d e p o s i t i s i n d o u b t , or c a n n o t be d e m o n s t r a t e d , or does one w a i t t i l l t h e d e p o s i t i s p r o v e n f e a s i b l e , a t . r i s k o f d e a l i n g w i t h a n a r r o w e d s e t o f f u t u r e e n e r g y s u p p l y a l t e r n a t i v e s ? The d e g r e e t o w h i c h u n c e r t a i n t y p r e v a i l s i s d i f f i c u l t t o d e t e r m i n e i n a d v a n c e . W h i l e t h e m e t h o d o l o g y has o s t e n s i b l y 110 a t t e m p t e d t o i n t e r n a l i z e t h e t h r e e k i n d s o f u n c e r t a i n t y — u n c e r t a i n t y i n t h e o p e r a t i n g e n v i r o n m e n t , u n c e r t a i n t y i n v a l u e s , and u n c e r t a i n t y i n d e c i s i o n s e x t e r n a l t o t h e p r o b l e m e n v i r o n m e n t — p r i n c i p a l l y t h r o u g h t h e use o f s t r a t e g i c d a t a b a s e s , n e v e r t h e l e s s t h e r e a r e l i k e l y t o be many a r e a s where f u r t h e r u n c e r t a i n t y becomes e v i d e n t . The f i n a l l i m i t a t i o n r e l a t e s t o t h e a n a l y t i c a l e n v i r o n m e n t . F o r t h e a n a l y s i s t o be t r u l y s t r a t e g i c i n n a t u r e r e q u i r e s commitment and w i l l o f t h e t h e a n a l y s t ; t o u p d a t e s t r a t e g i c d a t a b a s e s , c o n t i n u a l l y r e a s s e s s i n t e r e s t g r o u p r e l e v a n c e and o b j e c t i v e s , and p r o c e e d w i t h t h e a n a l y s i s even t h o u g h t h e t i m i n g o f t h e m i n e r a l d e v e l o p m e n t i s u n c e r t a i n . 4.5 CONCLUSIONS: A m e t h o d o l o g y has been p r e s e n t e d f o r s t r a t e g i c r e c o n n a i s s a n c e e v a l u a t i o n o f e n e r g y s u p p l y a l t e r n a t i v e s f o r m i n e r a l d e p o s i t d e v e l o p m e n t i n n o r t h w e s t e r n B.C. The m e t h o d o l o g y i n c o r p o r a t e s p r i n c i p l e s o f n o r m a t i v e a n a l y s i s t o p r o c e e d l o g i c a l l y f r o m p r o b l e m i d e n t i f i c a t i o n t o r e s o l u t i o n . T h e s e p r i n c i p l e s a r e augmented by s p e c i f i c e v a l u a t i o n p r o c e d u r e s w h i c h r e f l e c t t h e o b j e c t i v e s o f key d e c i s i o n p a r t i c i p a n t s . The m e t h o d o l o g y ' s s t r u c t u r e e n t a i l s t h r e e main c o m p o n e n t s ; a c o r e i n f o r m a t i o n e n v i r o n m e n t and b a s i c and p e r i p h e r a l e v a l u a t i o n e n v i r o n m e n t s , e a c h w i t h i t s c o r r e s p o n d i n g s t r a t e g i c d a t a b a s e s and i n t e r n a l a n a l y t i c p r o c e s s e s . To a c h i e v e a s t r a t e g i c l e v e l o f a n a l y s i s a t t h e 111 r e c o n n a i s s a n c e l e v e l , t h e s t r u c t u r a l components have been d e s i g n e d t o promote e m p h a s i s on p r i o r i t i e s , c o n t i n u i t y o f a n a l y s e s , r o b u s t n e s s , and a d a p t i v e n e s s . A d e s i r e d b a l a n c e between s i m p l i c i t y and c o m p l e x i t y can be a c h i e v e d i n t h e a n a l y s i s by a c k n o w l e d g i n g t h e l i m i t a t i o n s i m p o s e d by t h e i n t e r a c t i o n between a n a l y t i c a l d e s i g n , p h y s i c a l r e s o u r c e s , and u n c e r t a i n t y . The s t a g e has t h u s been s e t f o r t h e a n a l y s t t o c a r r y o u t a p r a c t i c a l a p p l i c a t i o n o f t h e m e t h o d o l o g y . 112 CHAPTER F I V E A CASE STUDY - THE RED-CHRIS COPPER-GOLD DEPOSIT T h i s c h a p t e r i n t r o d u c e s t h e RED-CHRIS c o p p e r - g o l d d e p o s i t w h i c h as been s e l e c t e d f o r a p p l i c a t i o n o f t h e e n e r g y s u p p l y e v a l u a t i o n m e t h o d o l o g y p r o p o s e d i n C h a p t e r 4. E x p l o r a t i o n h i s t o r y o f RED-CHRIS i s r e v i e w e d and a r a n g e o f e l e c t r i c a l e n e r g y demands, a n t i c i p a t e d f o r e v e n t u a l p r o d u c t i o n , a r e d e r i v e d by r e v i e w i n g s t a n d a r d m i n i n g and m i l l i n g e n e r g y c o n s u m p t i o n d a t a and a p p l y i n g t h e s e r e s u l t s t o v a r i o u s assumed p r o d u c t i o n s c h e d u l e s . The d e p o s i t w i l l n o t be m o d e l l e d , n o r w i l l a d e t a i l e d i n p u t - o u t p u t e n e r g y a n a l y s i s be p e r f o r m e d as t h e s e e x e r c i s e s e x c e e d t h e s c o p e and r e s o u r c e s a v a i l a b l e f o r t h e p r e s e n t r e c o n n a i s s a n c e s t u d y . The i n f o r m a t i o n p r e s e n t e d i n t h i s c h a p t e r p r o v i d e s a b a s i s f o r s u b s e q u e n t d e t a i l e d e x a m i n a t i o n o f t h e d e p o s i t ' s e n e r g y s u p p l y s i t u a t i o n . The RED-CHRIS d e p o s i t , c e n t r a l l y l o c a t e d i n t h e s t u d y a r e a a t a p p r o x i m a t e l y 5 7 ° 4 1 ' N . l a t i t u d e and 1 2 9 ° 4 8 ' W . l o n g i t u d e , i s shown on F i g u r e 2-2. I t i s s e l e c t e d as a c a s e s t u d y f o r t h e f o l l o w i n g r e a s o n s : 1) RED-CHRIS c o n t a i n s two o f t h e r e g i o n ' s p r i n c i p a l c o m m o d i t i e s , c o p p e r and g o l d , and meets t h e m e d i u m - s i z e c r i t e r i a i n t e r m s o f i n - s i t u r e s e r v e v a l u e and e n e r g y demand as d e f i n e d i n C h a p t e r 2. i i ) RED-CHRIS i s w e l l e x p l o r e d and c o n s i d e r e d t o be a t 113 t h e p r e f e a s i b i l i t y s t a g e o f d e v e l o p m e n t . i i i ) RED-CHRIS e x p e r i e n c e s a mix o f d e v e l o p m e n t c o n s t r a i n t s s u c h as weak m e t a l p r i c e s and l a c k o f i n f r a s t r u c t u r e w h i c h a r e t y p i c a l f o r many d e p o s i t s i n t h e r e g i o n . i v ) The d e p o s i t ' s l o c a t i o n l e n d s i t s e l f t o c o n s i d e r a t i o n o f a v a r i e t y o f e n e r g y s u p p l y a l t e r n a t i v e s . v) The w r i t e r b r i n g s f i r s t - h a n d k n o w l e d g e o f t h e d e p o s i t t o t h e a n a l y s i s , h a v i n g s p e n t a l l o r p a r t o f f i v e f i e l d s e a s o n s e n g a g e d i n e x p l o r a t i o n on and a d j a c e n t t o RED-CHRIS 5.1; HISTORY OF EXPLORATION AND RESERVES M i n e r a l e x p l o r a t i o n has o c c u r r e d t h r o u g h o u t t h e S t i k i n e a r e a f o r n e a r l y 100 y e a r s . P r i o r t o 1898 t h e e a r l i e s t p r o s p e c t i n g a c t i v i t y c o n c e n t r a t e d p r i m a r i l y on p l a c e r g o l d d e p o s i t s . T h i s a c t i v i t y was c e n t r e d n o r t h o f t h e S t i k i n e R i v e r f r o m G l e n o r a t o Dease L a k e . W i t h t h e d i s c o v e r y o f t h e Yukon p l a c e r f i e l d s , G l e n o r a and l a t e r T e l e g r a p h C r e e k became t h e f a v o u r e d d i s e m b a r k i n g l o c a t i o n s f o r t h e K l o n d i k e f r o m 1898 t o a b o u t 1900. L a t e r , t h e m a j o r i t y o f t r a f f i c d i v e r t e d t o J u n e a u and t h e C h i l k o o t P a s s t r a i l ( A l a s k a G e o g r a p h i c , 1 9 7 9 ) . E x p l o r a t i o n i n t h e e a r l y 1900's r e s u l t e d i n t h e d i s c o v e r y o f numerous c o p p e r , l e a d , z i n c , molybdenum, g o l d and s i l v e r m i n e r a l i z e d p r o s p e c t s . Many c o p p e r and molybdenum p r o s p e c t s were r e - e v a l u a t e d d u r i n g t h e 1950's and 1960's w i t h t h e i n c r e a s i n g i n t e r e s t i n l a r g e l o w - g r a d e " p o r y p h y r y " d e p o s i t s . T h i s was s p u r r e d on by s t e a d i l y r i s i n g m e t a l p r i c e s and 114 advances i n m e t a l l u r g i c a l recovery technology allowing the e x p l o i t a t i o n of lower grade ores. The Canadian I n s t i t u t e of Mining and Metallurgy (1976) describes some of the more important deposits i n the region. Newell and Leitch (1976) have reviewed the history of the RED-CHRIS porphyry copper-gold deposit for the period 1969-1976. The s a l i e n t features of t h e i r review are as follows. Exploration began i n earnest on a portion of the RED-CHRIS deposit in 1969 when Great Plains Development Company of Canada Ltd., (now Norcen) located the Chris and Money claims south of the present deposit. Preliminary exploration concentrated on mineralized showings i n deeply incised drainages and consisted mainly of geological mapping and geochemical sampling. Subsequently about 1230 metres of diamond d r i l l i n g were completed by 1972. The adjoining property to the east, comprised of the Red and Sus claims, were located by S i l v e r Standard Mines Ltd. in 1970. In 1971 t h e i r f i e l d programme consisted of geological mapping, geochemical and geophysical surveys and 457 metres of trenching. No work was c a r r i e d out in 1972. E c s t a l l Mining Ltd., ( l a t e r Texasgulf Canada Ltd., and now Kidd Creek Mines Ltd.) became interested in the RED property as a r e s u l t of a submittal of the ground by S i l v e r Standard for examination to E c s t a l l ' s parent-company Texasgulf Inc. An agreement was reached in 1973 and Texasgulf Inc. proceeded to carry out a programme of percussion d r i l l i n g t o t a l l i n g 915 metres. Results were s u f f i c i e n t l y encouraging to 115 l e a d t o an a g r e e m e n t w i t h G r e a t P l a i n s t o f u r t h e r e x p l o r e t h e C h r i s p r o p e r t y . E x p l o r a t i o n f r o m 1974 t h r o u g h t o 1980 i n c l u d e d e x t e n s i v e s u r f a c e . g e o l o g i c a l and g e o c h e m i c a l work a l o n g w i t h u n d e r g r o u n d g e o p h y s i c s and d r i l l i n g . To d a t e a t o t a l o f 75 diamond d r i l l h o l e s t o t a l l i n g 13119 m e t r e s and 44 p e r c u s s i o n d r i l l h o l e s t o t a l l i n g 3178 m e t r e s have been c o m p l e t e d ( P e a t f i e l d , 1 9 8 0 ) . R e s u l t s o f t h i s work have o u t l i n e d a modest d e p o s i t c o n t a i n i n g 41 m i l l i o n t o n n e s o f u n d i l u t e d " o r e " w i t h an a v e r a g e g r a d e o f 0.56% c o p p e r and 0.34 gram/tonne g o l d , b a s e d on a s t r i p p i n g r a t i o o f 1.4:1. The r e s e r v e c a l c u l a t i o n s use an a r b i t r a r y c u t - o f f g r a d e o f 0.25% c o p p e r . T o t a l c o n t a i n e d m e t a l b a s e d on t h i s c u t - o f f g r a d e i s 229,600,000 kg c o p p e r and 13,940,000 gm g o l d . The t o t a l v a l u e o f t h e d e p o s i t i s t h e r e f o r e $630,750,000 b a s e d on $1.80/kg c o p p e r , and $15.60/gm g o l d ( p r o d u c e r p r i c e s m i d - J u n e 1 9 8 4 ) . The d e p o s i t o c c u r s i n two z o n e s , t h e M a i n and E a s t z o n e s , c o n t a i n i n g 34.38 and 6.62 m i l l i o n t o n n e s o f d r i l l i n d i c a t e d r e s e r v e s , r e s p e c t i v e l y . The M a i n and s h a l l o w e r p a r t s o f t h e E a s t Zone would be amenable t o o p e n - p i t m i n i n g m ethods. H i g h e r g r a d e " o r e s h o o t s " a t c o n s i d e r a b l e d e p t h i n t h e E a s t Zone may r e q u i r e u n d e r g r o u n d d e v e l o p m e n t . P a n t e l e y e v ( 1 9 7 5 , 1977) has summarized t h e g e o l o g y of t h e d e p o s i t . E s s e n t i a l l y , two z o n e s ( M a i n and E a s t ) o f c o p p e r - g o l d s t o c k w o r k m i n e r a l i z a t i o n o c c u r w i t h i n an e l o n g a t e h i g h l y a l t e r e d s u b v o l c a n i c i n t r u s i v e c o m p l e x o f m o n z o n i t i c c o m p o s i t i o n , e n c l o s e d by a n d e s i t i c t o b a s a l t i c v o l c a n i c s and 116 v o l c a n i c l a s t i c s o f L a t e T r i a s s i c a g e . 5.2 POWER REQUIREMENTS: The a n t i c i p a t e d a v e r a g e demand f o r e l e c t r i c a l e n e r g y by t h e p o t e n t i a l RED-CHRIS mine i s s u b j e c t t o u n c e r t a i n t y r e s u l t i n g f r o m unknown s c a l e and d u r a t i o n o f f u t u r e m i n i n g o p e r a t i o n s . However, i t i s p o s s i b l e t o c o n s t r a i n e n e r g y demand p r o j e c t i o n s i f one p r o c e e d s w i t h two h y p o t h e t i c a l r a n g e s o f p r o d u c t i o n r e f l e c t i n g t y p i c a l d i s i n v e s t m e n t p e r i o d s u s e d i n t h e m i n i n g i n d u s t r y f o r t h i s s c a l e o f d e p o s i t . I n t h i s way u p p e r and l o w e r bounds f o r e n e r g y demands c a n be d e t e r m i n e d . The f o l l o w i n g a s s u m p t i o n s a r e a p p l i e d . i ) T h a t t h e mine w i l l o p e r a t e f o r between 8 and 20 y e a r s . P r e v i o u s s t u d i e s have s u g g e s t e d p o t e n t i a l d u r a t i o n s o f m i n i n g o f 29 y e a r s ( I n t e r m i n i s t r y W o r k i n g Group on N o r t h w e s t B.C. and M i n i s t r y o f E n e r g y , M i n e s and P e t r o l e u m R e s o u r c e s , 1 9 8 3 ) , and 20 y e a r s ( S c h r o e t e r and Pan, 1 9 8 2 ) . i i ) E x t r a c t i o n w i l l be b a s e d on an o p t i m a l i n v e s t m e n t s t r a t e g y where an i n i t i a l s t o c k o f c a p i t a l a c h i e v e s c o n s t a n t r a t e o f p r o d u c t i o n o v e r t h e m i n e ' s l i f e ( C a m p b e l l , 1 9 8 0 ) . I n p r a c t i c e , e x t r a c t i o n and i n v e s t m e n t p o l i c i e s a r e l i k e l y t o be l e s s t h a n o p t i m a l and p r o d u c t i o n r a t e s w i l l v a r y i n r e s p o n s e t o c u r r e n t e c o n o m i c and l a b o u r s i t u a t i o n s . An a t t e m p t t o f o r e c a s t t h e s e v a r i a t i o n s c o u l d l e a d t o s p u r i o u s r e s u l t s . i i i ) P r o d u c t i o n w i l l o c c u r e n t i r e l y f r o m an o p e n - p i t o p e r a t i o n b e c a u s e o f t h e d i f f i c u l t i e s e n c o u n t e r e d i n t r y i n g t o f o r e c a s t t h e h i g h e r e n e r g y demands o f an u n d e r g r o u n d or 117 c o m b i n e d o p e n - p i t / u n d e r g r o u n d o p e r a t i o n . i v ) A s t r i p p i n g r a t i o o f 1.4 t o n n e s o f waste r o c k p e r t o n n e o f o r e i s assumed, as t h i s i s t h e r a t i o u s e d f o r o r e r e s e r v e e s t i m a t i o n s . Chapman and R o b e r t s ( 1 9 8 3 ) and J o e (19 7 9 ) have summarized e n e r g y c o n s u m p t i o n d a t a f o r m i n i n g and m i l l i n g s t a g e s o f l o w - g r a d e o p e n - p i t c o p p e r d e p o s i t s . E n e r g y r e q u i r e m e n t s o f m i n i n g , t h e r e m o v a l and t r a n s p o r t o f w a s t e and o r e t o t h e dump p i l e and m i l l , depend on a v a r i e t y o f f a c t o r s i n c l u d i n g : m i n i n g m e t h o d s , r o c k h a r d n e s s , e q u i p m e n t u s e d , s c a l e o f o p e r a t i o n , d i s t a n c e f r o m mine t o m i l l , c l i m a t i c c o n d i t i o n s , and l o c a l g e o g r a p h y . M i l l i n g , t h e p r o c e s s o f u p g r a d i n g m i n e r a l i z a t i o n t o p r o d u c e m e t a l c o n c e n t r a t e s , d e pends on f a c t o r s s u c h as f i n e n e s s o f c r u s h i n g and g r i n d i n g , methods o f s e p a r a t i o n and c o n c e n t r a t i o n , and p r o d u c t c o n c e n t r a t e p r e p a r a t i o n by d r y i n g and p a c k a g i n g . Chapman and R o b e r t s (1983) p r e s e n t d a t a f r o m B a t e l l e ( 1 9 7 5 ) and U.S. D e p a r t m e n t o f I n t e r i o r s t u d i e s t h a t i n d i c a t e g r o s s e n e r g y r e q u i r e m e n t s f o r o p e n - p i t c o p p e r m i n i n g and m i l l i n g t o be 15 t o 32 M J / t o n o r e mined ( 1 . 4 6 - 3 . 1 4 k W h / t o n n e ) , and 272 M J / t o n o r e m i l l e d ( 2 6 . 6 k W h / t o n n e ) . T h i s assumes a c o n v e r s i o n o f 11.25 MJ/kWh @ 32% e f f i c i e n c y . J o e ' s ( 1 9 7 9 ) r e s u l t s f o r e n e r g y c o n s u m p t i o n i n m i l l i n g of c o p p e r o r e s i n Canada, i n d i c a t e a mean r e q u i r e m e n t o f 215.5 BTU/ton o r e (23.75kWh/tonne @ 10* BTU/kWh). By i n f e r e n c e , m i n i n g and m i l l i n g o f RED-CHRIS o r e c o u l d be e x p e c t e d t o e n t a i l g r o s s e n e r g y r e q u i r e m e n t s i n t h e r a n g e o f 118 25.21 kWh/tonne to 29.74kWh/tonne exclusive of waste rock s t r i p p i n g energy requirements and byproduct concentration. The following c a l c u l a t i o n s of po t e n t i a l energy capacity requirements are derived using the foregoing data. For comparison, previous workers have estimated i n s t a l l e d capacity requirements to range from 4.5 MW to 15 MW (Ministry of Economic Development, 1977; B.C. Hydro Corporate Group, 1983). 119 T a b l e V I . I n s t a l l e d E n e r g y C a p a c i t y R e q u i r e m e n t s C a l c u l a t i o n s PRODUCTION SCENARIO 1: A n t i c i p a t e d Mine L i f e o f 8 Y e a r s : T o t a l Tonnes M i n e d 41.0 x 10° t o n n e s :Nominal H o u r l y P r o d u c t i o n R a t e 41.0 x 1 0 6 t o n e s = 585 t o n n e s / h o u r 8 x 365 x 24 h o u r s : E n e r g y R e q u i r e m e n t s Low E s t i m a t e Ore (25.21 kWh/tonne x 585 t o n n e s / h r ) + Waste 1.4 (1.46 kWh/tonne x 585 t o n n e s / h r ) = 15944 kW A l l o w f o r 85% L o a d F a c t o r « 18758 kW o r a p p r o x . 18.8 MW H i g h E s t i m a t e Ore (29.74 kWh/tonne x 585 t o n n e s / h r ) + Waste 1.4 (3.14 kWh/tonne x 585 t o n n e s / h r ) = 19970 kW A l l o w f o r 85% L o a d F a c t o r = 23495 kW or a p p r o x . 23.5 MW 120 T a b l e V I I . I n s t a l l e d E n e r g y C a p a c i t y R e q u i r e m e n t s C a l c u l a t i o n s PRODUCTION SCENARIO 2: A n t i c i p a t e d Mine L i f e o f 20 Y e a r s : T o t a l T o nnes M i n e d 41.0 x 106 t o n n e s •.Nominal H o u r l y P r o d u c t i o n R a t e 41.0 x 1 0 6 t o n e s = 234 t o n n e s / h o u r 20 x 365 x 24 h o u r s • E n e r g y R e q u i r e m e n t s Low E s t i m a t e Ore (25.21 kWh/tonne x 234 t o n n e s / h r ) + Waste 1.4 (1.46 kWh/tonne x 234 t o n n e s / h r ) = 6377 kW A l l o w f o r 85% L o a d F a c t o r = 7503 kW o r a p p r o x . 7.5 MW H i g h E s t i m a t e Ore (29.74 kWh/tonne x 234 t o n n e s / h r ) + Waste 1.4 (3.14 kWh/tonne x 234 t o n n e s / h r ) = 7988 kW A l l o w f o r 85% L o a d F a c t o r = 9397 kW o r a p p r o x . 9.4 MW 121 5.4 CONCLUSIONS: The RED-CHRIS copper-gold deposit i s selected for ap p l i c a t i o n of the preliminary methodology proposed in the previous chapter. The deposit, owned by Kidd Creek Mines Ltd. (60%), Norcen (20%), and S i l v e r Standard Mines Ltd. (20%), i s situated southeast of Iskut, and contains 41 m i l l i o n tonnes of mineralization grading 0.56% copper and 0.34 grams/tonne gold. The gross i n - s i t u value of the deposit based on mid-June 1984 metal prices i s approximately $631 m i l l i o n . RED-CHRIS has not been developed to date c h i e f l y because of low copper p r i c e s . Additional important constraints that have exacerbated t h i s s i t u a t i o n include i n s u f f i c i e n t or absent transportation and community f a c i l i t i e s , lack of low-cost power, and po t e n t i a l environmental impacts. Based on the assumption that the poten t i a l mine would operate for a period of 8 to 20 years, high and low gross energy demands were derived from energy consumption data i n the l i t e r a t u r e . Production over 8 years would require i n s t a l l e d capacity of within the range 18.8 to 23.5 Megawatts. Production over 20 years would require i n s t a l l e d capacity of within the range 7.5 to 9.4 Megawatts. These estimates provide reasonable upper and lower bounds based on several s i m p l i f y i n g assumptions and therefore provide an important basis for examining a l t e r n a t i v e energy supply options in the next chapter. 122 CHAPTER SIX EVALUATION OF ENERGY SUPPLY ALTERNATIVES FOR RED-CHRIS 6.1. PURPOSE The p u r p o s e o f t h i s c h a p t e r i s t o p r e s e n t a r e c o n n a i s s a n c e l e v e l e v a l u a t i o n o f t h e e n e r g y s u p p l y a l t e r n a t i v e s a v a i l a b l e f o r p o t e n t i a l d e v e l o p m e n t o f t h e RED-CHRIS d e p o s i t . The e v a l u a t i o n i s p e r f o r m e d u s i n g t h e m e t h o d o l o g y p r o p o s e d i n C h a p t e r 4 f r o m t h e p e r s p e c t i v e o f a mine p l a n n e r . I n o r d e r t o p r e s e n t t h e a n a l y s i s i n as c o n c i s e f o r m as p o s s i b l e , t h e r e s u l t s o f e x t e n s i v e r e s e a r c h i n t o e n e r g y a l t e r n a t i v e s w i l l be p r e s e n t e d i n summary f o r m . The c h a p t e r c o n s i s t s o f t h r e e p a r t s . P a r t One d e v e l o p s t h e C o r e I n f o r m a t i o n E n v i r o n m e n t , w h i l e P a r t Two d e v e l o p s t h e B a s i c E v a l u a t i o n E n v i r o n m e n t . C o n c l u d i n g t h e c h a p t e r i s a u n i f y i n g p a r t t h a t e x a m i n e s t h e i n f l u e n c e o f p e r i p h e r a l s t r a t e g i c d a t a on t h e outcome o f t h e a n a l y s i s , and h i g h l i g h t s t h o s e a r e a s r e q u i r i n g f u r t h e r r e s e a r c h . 6.2. CORE INFORMATION ENVIRONMENT The C o r e I n f o r m a t i o n E n v i r o n m e n t ' s p r i m a r y p u r p o s e i s t o f o c u s t h e e n e r g y s u p p l y i s s u e s p e r t a i n i n g t o a p a r t i c u l a r d e p o s i t t h r o u g h a c o m p i l a t i o n o f b a c k g r o u n d and s t r a t e g i c d a t a . T h i s t a s k i s c a r r i e d o u t i n a f o r m a t w h i c h r e s p o n d s t o e i g h t key q u e s t i o n s c o n c e r n i n g t h e p r o b l e m e n v i r o n m e n t . I n t r o d u c t o r y b a c k g r o u n d i n f o r m a t i o n on t h e s t a t u s o f 123 RED-CHRIS d e p o s i t ' s e x p l o r a t i o n and development was presented i n the p r e c e d i n g c h a p t e r . I t i s understood t h a t t h i s i n f o r m a t i o n i s v i t a l to the Core I n f o r m a t i o n Environment. S t r a t e g i e s Data Base Sets Three s t r a t e g i c data base s e t s are developed to supplement i n f o r m a t i o n on the d e p o s i t ' s s t a t u s i n order to focus the energy supply i s s u e . The f i r s t i d e n t i f i e s the key i n t e r e s t groups i n v o l v e d i n the energy supply a n a l y s i s and e s t a b l i s h e s t h e i r o b j e c t i v e f u n c t i o n s . The second i n v e s t i g a t e s g e o l o g i c a l parameters and energy requirements of the d e p o s i t . The f i n a l s t r a t e g i c data base examines r e g i o n a l a s p e c t s of mi n e r a l development. These data bases must be kept c u r r e n t so th a t an u n d e r s t a n d i n g of the d e p o s i t ' s energy supply environment remains v a l i d . 6.2.1. S t r a t e g i c Data Base One - I n t e r e s t Groups and O b j e c t i v e s The a n a l y s i s of energy supply a l t e r n a t i v e s must acknowledge and i n c o r p o r a t e the i n f l u e n c e of key i d e n t i f i e d i n t e r e s t groups i f a p u b l i c r e source p e r s p e c t i v e i s to be achieved and the implementation of d e c i s i o n s i s to be s u c c e s s f u l . For RED-CHRIS we wish to know who e f f e c t s the energy supply s e l e c t i o n p r o c e s s , and who i s a f f e c t e d by p o t e n t i a l energy p r o j e c t implementation. Not a l l i n t e r e s t s a f f e c t e d w i l l be i n c l i n e d to exert an e f f e c t on the s e l e c t i o n p rocess, and so an i n t e r e s t group p r o f i l e must be made e x p l i c i t 124 i f d i s t r i b u t i o n and e q u i t y c o n s i d e r a t i o n s a r e t o be u n d e r s t o o d . G r o u p s i d e n t i f i e d as h a v i n g key i n t e r e s t s o r r e s p o n s i b i l i t i e s r e l a t e d t o t h e e n e r g y p r o j e c t e v a l u a t i o n a r e s t r u c t u r e d i n t o a t h r e e - p a r t c l a s s i f i c a t i o n . F i g u r e 6-1 s c h e m a t i c a l l y i l l u s t r a t e s key r e l a t i o n s h i p s among t h e s e g r o u p s . Note t h a t some members o f Group C have i n t e r e s t s i n b o t h s u b s e t s . OBJECTIVE GROUP A: MINERAL DEPOSIT OWNERS K i d d C r e e k M i n e s - 60% owner of RED-CHRIS N o r c e n E n e r g y - 20% owner o f RED-CHRIS S i l v e V S t a n d a r d M i n e s - 20% owner o f RED-CHRIS OBJECTIVE GROUP B: INTERESTS DIRECTLY OR INDIRECTLY AFFECTED BY THE PROJECT T a h l t a n N a t i o n - n a t i v e r e s i d e n t s o f I s k u t , E d d o n t e n a j o n , a b o r i g i n a l l a n d c l a i m s and s u b s i s t e n c e economy N o n - n a t i v e r e s i d e n t s - y e a r - r o u n d and s e a s o n a l c o m m e r c i a l o p e r a t o r s , and l a b o u r e r s a t I s k u t , E d d o n t e n a j o n , T a t o g g a L a k e and E a l u e L a k e . N o n - r e s i d e n t s - s p e c i a l i n t e r e s t g r o u p s c o n c e r n e d w i t h t o u r i s m , w i l d l i f e , r e s o u r c e d e v e l o p m e n t a n t h r o p o l o g y , and e n e r g y p o l i c y . 125 OBJECTIVE GROUP A: M i n e r a l D e p o s i t Owners P u b l i c Revenue I n i t i t a t i v e s E f f i c i e n t I Resource U t i l i z a t i o n IMPACTS C* CONSTRAINTS <=9 LOCAL SOCIAL AND 5> ECONOMIC BENEFITS S o c i a l and Economic C o n s t r a i n t s OBJECTIVE GROUP B: I n t e r e s t s D i r e c t l y or I n d i r c t l y A f f e c t e d by the P r o j e c t D i v e r s e S o c i a l and P r i v a t e O b j e c t i v e s And Issues Both R e l a t e d and U n r e l a t e d to P r o j e c t Si OBJECTIVE GROUP C: Subset 1: S o c i a l Energy P o l i c y I n t e r e s t s Subset 2: Government A d m i n i s t r a t i v e I n t e r e s t s F i g u r e 11 . Schematic I l l u s t r a t i o n of Key I n t e r a c t i o n s Among O b j e c t i v e Groups 126 OBJECTIVE GROUP C: COLLECTIVE SOCIETAL INTERESTS S u b s e t One - S o c i a l E n e r g y P o l i c y I n t e r e s t s M i n i s t r y o f E n e r g y , M i n e s , and P e t r o l e u m R e s o u r c e s B.C. H y d r o P u b l i c e n e r g y p o l i c y , e n e r g y p r o j e c t and r e v i e w and r e g u l a t i o n . Remote power p l a n n i n g , e x i s t i n g w a t e r r e s e r v e s . M i n i s t r y o f F o r e s t s M i n i s t r y o f E n v i r o n m e n t M i n i s t r y o f T r a n s p o r -t a t i o n and H i g h w a y s M i n i s t r y o f F i n a n c e M i n i s t r y o f I n d u s t r y and S m a l l B u s i n e s s D e v e l o p m e n t M i n i s t r y o f T o u r i s m R e g i o n a l D i s t r i c t o f K i t i m a t / S t i k i n e - Crown t i m b e r and a c c e s s . - B i o p h y s i c a l l a n d use and i m p a c t s , w a s t e m o n i t o r i n g and r e g u l a t i o n , e n v i r o n m e n t a l r e h a b i l i t a t i o n . - A c c e s s , sand and g r a v e l r e s o u r c e use - T a x a t i o n - I n d u s t r i a l and P r i v a t e I n v e s t m e n t and d e v e l o p m e n t , r e g i o n a l r e s o u r c e d e v e l o p m e n t . - C o m m e r c i a l f a c i l i t i e s and P a r k s - R e g i o n a l r e s o u r c e p l a n n i n g S u b s e t Two - Government A d m i n i s t r a t i v e I n t e r e s t s M i n i s t r y of E n e r g y , M i n e s and P e t r o l e u m R e s o u r c e s M i n i s t r y o f L a n d s , P a r k s , and H o u s i n g - Mine d e v e l o p m e n t a p p r o v a l and r e g u l a t i o n , r e g i o n a l m i n e r a l d e v e l o p m e n t . - Crown l a n d use and a c c e s s , P a r k p r o t e c t i o n . 127 The f o r e g o i n g d i v e r s e i n t e r e s t g r o u p s r e f l e c t a b r o a d s p e c t r u m o f p u b l i c and p r i v a t e o b j e c t i v e s . I n o r d e r t o r e d u c e t h e s e t o a m a n a g e a b l e and u n d e r s t a n d a b l e number, i t w i l l be n e c e s s a r y t o i d e n t i f y t h e p r i n c i p a l o b j e c t i v e f u n c t i o n f o r e ach g r o u p . Once t h e o b j e c t i v e f u n c t i o n i s i d e n t i f i e d , key v a r i a b l e s and mechanisms t o a c h i e v e t h e o b j e c t i v e , s u c h as r i s k r e d u c t i o n s t r a t e g i e s , c a n be d i s c u s s e d . I n t h e f o l l o w i n g d i s c u s s i o n , o b j e c t i v e f u n c t i o n s , v a r i a b l e s , and a c h i e v e m e n t mechanisms a r e r e l a t e d t o t h e p r o c e s s o f c h o o s i n g an e n e r g y s u p p l y a l t e r n a t i v e f o r t h e m i n i n g d e v e l o p m e n t . O BJECTIVE GROUP A: M i n e r a l D e p o s i t Owners O b j e c t i v e F u n c t i o n : M a x i m i z e n e t b e n e f i t s f r o m i t s m i n i n g i n v e s t m e n t . The g e n e r a l d e c i s i o n r u l e a p p l i c a b l e t o t h i s o b j e c t i v e f u n c t i o n c a n be s t a t e d as f o l l o w s : m a x i m i z e 11 = P - ^ c ^ where IJ* = p r o f i t P = g r o s s b e n e f i t s o v e r p r o j e c t l i f e e q u a l t o t o t a l r e v e n u e f r o m t h e s a l e o f t h e p r o d u c t p l u s p l a n t s a l v a g e v a l u e fg = sum o f t h e s e t o f c o s t s i n c l u d i n g c a p i t a l , l a b o u r , e n e r g y ( f u e l ) , m a t e r i a l s , l i c e n c e s , and i n t e r n a l i z e d s o c i a l c o s t s o v e r t h e p r o j e c t l i f e , s u c h as r e q u i r e d e n v i r o n m e n t a l c o n t r o l e q u i p m e n t and p r o c e d u r e s , and p o s s i b l y s p e c i a l e n v i r o n m e n t a l and s o c i a l p r o g r a m s r e l a t e d t o i m p a c t s e x c e e d i n g t h e p r o j e c t l i f e . The o b j e c t i v e f u n c t i o n i s m a x i m i z e d by c h o o s i n g and 128 implementing an optimum combination of a l t e r n a t i v e s which produce the g r e a t e s t expected value of a d i s c o u n t e d stream of u n c e r t a i n c o s t s and b e n e f i t s over the l i f e of the p r o j e c t , u s i n g a c o r p o r a t e investment d e c i s i o n making r a t e of r e t u r n . While the d e l i n e a t i o n of the f i r m ' s o b j e c t i v e f u n c t i o n i s , i n i t s e l f , a r e l a t i v e l y s t r a i g h t f o r w a r d procedure, the p l a n n i n g process i s made more complex by the n e c e s s i t y to accommodate elements of r i s k and u n c e r t a i n t y . Indeed, the f i r m ' s p e r c e p t i o n of r i s k and u n c e r t a i n t y , and i t s a b i l i t y to i s o l a t e and develop management s t r a t e g i e s can p r o f o u n d l y i n f l u e n c e the a l t e r n a t i v e s chosen by the f i r m . Three elements of r i s k t h a t are p a r t i c u l a r l y r e l e v a n t to energy supply are now examined. The f i r s t concerns the t r a d e o f f between the n e c e s s i t y to i n s t a l l c o s t l i e r and b e t t e r q u a l i t y equipment, or i n c u r l a r g e r o p e r a t i n g c o s t s , and the d e s i r e to a t t a i n a c e r t a i n l e v e l of t e c h n o l o g i c a l r e l i a b i l i t y . A d e c i s i o n on the d e s i r e d l e v e l of t e c h n o l o g i c a l r e l i a b i l i t y r e q u i r e s i n f o r m a t i o n on the p r o b a b i l i t y of downtime and r e s u l t a n t l o s t revenues, as w e l l as c a p i t a l and o p e r a t i n g c o s t s of a l t e r n a t i v e s . Where the p r o b a b i l i t y d i s t r i b u t i o n of downtime i s not w e l l e s t a b l i s h e d , such as f o r new t e c h n o l o g i e s , a s t r a t e g y to manage t h i s u n c e r t a i n t y might be to i n s t a l l standby g e n e r a t i n g c a p a c i t y . Standby c a p i t a l and o p e r a t i n g c o s t s must then be accounted f o r i n the d e c i s i o n . The a p p r o p r i a t e d e c i s i o n rule, i s to choose the a l t e r n a t i v e with the h i g h e s t expected present v a l u e . T h i s can be g e n e r a l i z e d as f o l l o w s : 129 a = E ( R a ) - K a - 0 a  b = E ( R b ) - K b - O b l Where E ( R ) = e x p e c t e d p r e s e n t v a l u e o f t h e r e v e n u e s t r e a m ; K = c a p i t a l c o s t ; 0 i s t h e p r e s e n t v a l u e o f t h e s t r e a m o f o p e r a t i n g c o s t s . F o r e x a m p l e , i f K b > K a 0 b > 0 a E ( R a ) < E ( R b ) i n d i c a t i n g l o w e r e x p e c t e d r e v e n u e f o r a l t e r n a t i v e a b e c a u s e o f l o w e r e x p e c t e d t e c h n o l o g i c a l r e l i a b i l i t y , and [ ( K b + 0 b ) - ( K a + 0 a ) ] < [ ( E ( R b ) - E ( R a ) ] t h e n l l b > l l a and t h e d e c i s i o n i s t o c h o o s e a l t e r n a t i v e two. The s e c o n d i s s u e o f r i s k c o n c e r n s t h e t r a d e o f f between i n c u r r i n g h i g h e r i n i t i a l c a p i t a l e q u i p m e n t c o s t s and t h e d e s i r e t o r e t a i n t h e o p t i o n o f i m p r o v i n g t h e s y s t e m p e r f o r m a n c e or e f f i c i e n c y a t some f u t u r e d a t e . The d e c i s i o n f o r m a t f o r impr o v e m e n t f l e x i b i l i t y i s a n a l o g o u s t o t h a t o f t e c h n o l o g i c a l r e l i a b i l i t y . A d e c i s i o n t o c a p i t a l i z e on t h e f l e x i b i l i t y o f an a l t e r n a t i v e and i m p r o v e i t s e f f i c i e n c y , f o r example, r e q u i r e s i n f o r m a t i o n on c a p i t a l c o s t s , r e v i s e d o p e r a t i n g c o s t s , s a l v a g e c o s t s , as w e l l as e x p e c t e d b e n e f i t s o f t h e improvement i n t e r m s o f g r e a t e r n e t r e v e n u e . 1 more f o r m a l l y t h i s c a n be e x p r e s s e d a s : K& + J?O ai-( l + r ) n K b + £ 0 b i ( l + r ) n E l i b = E si R a i ( l + r ) n £ R b i ( U r ) n 130 The r i s k a s s o c i a t e d w i t h t h i s t r a d e o f f , r e p r e s e n t e d by s u b o p t i m a l p r o j e c t n e t p r e s e n t v a l u e , a p p e a r s t o be d i m i n i s h e d w i t h m i n i n g o p e r a t i o n s o f r e l a t i v e l y s h o r t e r d u r a t i o n b e c a u s e o f more r i g i d c o n s t r a i n t s on o v e r a l l p r o j e c t d e s i g n . S e c o n d l y , i t i s g e n e r a l l y d e s i r a b l e t o m a x i m i z e t h e c a p a c i t y f a c t o r o f t h e e n e r g y s u p p l y a l t e r n a t i v e s e l e c t e d f o r t h e i n t e g r a t e d m i n e / m i l l c o m p l e x . C a p a c i t y f a c t o r i s a m e a s u r e , i n d e p e n d e n t o f t e c h n o l o g i c a l r e l i a b i l i t y , o f t h e s e r v i c e a v a i l a b i l i t y o f t h e s y s t e m . A h i g h c a p a c i t y f a c t o r ( i . e . , c l o s e t o o r e q u a l t o 100%) e n s u r e s minimum down t i m e and t h e r e f o r e m i n i m i z e s c o s t s . I f an e n e r g y s u p p l y a l t e r n a t i v e w i t h a c a p a c i t y f a c t o r l e s s t h a n 100% i s t o be c o n s i d e r e d , t h e n t h e q u e s t i o n t h a t must be e x a m i n e d i s w h e t h e r t h e n e t p r e s e n t v a l u e o f t h e i n t e g r a t e d m i n i n g c o m p l e x s u b j e c t t o an i n t e r r u p t i b l e s c h e d u l e , b a s e d on some known o r e s t i m a t e d p r o b a b i l i t y d i s t r i b u t i o n o f e n e r g y s y s t e m downtime, c a n e x c e e d t h e n e t p r e s e n t v a l u e o f a s i m i l a r c omplex r e l i a n t on an e n e r g y s u p p l y s y s t e m c a p a b l e o f 100% c a p a c i t y f a c t o r . The t h i r d i s s u e o f r i s k c o n t a i n s two r e l a t e d components w o r t h e x p l i c i t m e n t i o n . F i r s t , i t i s g e n e r a l l y d e s i r a b l e , i n o r d e r t o m i n i m i z e c o s t s , t o m a x i m i z e c a p a c i t y u t i l i z a t i o n . I n m i n i n g t h i s e n t a i l s o p t i m i z i n g t h e o p e r a t i o n a l a s p e c t s o f t h e p r o c e s s o f m i n i n g , t h e t r a n s p o r t o f o r e t o t h e m i l l , t h e m i l l i n g c i r c u i t , t h e s t o r a g e o f c o n c e n t r a t e and t h e d i s p o s a l o f w a s t e . F o r e x a m p l e , as i n s u r a n c e a g a i n s t u n a n t i c i p a t e d downtime i n m i n i n g due t o w e a t h e r , g e o l o g i c a l o r l a b o u r f a c t o r s , i t may be d e s i r a b l e t o c o n s i d e r i n s t a l l i n g m i l l 131 c a p a c i t y l o w e r t h a n m i n i n g c a p a c i t y . The i n t e n d e d r e s u l t i s t o m a i n t a i n m i l l o p e r a t i o n s a t o p t i m a l l e v e l s , and t o m i n i m i z e r e v e n u e l o s s e s . As b e f o r e , t h e o p e r a t i v e d e c i s i o n r u l e i s t o s e l e c t an optimum c o m b i n a t i o n o f p r o c e s s i n g d e s i g n s t h a t m a x i m i z e n e t p r e s e n t v a l u e . A f i n a l i s s u e c o n c e r n s a n t i c i p a t e d e n e r g y c o s t s and t h e i r i m p a c t on d e s i g n and o p e r a t i o n o f t h e m i n i n g c o m p l e x . As w i t h most i n d u s t r i a l p l a n t s and p r o c e s s e s , t h e r e i s a c e r t a i n d e g r e e o f f l e x i b i l i t y i n t h e c h o i c e o f f u e l . W i t h e n e r g y c o s t s b e c o m i n g an i n c r e a s i n g l y l a r g e p a r t o f o v e r a l l m i n i n g c o s t s , however, one o f t h e c r i t i c a l d e c i s i o n s a f f e c t i n g mine p r o f i t a b i l i t y i s t h e c h o i c e o f f u e l and c o n c o m i t a n t e n e r g y g e n e r a t i o n and u s e e q u i p m e n t . A l t h o u g h s h o r t - t e r m f u e l c o s t s a r e g e n e r a l l y u n p r e d i c t a b l e , i t i s h i g h l y p r o b a b l e t h a t o v e r t h e medium t o l o n g t e r m b o t h a c t u a l and r e l a t i v e f u e l p r i c e s w i l l c h a n g e . By c o m b i n i n g e n e r g y t e c h n o l o g y c a p i t a l c o s t s w i t h r e l a t i v e f u e l p r i c e t r e n d s , one c a n d e r i v e t h e f o l l o w i n g t h r e e a l t e r n a t e d e c i s i o n s c e n a r i o s : 132 A l t e r n a t i v e One R e l a t i v e l y more expensive T c a p i t a l equipment or process / u s i n g r e l a t i v e l y i n f l a t i o n / proof f u e l s / A l t e r n a t i v e Two Choice of f u e l and / R e l a t i v e l y l e s s expensive f u e l r e l a t e d t e c h n o l o g y ! ^ c a p i t a l equipment or process \ u s i n g r e l a t i v e l y i n f l a t i o n \ prone f u e l s \ A l t e r n a t i v e Three \ R e l a t i v e l y expensive c a p i t a l \equipment or process with c a p a b i l i t y f o r i n t e r f u e l s u b s t i t u t i o n To determine the d i f f e r e n c e i n estimated net present value of each a l t e r n a t i v e i t i s necessary to i d e n t i f y c a p i t a l c o s t s and an u n c e r t a i n stream of c o s t s a s s o c i a t e d with the c h o i c e of f u e l and i t s p r e d i c t e d p r i c e path. Since p r e d i c t i o n of f u t u r e f u e l p r i c e s i s becoming i n c r e a s i n g l y d i f f i c u l t and complex, the f i r m ' s c h o i c e of f u e l / g e n e r a t i o n / e n e r g y a p p l i c a t i o n combinations w i l l be based on e i t h e r formal and e x p l i c i t assumptions about f u t u r e r e l a t i v e f u e l p r i c e t r e n d s , or i n f o r m a l expert judgement. While e s t i m a t i o n of f u t u r e energy p r i c e t r e n d s w i l l 133 a l w a y s be s u b j e c t t o u n c e r t a i n t y , two t e c h n i q u e s c a n a i d i n a c h i e v i n g a h i g h e r l e v e l o f c o n f i d e n c e i n p r o b a b i l i t y e s t i m a t i o n s o f f u t u r e t r e n d s and h ence add c o n f i d e n c e t o r e l a t i v e e s t i m a t e s o f n e t p r e s e n t v a l u e . The f i r s t t e c h n i q u e i n v o l v e s c o n s t r u c t i n g a n t i c i p a t o r y s c e n a r i o s and a s s i g n i n g r e s p e c t i v e p r o b a b i l i t y r a n g e s b a s e d on e x p e r t j u d g e m e n t . I f , f o r e x a mple, t h e s c e n a r i o deemed "most l i k e l y " e n t a i l s a m a j o r s h i f t i n t h e r e l a t i v e p r i c e s o f f u e l s , t h e n a d d i t i o n a l i n i t i a l i n v e s t m e n t i n e q u i p m e n t c a p a b l e o f i n t e r f u e l s u b s t i t u t i o n may l e a d t o l o w e s t p r o j e c t c o s t s on a p r e s e n t v a l u e b a s i s . I f more a c c u r a t e d a t a were t o become a v a i l a b l e t h e n f o r m a l m o d e l l i n g o f p r i c e t r e n d s and t i m i n g c o u l d be i n c o r p o r a t e d i n t o t h e n e t p r e s e n t v a l u e a n a l y s i s o f a l t e r n a t i v e s . The s e c o n d t e c h n i q u e c o n s i d e r s c o m p a r i s o n o f o v e r l a p p i n g p r o b a b i l i t y d i s t r i b u t i o n s o f a n t i c i p a t e d p r o f i t s f o r e a c h a l t e r n a t i v e , w h i l e f o c u s i n g on known c a p t i t a l c o s t s and u n c e r t a i n f u t u r e f u e l c o s t s as t h e d o m i n a n t v a r i a b l e s . G i v e n t h a t e a c h a l t e r n a t i v e can be d e f i n e d by i t s mean ( E x p e c t e d p r o f i t E ( l l ) ) and i t s v a r i a n c e ( r e p r e s e n t e d by a r a n g e o f e x p e c t e d o u t c o m e s ) and a s s u m i n g s i m i l a r G a u s s i a n d i s t r i b u t i o n s , t h e n t h e g e n e r a l d e c i s i o n r u l e would be t o s e l e c t t h e a l t e r n a t i v e w i t h t h e h i g h e s t mean e x p e c t e d outcome i f t h e f i r m i s r i s k n e u t r a l . I f t h e f i r m ' s p r i n c i p a l d e c i s i o n makers a r e r i s k a v e r s e or r i s k t o l e r a n t , t h e n a more f o r m a l i z e d a n a l y t i c a l m e t h o d o l o g y must be employed t o s p e c i f y t h e t r a d e o f f between mean and v a r i a n c e . I n summary i t i s e v i d e n t t h a t t h e f i r m ' s p r i n c i p a l 134 o b j e c t i v e o f a c h i e v i n g maximum p r o f i t e n t a i l s many complex i n t e r r e l a t e d d e c i s i o n s t r a t e g i e s . C o m p l e x i t y i s p a r t i c u l a r l y e v i d e n t when c o n s i d e r i n g t h e r e l a t i o n s h i p o f e n e r g y s u p p l y i n p u t s t o t h e o v e r a l l m i n i n g p r o j e c t . S t r a t e g i e s t o r e d u c e r i s k and manage u n c e r t a i n t y must be c o n s i d e r e d c a u t i o u s l y w i t h f u l l a w a r e n e s s o f t h e i r p r o b a b i l i s t i c i n p u t s . N e v e r t h e l e s s , t h e s e s t r a t e g i e s c an f o c u s t h e number o f d e c i s i o n c r i t e r i a and t h e r e f o r e l e a d t o more c o n f i d e n t e v a l u a t i o n s o f n e t p r e s e n t v a l u e . OBJECTIVE GROUP B: I n t e r e s t s D i r e c t l y o r I n d i r e c t l y a f f e c t e d by t h e P r o j e c t O b j e c t i v e F u n c t i o n : M a x i m i z e e c o n o m i c and s o c i a l w e l l - b e i n g and e n v i r o n m e n t a l i n t e g r i t y . The g e n e r a l d e c i s i o n r u l e c o r r e s p o n d i n g t o t h i s o b j e c t i v e c a n be s t a t e d a s : t=T t=T m a x i m i z e NPV = b^ - j^Cj t=0 t=0 An e n e r g y p r o j e c t i s f a v o u r e d i f i t a c h i e v e s t h e h i g h e s t Net P r e s e n t V a l u e (NPV) o f a d i s c o u n t e d s t r e a m o f m e a s u r a b l e and i m p u t e d s o c i a l , e c o n o m i c and e n v i r o n m e n t a l c o s t s ( c i ) and b e n e f i t s ( b ^ ) o v e r t h e l i f e o f t h e p r o j e c t ' s e f f e c t s ( f r o m t = 0 t o T) , b a s e d on e a c h g r o u p ' s r a t e o f d i s c o u n t . The d e c i s i o n r u l e d i f f e r s f r o m t h a t o f GROUP A by i n c l u d i n g a d d i t i o n a l b e n e f i t s and c o s t s s u c h - a s t h o s e r e l a t e d t o d i s t r i b u t i o n a l e q u i t y and t h e i m p a c t o f p r o j e c t e x t e r n a l i t i e s , w h i c h w o u l d n o t n e c e s s a r i l y be c o n s i d e r e d i n t h e d e c i s i o n making framework by t h e e n e r g y p r o j e c t p r o p o n e n t . The 1 3 5 o b j e c t i v e f u n c t i o n may be r e p r e s e n t e d f o r m a l l y as f ( e i , s i , WJ[) where e^ r e p r e s e n t s some d i r e c t measure o f e c o n o m i c w e l l - b e i n g s u c h as i n c o m e ; s-^  r e p r e s e n t s a group o f s o c i o - e c o n o m i c v a r i a b l e s , i n c l u d i n g t h e m a i n t e n a n c e and enhancement o f community s o c i a l v i t a l i t y , c u l t u r a l d i v e r s i t y , community autonomy, s o c i a l s e r v i c e s , p o l i t i c a l e f f i c a c y , n a t i v e l a n d r i g h t s , and t h e p r e s e r v a t i o n o f t r a d i t i o n a l c u l t u r a l l y - r e l a t e d s u b s i s t e n c e a c t i v i t i e s . w^ r e p r e s e n t s a s e t o f e n v i r o n m e n t - r e l a t e d v a r i a b l e s s u c h as t h e p r e s e r v a t i o n o f w i l d l i f e h a b i t a t and t h e e a s e o f i m p a c t m i t i g a t i o n . A number of o t h e r i m p o r t a n t e n v i r o n m e n t - r e l a t e d v a r i a b l e s may be a d d r e s s e d as c o n s t r a i n t s o r as v a r i a b l e s t o be m i n i m i z e d . I n t h e l a t e r c a s e , a m o d i f i c a t i o n t o t h e o b j e c t i v e f u n c t i o n w o u l d be r e q u i r e d . I n t h e f o r m e r , t h e p r o c e s s o f s a t i s f y i n g i n t e r e s t g r o u p d e s i r e s c o u l d be s t a t e d as f o l l o w s : max ( e ^ , s^) s u b j e c t t o w-^  < w * i where w*^ r e p r e s e n t s maximum a c c e p t a b l e v a l u e s f o r h y d r o l o g i c a l a l t e r a t i o n , t h e f i s h e r i e s i m p a c t , t h e l e v e l o f u n d e s i r a b l e e f f l u e n t s o r e m i s s i o n s and t h e d e g r e e o f i r r e v e r s i b i l i t y a s s o c i a t e d w i t h an e n e r g y - r e l a t e d p r o j e c t . F i n a l l y i t s h o u l d be n o t e d t h a t t h e m a x i m i z a t i o n of d i r e c t e c o n o m i c b e n e f i t s , e i , may be f a c i l i t a t e d by t h e p r o m o t i o n o f c e r t a i n a c t i v i t i e s w h i c h l e a d t o t h e d i v e r s i f i c a t i o n and s t a b i l i z a t i o n o f e c o n o m i c a c t i v i t y , t h e 136 e s t a b l i s h m e n t o f l o c a l employment and t r a i n i n g o p p o r t u n i t i e s , t h e a t t r a c t i o n o f new s e r v i c e i n d u s t r i e s , and t h e i n c r e a s e d p u r c h a s e o f l o c a l goods and s e r v i c e s . OBJECTIVE GROUP C: C o l l e c t i v e S o c i e t a l I n t e r e s t s The t h i r d m a j o r o b j e c t i v e f u n c t i o n t o be c o n s i d e r e d i s t h a t a s s o c i a t e d w i t h s o c i e t y i n g e n e r a l . I t i s t h e r o l e of g o v e r n m e n t , r e p r e s e n t i n g a l l d i v e r s e s o c i a l i n t e r e s t s b o t h i n d i v i d u a l l y and i n t o t a l i t y , t o d i r e c t i t s e f f o r t s t o m a x i m i z e t h i s o v e r a l l o b j e c t i v e f u n c t i o n ( a l s o r e f e r r e d t o as a s o c i a l w e l f a r e f u n c t i o n ) . G e n e r a l l y s u c h a f u n c t i o n may be f o r m a l i z e d as w= f ( E i , P i , S ± ) where E r e p r e s e n t s e c o n o m i c v a r i a b l e s b r o a d l y d e f i n e d t o i n c l u d e a l l d i r e c t and i m p u t e d s o c i a l c o s t s and b e n e f i t s . P r e p r e s e n t s p o l i t i c a l c o n s i d e r a t i o n s S r e p r e s e n t s s o c i a l i s s u e s s u c h as d i s t r i b u t i o n a l e q u i t y and e n v i r o n m e n t a l i s s u e s o f r i s k . W i t h r e g a r d t o t h e i s s u e o f e n e r g y s u p p l y f o r m i n i n g a d d r e s s e d i n t h i s s t u d y , t h e r e a r e two o b j e c t i v e s u b s e t s i n t h i s f u n c t i o n t h a t a r e d i r e c t l y r e l e v a n t . OBJECTIVE SUBSET 1: S o c i a l E n e r g y P o l i c y I s s u e s . The B.C. g o v e r n m e n t l i s t e d t h e f o l l o w i n g e l e m e n t s i n i t s 1980 E n e r g y P o l i c y S t a t e m e n t as b e i n g c e n t r a l t o p r o v i n c i a l e n e r g y p o l i c y : ( 1 ) e f f e c t i v e g overnment o r g a n i z a t i o n 137 ( 2 ) i n d u s t r i a l d e v e l o p m e n t b a s e d on e x t e n s i v e p r o v i n c i a l r e s o u r c e s ( 3 ) r e d u c e d d e p e n d e n c e on i m p o r t e d o i l and i n c r e a s e d use o f n a t u r a l g a s , h y d r o e l e c t r i c i t y and o t h e r B.C. p r o d u c e d e n e r g y r e s o u r c e s ( 4 ) e x p a n d e d c o n s e r v a t i o n e f f o r t s ( 5 ) i n c r e a s e d s u p p o r t o f r e s e a r c h and d e v e l o p m e n t i n e n e r g y ( 6 ) a s t r e a m l i n e d p r o j e c t r e v i e w p r o c e s s w i t h " f u l l c o n s i d e r a t i o n o f s o c i a l , e n v i r o n m e n t a l and e c o l o g i c a l i m p l i c a t i o n s " ( 7 ) p r o t e c t i o n o f B.C.'s own e n e r g y n e e d s i n a s s e s s i n g p r o p o s e d e n e r g y e x p o r t s , and ( 8 ) e n e r g y p r i c e s t h a t e n c o u r a g e c o n s e r v a t i o n and a d e q u a t e e n e r g y d e v e l o p m e n t , but t h a t a l s o p r o t e c t t h e n e e d s o f c o n s u m e r s Items 2,3, and 4 a p p e a r t o be t h e most r e l e v a n t t o t h e i s s u e o f e n e r g y s u p p l y f o r m i n i n g d e v e l o p m e n t , a t l e a s t i n t h e s h o r t - t e r m . The p r o v i n c i a l g o v e r n m e n t ' s a t t e m p t s t o e n c o u r a g e r e s o u r c e d e v e l o p m e n t u s i n g d o m e s t i c e n e r g y r e s o u r c e s p r i c e d a t a l e v e l w h i c h e n c o u r a g e s t h e i r e f f i c i e n t u t i l i z a t i o n a r e most a p t l y a d d r e s s e d by t h e s e t h r e e i t e m s . T h e r e a r e v a r i o u s m e a s u r e s t h e g o vernment c o u l d employ t o h e l p a c h i e v e t h e s e p o l i c y g o a l s . F o r e x a m p l e , i t may be a w o r t h w h i l e a c t i v i t y f o r g o vernment t o j o i n t l y p a r t i c i p a t e w i t h p r i v a t e d e v e l o p e r s i n s u r v e y i n g and c a r r y i n g o u t a d e t a i l e d q u a l i t y a s s e s s m e n t o f d o m e s t i c e n e r g y r e s o u r c e s as a means o f p r o m o t i n g t h e i r u s e , where t h e r e i s a h i g h p r o b a b i l i t y t h a t 138 imported p e t r o l e u m - d e r i v e d f u e l s would otherwise be used. In a s i t u a t i o n such as t h i s , a r e l a t i v e l y s m a l l amount of p u b l i c investment over a s h o r t - t e r m might r e t u r n a s i g n i f i c a n t l y g r e a t e r amount of economic b e n e f i t s over a much lon g e r term. OBJECTIVE SUBSET 2: Government A d m i n i s t r a t i v e I n t e r e s t s L e g i s l a t i o n enacted by the p r o v i n c i a l government p r o v i d e s the l e g a l a u t h o r i t y and a d m i n i s t r a t i v e framework f o r a c h i e v i n g broad government s o c i a l and economic g o a l s . In the c o n t e x t of a s p e c i f i c i n d u s t r i a l p r o j e c t such as mining, the o b j e c t i v e of government would be to maximize the e f f e c t i v e n e s s of government l e g i s l a t i v e a u t h o r i t y , where NPV = i ( b ± ) - 2(a±) where b^ = gross b e n e f i t s to the p u b l i c , such as lower s o c i a l and environmental c o s t s through the i n t e r n a l i z a t i o n of these c o s t s by the f i r m , as w e l l as r e s o u r c e r e n t s , l i c e n c e s and t a x a t i o n , a^ = p u b l i c c o s t s of a d m i n i s t e r i n g the a p p r o p r i a t e l e g i s l a t i o n and r e g u l a t i o n s , and p o s s i b l y , p u b l i c f i n a n c i a l a s s i s t a n c e f o r p r o j e c t development, product marketing or d i v e r s i f i c a t i o n , once again to achieve l o n g e r term p u b l i c g o a l s . Government l e g i s l a t i o n can t h e r e f o r e be viewed as a mechanism to a c hieve p u b l i c g o a l s . The o v e r a l l p u b l i c i n t e r e s t i s best served when net present value (NPV) i s maximized u s i n g a s o c i a l r a t e of d i s c o u n t . The i s s u e s of r i s k i n h e r e n t i n i n e f f e c t i v e government r e g u l a t i o n of i n d u s t r i a l p r o j e c t s are 139 p o t e n t i a l l y o f t h e f o l l o w i n g two k i n d s . I n t h e f i r s t s i t u a t i o n where government c a r r i e s o u t l i t t l e o r no r e g u l a t i o n , t h e n t h e o b v i o u s s h o r t - t e r m b e n e f i t s o f l o w e r p u b l i c a d m i n i s t r a t i v e c o s t s t o g o v e r n m e n t and h i g h e r p r o j e c t p r o f i t a b i l i t y f o r t h e f i r m may be o f f s e t i n t h e l o n g e r t e r m by p o t e n t i a l l y h i g h e r p u b l i c c o s t s p e r t a i n i n g t o d i s t r i b u t i o n a l e q u i t y o f p r o j e c t i m p a c t s . F o r e x ample, i n a d e q u a t e l y r e g u l a t e d e f f l u e n t d i s c h a r g e may a f f e c t downstream f i s h e r i e s t h u s i n c u r r i n g l o n g - t e r m p u b l i c r e h a b i l i t a t i o n c o s t s . The s e c o n d s i t u a t i o n , o v e r - r e g u l a t i o n , i s l i k e l y t o e n t a i l u n n e c e s s a r y e x p e n d i t u r e o f p u b l i c f u n d s on d e p l o y m e n t of manpower and r e s o u r c e s f o r r e g u l a t i o n w i t h d e c r e a s i n g m a r g i n a l g a i n s i n p u b l i c w e l f a r e . S i m u l t a n e o u s l y , r e l a t i v e l y h i g h e r c o s t s i m p o s e d on t h e f i r m , p e r h a p s i n t h e f o r m o f t a x a t i o n o r e n v i r o n m e n t a l c o n t r o l s , may l e a d t o a s i t u a t i o n where m i n i n g o p e r a t i o n s and f u t u r e o p t i o n s a r e s e v e r e l y c o n s t r a i n e d or p e r h a p s c u r t a i l e d . Once a g a i n s o c i a l w e l f a r e i s n o t m a x i m i z e d b e c a u s e o f i n e f f i c i e n t u s e o f p u b l i c and p r i v a t e r e s o u r c e s . 6.2.2. S t r a t e g i c D a t a Base Two - E n e r g y Demand S t r a t e g i c D a t a Base Two i d e n t i f i e s key f a c t o r s w h i c h d e t e r m i n e , and r e f i n e RED-CHRIS's p o t e n t i a l e l e c t r i c a l e n e r g y r e q u i r e m e n t s . Two c a t e g o r i e s o f i n f o r m a t i o n a r e e x a m i n e d : g e o l o g i c a l and p h y s i c a l d e v e l o p m e n t . The f o r m e r c o n c e r n s p h y s i c a l and m i n e r a l o g i c a l i n f o r m a t i o n , w h i l e t h e l a t t e r e n c o m p asses m i n i n g , m i l l i n g and s u p p o r t f a c i l i t i e s . E s t i m a t e s w i l l be o f a r e c o n n a i s s a n c e n a t u r e i n t h e a b s e n c e o f a 140 c o n c e p t u a l p l a n h a v i n g been c o n c e i v e d f o r t h e d e p o s i t . N e v e r t h e l e s s , e n e r g y c o n s u m p t i o n t r e n d s c a n be s u g g e s t e d and i n f o r m a t i o n r e q u i r e m e n t s c an be o u t l i n e d i n a r e a s where u n c e r t a i n e n e r g y c o n s u m p t i o n may o c c u r . J u d i c i o u s r e f e r e n c e t o e n e r g y c o n s u m p t i o n d a t a f r o m e x i s t i n g m ines i s an i n t e g r a l p a r t o f t h i s s t r a t e g i c d a t a b a s e . G e o l o g i c a l RED-CHRIS i s commonly r e f e r r e d t o as a ' p o r p h y r y ' d e p o s i t . T h i s n o m e n c l a t u r e i d e n t i f i e s t h e d e p o s i t as h a v i n g a s t y l e and o r i g i n o f m i n e r a l i z a t i o n and h o s t g e o l o g y a n a l o g o u s t o many o f t h e w o r l d ' s l a r g e - t o n n a g e , l o w - g r a d e c o p p e r and molybdenum d e p o s i t s f o u n d i n P e r u , C h i l e , t h e m i d - w e s t e r n U n i t e d S t a t e s , and i n t h e H i g h l a n d V a l l e y o f B.C. ( S u t h e r l a n d Brown, 1 9 7 6 ) . T h i s k n o w l e d g e p r o v i d e s an i m p o r t a n t r e f e r e n c e p o i n t f r o m w h i c h t o compare documented e n e r g y c o n s u m p t i o n a t d e v e l o p e d d e p o s i t s . The f o l l o w i n g i n f o r m a t i o n a r e a s p r o v i d e t h e g e o l o g i c a l b a s i s n e e d ed f o r p r e l i m i n a r y e s t i m a t i o n o f e n e r g y demand: M i n e r a l i z a t i o n - O c c u r s p r e d o m i n a n t l y as c h a l c o p y r i t e (CuFeS2) and p y r i t e (FeS2) as g r a i n s l e s s t h a n one m i l l i m e t r e , d i s s e m i n a t e d i n a r g i l l i c t o s e r i c i t i c a l t e r e d i n t r u s i v e r o c k s , or as b l e b s up t o s e v e r a l m i l l i m e t r e s i n q u a r t z - r i c h i n t r u s i v e r o c k s and v e i n l e t s o f q u a r t z up t o s e v e r a l c e n t i m e t r e s w i d e . S u b o r d i n a t e m i n e r a l i z a t i o n i n c l u d e s m a g n e t i t e ( F e 3 0 4 ) , h e m a t i t e ( F e 2 0 3 ) , b o r n i t e (Cu5FeS4), m o l y b d e n i t e (M0S2) . s p h a l e r i t e (ZnS) and g a l e n a ( P b S ) . C o p p e r b e a r i n g m i n e r a l s a r e v e r y 141 w e a k l y a u r i f e r o u s ( g o l d b e a r i n g ) and a r g e n t i f e r o u s ( s i l v e r b e a r i n g ) . E c o n o m i c m i n e r a l i z a t i o n g r a d e t e n d s t o i n c r e a s e w i t h a c o r r e s p o n d i n g i n c r e a s e i n q u a r t z and hence r o c k h a r d n e s s , an i m p o r t a n t f a c t o r t o c o n s i d e r when c a l c u l a t i n g m i n i n g c o s t s . D e p o s i t C o n f i g u r a t i o n - M i n e r a l i z a t i o n o c c u r s i n two d i s c r e t e z o n e s , r e f e r r e d t o as t h e M a i n and E a s t Z o n e s . The M a i n Zone has d i m e n s i o n s o f : 500 m e t e r s l e n g t h ; 150 m e t e r s w i d t h ; and 0 t o 200 m e t e r s d e p t h below s u r f a c e . The E a s t Zone has d i m e n s i o n s o f : 400 m e t e r s l e n g t h ; 80 t o 100 m e t e r s w i d t h ; and 0 t o 300+ m e t e r s d e p t h below s u r f a c e . The two z o n e s a r e e l o n g a t e i n a n o r t h e a s t e r l y d i r e c t i o n , and a r e bounded on t h e s o u t h e a s t by a m a j o r f a u l t . D e p o s i t G r a d e / T o n n a g e -T o t a l D e p o s i t D r i l l I n d i c a t e d " R e s e r v e s " : 41 m i l l i o n t o n n e s o f 0.56% c o p p e r and 0.34 gm/tonne g o l d M a i n Zone D r i l l I n d i c a t e d " R e s e r v e s " : 34.38 m i l l i o n t o n n e s o f 0.51% c o p p e r and 0.23 gm/tonne g o l d E a s t Zone D r i l l I n d i c a t e d " R e s e r v e s " : 6.62 m i l l i o n t o n n e s o f 0.82% c o p p e r and 0.93 gm/tonne g o l d O v e r a l l S t r i p p i n g R a t i o : 1.4:1.0 C u t - o f f G r a d e : 0.25% c o p p e r e q u i v a l e n t P h y s i c a l D e v e l o p m e n t / M i n i n g / M i l l i n g G e o l o g i c a l p a r a m e t e r s i n d i c a t e t h a t t h e d e p o s i t w o u l d be amenable t o o p e n - p i t m i n i n g methods w i t h p o s s i b l e l i m i t e d b u l k u n d e r g r o u n d m i n i n g . The t e r m p h y s i c a l d e v e l o p m e n t , as u s e d h e r e , encompasses 142 m i n i n g , m i l l i n g , s u p p o r t i n f r a s t r u c t u r e and l o g i s t i c s o f an o p e r a t i n g m i n e . E n e r g y c o n s u m p t i o n e s t i m a t e s a s s i g n a b l e t o t h e s e a c t i v i t i e s and i n s t a l l a t i o n s a r e n o r m a l l y c o n c e i v e d d u r i n g t h e mine f e a s i b i l i t y and c o n c e p t u a l p l a n n i n g s t a g e . At t h e r e c o n n a i s s a n c e l e v e l , however, p r e l i m i n a r y e s t i m a t e s can be a d v a n c e d , and a f r amework f o r i n f o r m a t i o n r e q u i r e m e n t s o u t l i n e d . T h e s e d a t a w i l l a s s i s t w i t h s u b s e q u e n t more d e t a i l e d e s t i m a t e s . M i n i n g and m i l l i n g c o n c e r n t h e p r o c e s s o f e x t r a c t i n g m i n e r a l i z e d r o c k f r o m t h e g r o u n d , l i b e r a t i n g and r e c o v e r i n g t h e e c o n o m i c m i n e r a l s by m e c h a n i c a l and c h e m i c a l means, p r o d u c i n g a m e t a l c o n c e n t r a t e , and d i s p o s i n g o f w aste m a t e r i a l s . The m i n i n g and m i l l i n g p r o c e s s a n t i c i p a t e d f o r RED-CHRIS wou l d be a n a l o g o u s t o t h a t o f e s t a b l i s h e d m i n e s . F i g u r e 12 d i s p l a y s t h i s p r o c e s s , t h e numbers i n b r a c k e t s r e f e r t o g r o s s e n e r g y c o n s u m p t i o n d a t a r e p o r t e d i n Chapman and R o b e r t s ( 1 9 8 3 ) and J o e ( 1979) . E n e r g y c o n s u m p t i o n i s a n t i c i p a t e d t o be w i t h i n t h e r a n g e s d i s p l a y e d , e x c e p t p e r h a p s i n t h e a r e a s o f t r a n s p o r t , w a t e r and t a i l i n g s h a n d l i n g , and h e a t i n g . A h a r s h n o r t h e r n c l i m a t e and m o u n t a i n o u s t e r r a i n may p r o v i d e an upward b i a s t o e n e r g y c o n s u m p t i o n i n t h o s e a r e a s . S i m i l a r i l y , b y p r o d u c t r e c o v e r y , s p e c i f i c a l l y g o l d , molybdenum, s i l v e r , z i n c , and l e a d , e n e r g y i n p u t c a n n o t be r e a s o n a b l y e s t a b l i s h e d w i t h o u t b u l k m e t a l l u r g i c a l t e s t i n g . 143 OVERBURDEN OKK: 41 X t o n n o s .56% Cu .34 gm/t Au DRILLING BLASTING E x p l o r a t o r y D r i l l i n g : (25-250 M J / t ) Open P i t D r i l l i n g : (2-20 M.J/t) B l a s t i n g : (3-20 M J / t ) LOADING BY SHOVEL: (5-30 M J / t ) TRANSPORT TRUCK: (0.4-2 MJ/t) CONVEYOR: (2-8 M J / t ) V PRODUCT PREPARATION Dewa t e r i n g : (5-25 MJ/t o r e ) F i I t rat i o n : (25-100 MJ/t o r e ) D r y i n g : (250-1500 M J / t ) o r e ) BASE AND PRECIOUS METAL BYPRODUCT RECOVERY (n.d.) SULPHIDE FLOTATION (100-180 M J / t ) oi e) 7^ TRANSH1K.T SMELTER ( n . . l . ) TO TAILINGS DISPOSAL (10-50 MJ/t t a i l i n g s ) <2 CRUSHING TO 15 mm. (20-50 M J / t ) o r e GRINDING 200 in t o 25 m (50-600 MJ/t o r e ) WASTE ROCK DISPOSAL WATER PUMPING: (5-20 MJ/t r o c k ) HEATING LIGHTING (n.d.) Modi l i e d i i f t r r Clin |>m;in and R o b e r t s (I9H3) F i g . 2.3 p. 19. Figure 12. Mining and M i l l i n g Process and Energy Requirements Note that the energy consumption data in Figure 12 represent gross energy requirements, of which e l e c t r i c a l energy i s only a portion. For example, crushing and grinding may be 90% e l e c t r i c a l , f l o t a t i o n 30% e l e c t r i c a l and product preparation 10% e l e c t r i c a l ( K i h l s t e d t , 1975). Energy demands previously derived for RED-CHRIS, ranging from 7.5 to 23.5 MW i n s t a l l e d capacity, also r e f l e c t gross requirements. These estimates are anticipated to be revised downwards as mining and m i l l i n g engineering design proceeds. Related mine support f a c i l i t i e s and a c t i v i t i e s that would require an indeterminate e l e c t r i c a l energy consumption include power plant operation and maintenance, power transmission losses for a remote power supply, and new or expanded community housing and service i n d u s t r i e s , including any non-related secondary industry that would be attracted to the mining community. 6.2.3. Strategic Data Base Three - Regional Influences Strategic Data Base Three investigates answers to the question: what i s the nature of peripheral influences on problem d e f i n i t i o n , and how are these influences l i k e l y to focus the problem? Regional influences which p o t e n t i a l l y a l t e r the energy supply environment for RED-CHRIS include: (a) development at nearby mineral deposits, (b) nearby non-mining i n d u s t r i a l development, (c) transportation and i n f r a s t r u c t u r e related to (a) and (b), and (d) settlement of native land claims. These 145 a c t i v i t i e s could influence r e l a t i v e changes i n energy supply cost, l o c a t i o n , scale, timing, and impact of energy a l t e r n a t i v e s and post-mining use of energy supply. The following s a l i e n t conclusions emerged from a review of the Ministry of Industry and Small Business Development's (1983) studies on Northwest Economic Development. (a) Nearby mineral deposit development Potential influence appears r e s t r i c t e d to development at f i v e deposits: Schaft Creek, Stikine Copper, Kutcho Creek, Eaglehead, and Klappan Coal, taking the form of: - shared or consecutively used power supply. For example shared i n d u s t r i a l development of More Creek h y d r o e l e c t r i c s i t e has been suggested to serve Schaft Creek, Stikine Copper and RED-CHRIS. - shared experience and knowledge of l o c a l mining conditions at other deposits can lead to more c o s t - e f f e c t i v e and energy e f f i c i e n t i n d u s t r i a l processes and i n s t a l l a t i o n s . - Gulf Canada Resources plan to mine anthracite coal 80 kilometres southeast of RED-CHRIS beginning as early as 1986, may off e r shared c o a l - f i r e d e l e c t r i c generation p o s s i b i l i t i e s . (b) Nearby non-mining i n d u s t r i a l development Influence could occur i n two areas: - construction of a l l or part of the 2765 MW Stikine-Iskut hydroelectric proposal could provide a bulk regional power supply. Timing and anticipated cost of t h i s power source could a l t e r timing of mining development to take advantage of bulk low-cost power. In early 1984 B.C. Hydro 146 i n d e f i n i t e l y d e f e r r e d i n v e s t i g a t i o n o f t h i s p r o j e c t due t o m a j o r s u r p l u s g e n e r a t i n g c a p a c i t y i n t h e P r o v i n c i a l s y s t e m . - e x p a n d e d f o r e s t s e c t o r a c t i v i t y , ( e . g . , l o g g i n g , s a w m i l l s , and p u l p m i l l s ) , c o u l d p r e s e n t s i m i l a r power s u p p l y c o s t - s h a r i n g o p t i o n s as n e a r b y mine d e v e l o p m e n t s . L o g g i n g r o a d c o n s t r u c t i o n may p r o v i d e a c c e s s t o p o t e n t i a l s m a l l - h y d r o s i t e s , o r ' n o n - c o m m e r c i a l ' f o r e s t s amenable t o b i o m a s s - f i r e d e l e c t r i c g e n e r a t i o n . ( c ) T r a n s p o r t a t i o n and I n f r a s t r u c t u r e D e v e l o p m e n t i n t h e s e two a r e a s w o u l d p r o c e e d p r i n c i p a l l y i n r e s p o n s e t o m i n i n g d e v e l o p m e n t s . B e n e f i t s t h a t RED-CHRIS c o u l d e x p e r i e n c e i n c l u d e l o w e r c o s t s f o r s h i p m e n t s o f s u p p l i e s s u c h as d i e s e l f u e l , i f d i e s e l - f i r e d g e n e r a t i o n were c h o s e n , and e x p a n d e d community and s e r v i c e s e c t o r demand f o r e l e c t r i c i t y . The l a t t e r c o u l d a l l o w t h e mine t o p a r t i a l l y s a l v a g e power p l a n t c o s t s a t t h e c o n c l u s i o n o f m i n i n g o p e r a t i o n s i f s u f f i c i e n t s t a b l e l o c a l r e l i a n c e on t h i s power s u p p l y had d e v e l o p e d . ( d ) N a t i v e Land C l a i m s U n r e s o l v e d n a t i v e l a n d c l a i m i s s u e s may e x e r t p o t e n t i a l l y i m p o r t a n t s o c i a l , e n v i r o n m e n t a l , and r e s o u r c e o wnership/management i n f l u e n c e on m i n e r a l d e v e l o p m e n t i n t h e n o r t h w e s t . N e a r l y a l l o f t h e p r e s e n t s t u d y a r e a i s e n c ompassed by t h e A s s o c i a t i o n o f U n i t e d T a h l t a n s c o m p r e h e n s i v e l a n d c l a i m . C o m p r e h e n s i v e c l a i m s c o n c e r n t r a d i t i o n a l u s e and o c c u p a n c y o f t h e l a n d and a r i s e where government has n o t e x t i n g u i s h e d I n d i a n i n t e r e s t t h r o u g h t r e a t y a r r a n g e m e n t s ( M i n i s t r y o f I n d u s t r y and 147 S m a l l B u s i n e s s , 1 9 8 3 ) . The T a h l t a n c l a i m has been a c c e p t e d f o r r e s o l u t i o n by t h e f e d e r a l government o f C a n a d a , b u t c a n n o t p r o c e e d u n t i l t h e p r o v i n c i a l government a g r e e s t o become i n v o l v e d i n c l a i m s n e g o t i a t i o n s . The e n t i r e a r e a s u r r o u n d i n g RED-CHRIS i s c o n t a i n e d i n t h e T a h l t a n c o m p r e h e n s i v e c l a i m . The l a n d p r e s e n t l y s u p p o r t s a modest s u b s i s t e n c e economy f o r t h e n a t i v e community o f I s k u t , w h i c h o t h e r w i s e e x p e r i e n c e s c h r o n i c h i g h l e v e l s o f wage-economy unemployment. D e v e l o p m e n t o f RED-CHRIS and i t s s u p p o r t i n f r a s t r u c t u r e w i l l c e r t a i n l y a l t e r e x i s t i n g l o c a l s u b s i s t e n c e a c t i v i t i e s w i t h p r o f o u n d s o c i o - e c o n o m i c e f f e c t s on t h e l o c a l r e s i d e n t s . I n t h e a b s e n c e o f a c o m p r e h e n s i v e l a n d c l a i m s e t t l e m e n t , t h e f o l l o w i n g a r e a s o f n a t i v e c o n c e r n w i l l l i k e l y emerge as p o t e n t i a l i n f l u e n c e s on RED-CHRIS's d e v e l o p m e n t : - p a r t i c i p a t i o n by T a h l t a n r e p r e s e n t a t i v e s i n p r o j e c t p l a n n i n g - demands by n a t i v e and n o n - n a t i v e r e s i d e n t s f o r o p p o r t u n i t i e s t o p a r t i c i p a t e i n wage economy a c t i v i t i e s r e l a t e d t o mine c o n s t r u c t i o n and o p e r a t i o n - r e s t r i c t i o n o f m i n i n g and s u p p o r t a c t i v i t i e s f r o m t r a d i t i o n a l f i s h i n g and h u n t i n g g r o u n d s - g u a r a n t e e s o f e n v i r o n m e n t a l m i t i g a t i o n where l a n d , w a t e r , f i s h e r i e s , and w i l d l i f e r e s o u r c e s a r e a l t e r e d o r d i m i n i s h e d i n q u a l i t y - p o s s i b l e f i n a n c i a l c o m p e n s a t i o n 148 6.3. BASIC EVALUATION ENVIRONMENT The purpose of the Basic Evaluation Environment i s to perform the following a n a l y t i c a l a c t i v i t i e s : (a) Identify appropriate c r i t e r i a corresponding to objectives i d e n t i f i e d for i n t e r e s t groups i n the Core Information Environment. (b) Conceptualize possible energy supply a l t e r n a t i v e s for RED-CHRIS. (c) Develop a set of st r a t e g i c data bases for each a l t e r n a t i v e which covers: ( i ) energy resource supply, ( i i ) energy conversion technology, economics and ( i i i ) power generation-related regional environmental and s o c i a l opportunities and r i s k s , and (iv ) other relevant information. (d) Summarize a n a l y t i c a l r e s u l t s in matrix form. (e) Perform m u l t i - c r i t e r i a decision making analyses to indicate the most promising a l t e r n a t i v e s for advancement to the p r e f e a s i b i l i t y l e v e l of a n a l y s i s . 6.3.1. P r i o r i t y Valuative C r i t e r i a C r i t e r i a are the operational measurements of objectives which allow the analyst to keep track of differences between alt e r n a t i v e s in terms of the i r e f f e c t s . C r i t e r i a measure the range, scale, and value of e f f e c t s . Once determined, they can be synthesized by a variety of decision making techniques and the o v e r a l l consequences and d e s i r a b i l i t y of an a l t e r n a t i v e can 149 be e v a l u a t e d . I n t h i s way i t i s p o s s i b l e t o d e t e r m i n e t h e d e g r e e t o w h i c h an a l t e r n a t i v e s a t i s f i e s t h e o b j e c t i v e f u n c t i o n o f s p e c i f i c i n t e r e s t g r o u p s . C r i t e r i a w h i c h c o r r e s p o n d t o t h e o b j e c t i v e f u n c t i o n s o f t h e f o u r i n t e r e s t g r o u p c a t e g o r i e s o f s e c t i o n 6.2.1 a r e o u t l i n e d b e l o w . OBJECTIVE GROUP A - M i n e r a l D e p o s i t Owners O b j e c t i v e F u n c t i o n : The o b j e c t i v e f u n c t i o n t o m a x i m i z e n e t b e n e f i t s ( p r o f i t s ) f r o m a m i n i n g i n v e s t m e n t i s m e a s u r e d i n m o n e t a r y t e r m s . The v a r i a b l e s w h i c h c o n t r i b u t e t o t h e g e n e r a l p r o f i t m a x i m i z i n g d e c i s i o n r u l e a r e a l s o d e r i v e d i n m o n e t a r y o r i m p u t e d m o n e t a r y t e r m s . Two commonly u s e d t e r m s s p e c i f i c t o e n e r g y p r o j e c t s c a n p r o v i d e p r e l i m i n a r y i n f o r m a t i o n on t h e m a g n i t u d e o f t o t a l c o s t s . The f i r s t o f t h e s e i s a g r o s s i n v e s t m e n t c o s t m e a s u r e , d o l l a r s p e r k i l o W a t t o f i n s t a l l e d c a p a c i t y ($/kW). T h i s may be s u p p l e m e n t e d by a n n u a l o p e r a t i o n and m a i n t e n a n c e c o s t s where a v a i l a b l e . The s e c o n d i s a measure o f t h e a n n u a l e n e r g y c o s t and r e f e r r e d t o as m i l l s p e r k i l o W a t t h o u r ( m i l l s / k W h ) , a r a t i o o f t h e a v e r a g e a n n u a l e n e r g y c o s t and t h e a v e r a g e a n n u a l e n e r g y p r o d u c e d . The t h r e e i s s u e s o f r i s k , i n v o l v i n g t r a d e o f f s between c a p i t a l i n v e s t m e n t and t e c h n o l o g i c a l r e l i a b i l i t y , i m p r o v e m e n t f l e x i b i l i t y , and c a p a c i t y u t i l i z a t i o n a r e u l t i m a t e l y r e p r e s e n t e d i n t h e d e c i s i o n r u l e as m o n e t a r y . m e a s u r e s p e r h a p s w i t h i n a p r o b a b i l i s t i c r a n g e . F o r a p r e l i m i n a r y a n a l y s i s where d e t a i l e d c o s t d a t a a r e g e n e r a l l y n o t a v a i l a b l e , t h e r e a r e a number o f u s e f u l i n d i c a t o r s t h a t can be u s e d . 150 T e c h n o l o g i c a l r e l i a b i l i t y can be c o n s i d e r e d a f u n c t i o n o f low p e r c e n t a g e downtime combined w i t h h i g h c a p a c i t y f a c t o r . I m proved f l e x i b i l i t y c o u l d be r e p r e s e n t e d by t h e i n c r e a s e i n e f f i c i e n c y o f t o t a l o p e r a t i o n s and e n e r g y o u t p u t as a f u n c t i o n o f c a p i t a l i n p u t . C a p a c i t y u t i l i z a t i o n , f r o m t h e s t a n d p o i n t o f power g e n e r a t i o n , c o u l d be r e p r e s e n t e d by t h e p e r c e n t a g e o f a n n u a l e n e r g y demand o f an i n d u s t r i a l o p e r a t i o n s e r v e d by t h e p r i n c i p a l g e n e r a t i o n s y s t e m . F i n a l l y , t h e i n d i c a t o r s f o r u n c e r t a i n f u e l p r i c e t r e n d s can a l s o be u s e d t o p r o v i d e i n f o r m a t i o n f o r f u t u r e p r o f i t m a x i m i z a t i o n s c e n a r i o s . G e n e r a l l y , f u e l p r i c e d a t a w i l l i n c l u d e a base r e f e r e n c e p r i c e and an a n t i c i p a t e d t i m e r a t e o f i n c r e a s e ( i n f l a t i o n f a c t o r ) . P r o b a b i l i t y r a n g e s c a n be i n c o r p o r a t e d by s u g g e s t i n g a low, m i d - r a n g e and h i g h i n f l a t i o n f a c t o r . OBJECTIVE GROUP B - I n t e r e s t s D i r e c t l y o r I n d i r e c t l y A f f e c t e d By t h e P r o j e c t O b j e c t i v e F u n c t i o n : The o b j e c t i v e f u n c t i o n t o m a x i m i z e e c o n o m i c and s o c i a l w e l l - b e i n g and e n v i r o n m e n t a l i n t e g r i t y i s r e p r e s e n t e d as a m o n e t a r y v a l u e o f n e t p r e s e n t v a l u e b a s e d on e a c h g r o u p ' s d i s c o u n t r a t e . M e a s urements o f d i s t r i b u t i o n a l e q u i t y and e x t e r n a l i t i e s may be a s s i g n e d i m p u t e d m o n e t a r y v a l u e s t h r o u g h shadow p r i c i n g , w i l l i n g n e s s - t o - p a y , e x p e r t j udgement o r o t h e r t e c h n i q u e s . The t h r e e m a j o r v a r i a b l e s e t s i n t h e o b j e c t i v e f u n c t i o n , e c o n o m i c , s o c i a l , and e n v i r o n m e n t a l c a n be r e p r e s e n t e d by a 151 l a r g e number o f c r i t e r i a . E c o n o m i c w e l l - b e i n g i s commonly r e p r e s e n t e d by i n c r e a s e d income l e v e l s , number o f e m p l o y e d , number and k i n d o f new i n d u s t r i e s , and l o c a l e x p e n d i t u r e s . S o c i o - e c o n o m i c v a r i a b l e s a r e a s s e s s e d i n more a b s t r a c t f a s h i o n . F o r example t h e o b j e c t i v e t o m a i n t a i n a h i g h l e v e l o f community p o l i t i c a l e f f i c a c y may be a s s e s s e d by t h e community's c a p a b i l i t y t o p e r c e i v e and e f f e c t i v e l y r e s p o n d t o e x t e r n a l i m p a c t s . S i m i l a r l y , a g e n e r a l c r i t e r i o n o f community s o c i a l v i t a l i t y m i g h t be t h e l e v e l o f p a r t i c i p a t i o n i n f o r m a l and i n f o r m a l c o l l e c t i v e community e v e n t s . F i n a l l y , e n v i r o n m e n t - r e l a t e d v a r i a b l e s a r e v a l u a t e d by c r i t e r i a w i t h b o t h e x p l i c i t and i n f o r m a l m e a s u r e s . F o r example, o p e r a t i o n a l m e a s u r e s o f h a b i t a t a l t e r a t i o n may be r e p r e s e n t e d by h e c t a r e s o f l a n d , numbers and k i n d o f s p e c i e s d i s p l a c e d , q u a n t i t y o f d i s c h a r g e d e f f l u e n t o r e m i s s i o n s , and c o s t o f m i t i g a t i o n p r o g r a m s . L e s s t a n g i b l e e n v i r o n m e n t a l v a r i a b l e s s u c h as a e s t h e t i c s or l o s s o f w i l d e r n e s s c a n be i n d i r e c t l y m e a s u r e d by a c t i o n s and e c o n o m i c a c t i v i t i e s o f a f f e c t e d u s e r g r o u p s . OBJECTIVE GROUP C - C o l l e c t i v e S o c i e t a l I n t e r e s t s S u b s e t 1: S o c i a l E n e r g y P o l i c y I s s u e s T h r e e e l e m e n t s o f p r o v i n c i a l e n e r g y p o l i c y a r e r e l e v a n t t o t h e s t u d y and c a n be examined f o r t h e i r c r i t e r i a . The f i r s t p o l i c y e l e m e n t , p r o m o t i o n o f i n d u s t r i a l d e v e l o p m e n t b a s e d on e x t e n s i v e p r o v i n c i a l ( e n e r g y ) r e s o u r c e s , c a n be r e p r e s e n t e d by t h e number, k i n d and e c o n o m i c c o n t r i b u t i o n o f new i n d u s t r i e s 152 r e l i a n t s o l e l y on p r o v i n c i a l e n e r g y , o r as a r a t e d f u n c t i o n o f i n d u s t r i e s p a r t i a l l y r e l i a n t on i n d i g e n o u s e n e r g y . The s e c o n d p o l i c y e l e m e n t , r e d u c e d d e p e n d e n c e on i m p o r t e d o i l and i n c r e a s e d use o f p r o v i n c i a l l y p r o d u c e d e n e r g y r e s o u r c e s , c a n be m e a s u r e d by n o t i n g t h e r e l a t i v e c o s t c h a n g e o f i m p o r t e d e n e r g y c o m m o d i t i e s t o d o m e s t i c e n e r g y c o m m o d i t i e s and t h e r e s u l t a n t c h a n g e ( i n c r e a s e ) i n e x p e n d i t u r e s on d o m e s t i c e n e r g y s o u r c e s . The f i n a l p o l i c y e l e m e n t , expanded c o n s e r v a t i o n e f f o r t s c a n be v a l u a t e d t h r o u g h t h e v a l u e o f e n e r g y r e s o u r c e s d e f e r r e d f o r f u t u r e u s e and t h e l e v e l o f e x p e n d i t u r e s on c o n s e r v a t i o n r e s e a r c h , d e s i g n , and c o n s t r u c t i o n . S u b s e t 2: Government A d m i n i s t r a t i v e I n t e r e s t s O b j e c t i v e F u n c t i o n - The government o b j e c t i v e o f m a x i m i z i n g t h e e f f e c t i v e n e s s o f p r o j e c t a d m i n i s t r a t i o n and r e g u l a t i o n c a n be r e p r e s e n t e d o v e r a l l by a m o n e t a r y v a l u e o f n e t p r e s e n t v a l u e b a s e d on a s o c i a l r a t e o f d i s c o u n t . The c r i t e r i a t h a t c a n be u s e d t o d e r i v e a m easure o f e f f e c t i v e n e s s i n c l u d e t h e c o s t of g o v e r n m e n t r e g u l a t i o n i n b o t h m o n e t a r y and manpower t e r m s and t h e c o s t s o f e x t e r n a l p r o j e c t i m p a c t s assumed by t h e p u b l i c and assumed by t h e p r o j e c t d e v e l o p e r b e c a u s e o f e x t e r n a l s o c i a l c o n s t r a i n t s . I n s p e c i a l c a s e s where t h e p u b l i c p a r t i c i p a t e s i n e n e r g y r e s o u r c e d e v e l o p m e n t , t h e n th e n e t p r e s e n t v a l u e o f t h e p u b l i c ' s i n v e s t m e n t s h a r e must be i n d i c a t e d . 153 6.3.2. Energy Supply Alternatives Uncertainty surrounding timing of RED-CHRIS mineral development, and the r e l a t i o n s h i p of regional influences to the deposit's development, require the analyst to consider a wide variety of energy supply a l t e r n a t i v e s . For convenience these can be placed into one of the following four categories: i ) Commercially proven and with h i s t o r i c a p p l i c a t i o n to serving remote mineral development (e.g., d i e s e l generation, small h y d r o e l e c t r i c , and high voltage gr i d extension). i i ) Commercially proven but without h i s t o r i c mineral development a p p l i c a t i o n in remote areas (e.g., c o a l - f i r e d generation, geothermal, biomass, peat, natural gas, combined diesel-small h y d r o e l e c t r i c ) . i i i ) Commercially doubtful, and without h i s t o r i c mineral development applications (e.g., s o l a r , wind, biofuels) . i v ) Unknown p o s s i b i l i t i e s which may be encountered during the course of the a n a l y s i s . Conservation, cogeneration, waste heat recovery, and other s p e c i a l i z e d system arrangements and app l i c a t i o n s w i l l not be discussed separately as they are generally subsets of the foregoing a l t e r n a t i v e s . Summaries presented on the following pages for each power generation a l t e r n a t i v e are based primarily on l i t e r a t u r e reviews and where possible, communication with persons knowledgeable i n small-scale a p p l i c a t i o n s . 1 5 4 6.3.2.A. Category I i ) Diesel E l e c t r i c Generation: a) Introduction Diesel e l e c t r i c generation i s presently the most widespread means of generating e l e c t r i c power at load centres in northern B.C. which are i s o l a t e d from the p r o v i n c i a l g r i d . Table III l i s t s 27 known s i t e s within the study area that r e l y on d i e s e l f u e l . End uses range from lodge operators to communities and operating mines. I n s t a l l e d c a p a c i t i e s range from several tens of kilowatts up to 19 MW at Cassiar Asbestos Mines. A sample of energy demands and costs (1982) experienced by several communities i n the northwest are (Sigma Engineering Ltd., 1984): A t l i n 2.38 GW.h 162 mills/kWh Stewart 12.83 GW.h 127 mills/kWh Telegraph Creek 1.01 GW.h 158 mills/kWh Diesel's popularity stems la r g e l y from i t s well-proven r e l i a b i l i t y , f l e x i b i l i t y , ease of transport and storage, easy and low-cost i n s t a l l a t i o n costs, and h i s t o r i c low f u e l costs, along with a high energy content per volume. As a f u e l resource, d i e s e l has been readily available i n the past and i s l i k e l y to be for the foreseeable future. However there i s a high p r o b a b i l i t y that future prices w i l l continue to increase at a higher rate r e l a t i v e to most other non-petroleum f u e l s . 155 In Canada, the nature of future d i e s e l prices i s complex and related to a number of factors including production l e v e l s of Canadian petroleum, development of Canadian o i l sand deposits, a v a i l a b i l i t y of imports, and federal government o i l - p r i c i n g s t r a t e g i e s . b) Technology Diesel generation technology i s well matured and few improvements can be anti c i p a t e d . A conversion factor of 0.31 to 0.30 litres/kWh can be expected for i n s t a l l e d c a p a c i t i e s greater than 500 kW ( S t i l w e l l , 1980). The l i f e s p a n of meticulously maintained i n s t a l l a t i o n s i s not l i k e l y to exceed 20 years, hence longer mining operations w i l l require replacement of o r i g i n a l equipment. c) Economics The economic factors of di e s e l generation are well defined. Following i s a general breakdown of c a p i t a l , operating and maintenance costs after B.C. Hydro Corporate Group (1983). I n s t a l l a t i o n and s i t e costs w i l l vary somewhat depending on the size and location of the f a c i l i t y . 156 C a p i t a l C o s t s E n g i n e e r i n g , d e s i g n , s i t e p r e p a r a t i o n , f o u n d a t i o n s , b u i l d i n g and m a j o r e q u i p m e n t o r d e r s . E q u i p m e n t d e l i v e r i e s , i n s t a l l a t i o n , t e s t i n g and c o m m i s s i o n i n g - 40% - 60% A n n u a l O p e r a t i n g C o s t s F u e l M a i n t e n a n c e - 83% - 17% - L a b o u r - S p a r e P a r t s and 64% M a t e r i a l s - L u b r i c a t i n g O i l s -25% 11% S a l v a g e V a l u e ~ Y e a r s o f s e r v i c e a b l e l i f e r e m a i n i n g X P l a n t L i f e R e p l a c e m e n t C o s t A n n u a l e n e r g y c o s t s o f d i e s e l a r e d e t e r m i n e d by t h e sum o f t h e a n n u a l o p e r a t i n g c o s t s d i v i d e d by t h e a n n u a l e n e r g y o u t p u t e x p r e s s e d i n m i l l s / k W h . S i n c e d i e s e l f u e l c o s t s a r e a m a j o r p o r t i o n o f o v e r a l l s y s t e m c o s t s . R e a l p r i c e e s c a l a t i o n s i n f u t u r e y e a r s w i l l i n c r e a s e o v e r a l l s y s t e m e n e r g y c o s t s . The e c o n o m i c a t t r a c t i v e n e s s o f i n f l a t i o n - p r o n e d i e s e l f u e l w i l l c o n t i n u e t o be d e t e r m i n e d by t h e t r a d e - o f f between c a p i t a l and o p e r a t i n g c o s t s and t h e d e g r e e of c e r t a i n t y i n f u t u r e c o s t s , and t h e a t t i t u d e s t o w a r d s r i s k o f t h e p l a n t owner. Remote i n s t a l l a t i o n s a r e g e n e r a l l y s i z e d t o s e r v e peak demand w i t h s t a n d b y u n i t s e q u i v a l e n t t o 25-30% o f i n s t a l l e d c a p a c i t y . Thus f o r RED-CHRIS un d e r a 20 y e a r m i n i n g l i f e s c e n a r i o w i t h a peak demand c a p a c i t y o f 7.5 MW, an a d d i t i o n a l 2 t o 2.5 MW i n s t a l l e d c a p a c i t y would be r e q u i r e d . F o r RED-CHRIS d i e s e l g e n e r a t i o n , c a p i t a l c o s t e s t i m a t e s 157 for i n s t a l l a t i o n and f i r s t year operating costs and energy costs can be r e l i a b l y determined for production scenarios suggested i n Section 5.2. In Appendix 3, Net Present Values are determined for d i e s e l based on 8 and 12 per cent discount rates for high and low f u e l price scenarios. The NPV of d i e s e l for an eight year production scenario ranges from 82.7 to 146.6 m i l l i o n d o l l a r s , while the range of values for the twenty year production scenario i s calculated as 48.1 to 115.1 m i l l i o n d o l l a r s . d) Environment The environmental problems associated with d i e s e l - e l e c t r i c concern possible f u e l s p i l l s during transport and handling, and land-use waste-heat and exhaust emmissions in t h i s remote environment are considered to be n e g l i g i b l e . These problems can be l a r g e l y ameliorated by c a r e f u l site-planning, well monitored safety programs, and the use of waste-heat and process steam recovery for domestic uses (greenhouses and sewage), and i n d u s t r i a l processes (steam, heating and metal concentrate drying a p p l i c a t i o n s ) . Experience with waste-heat recovery has proven p a r t i c u l a r l y b e n e f i c i a l at the P o l a r i s Mine on L i t t l e Cornwallis Island in the high A r c t i c (Nielson, 1984), and other locations ( P f e i f e r and Kovachevich, 1984; Hatsopoulos et a l , 1978). e) Social Implications Social opportunities created by d i e s e l generation are r e s t r i c t e d to employment in the operation and maintenance of the system, and the transport of f u e l . 158 f) Summary To summarize, d i e s e l generation has f u l f i l l e d the role of 'status quo' for remote e l e c t r i c a l demands for many years. Its well-proven r e l i a b i l i t y , f l e x i b i l i t y , and environmentally benign nature ensure i t s place in the future i f the cost of die s e l f u e l , the major system expense, permits energy costs to remain competitive, when compared to a l t e r n a t i v e power generation systems, over the l i f e of the mining project. Energy cost estimates prepared for RED-CHRIS i n Appendix 2 indicate costs comparable to those experienced at e x i s t i n g remote northern s i t e s . i i ) High Voltage Grid Extension: a) Introduction The f e a s i b i l i t y of extending high voltage transmission l i n e s from established grids to serve the energy requirements of northern mines has been investigated in a previous study by B.C. Hydro Corporate Group (1983). Their three a l t e r n a t i v e s and a fourth a l t e r n a t i v e proposed here, are examined i n r e l a t i o n to t h e i r a p p l i c a b i l i t y to RED-CHRIS. They are displayed on Figure 6. None of these a l t e r n a t i v e s i s p r i v a t e l y implementable from the standpoint of RED-CHRIS; most are large energy projects with power l e v e l s an order of magnitude greater than the history requirements. Nevertheless i t i s important to be aware of t h e i r p o t e n t i a l influence in the regional energy supply picture. 159 Alternative 1: Extending a 230 kV l i n e from Telkwa or Skeena substation to serve Schaft Creek and Stikine Copper, with a 138 kV spur l i n e run northeast to serve RED-CHRIS, and possibly Kutcho area mines. Alternative 2: Development of the Stikine/Iskut h y d r o e l e c t r i c project, and subsequent construction of a 138 kV l i n e from the nearest proposed substation to RED-CHRIS. Alternative 3: Development of More Creek hydroelectric project on a stand alone basis (Stikine/Iskut deferred or cancelled), with a 138 kV l i n e from the powerhouse to RED-CHRIS. Alternative 4: Extending a 230 kV l i n e south from the Yukon to serve Midway, Cassiar, McDame, Kutcho Creek and Stikine area mines, step down to 138 kV, or 69 kV to serve RED-CHRIS from nearest d i s t r i b u t i o n substation. b) Alternative 1: A 230 kV l i n e from Telkwa substation would tap the ex i s t i n g p r o v i n c i a l grid managed by B.C. Hydro. The 360 kilometre l i n e would follow approximately along the Highway 37 corridor to a substation at Bob Quinn, from where l i n e s would radiate to Stikine Copper, Schaft Creek and RED-CHRIS. An 80 kilometre l i n e would be required to access the l a s t . B.C. Hydro's 1982 cost estimate for the l i n e s to Stikine 160 Copper and Schaft Creek i n f l a t e d at 10% p.a. i n d i c a t e a cost of $230,000 to $321,000/km. for the 230 kV l i n e , or about $83 m i l l i o n to $116 m i l l i o n to Bob Quinn. Sigma Engineering Ltd. (1984) data indicate a further cost of $7.7 m i l l i o n for the 80 kilometre 138 kV l i n e to RED-CHRIS. The average i n d u s t r i a l rate cost of power over the next decade at Telkwa i s forecast to be at a s l i g h t l y higher than 2.5c/kWh in constant 1982$ (B.C. Hydro Corporate Group, 1983). Therefore, i f one assumes a transmission power loss of 10%, the 7 year and 20 year production schedules at RED-CHRIS would incur annual energy expenditures of approximately $4.1 m i l l i o n and $1.8 m i l l i o n . The p r a c t i c a b i l i t y of this a l t e r n a t i v e to RED-CHRIS i s c l e a r l y a function of several factors which must be overcome nearly a decade (estimated project lead time 7 to 10 years) before power would be required: - Approval of the project under the B.C. U t i l i t i e s Commission Energy Project Review Process. - Commitment by B.C. Hydro to meeting the mining development power requirements, - Development of a l l three deposits with a common time frame in order to share costs. - Sharing of c a p i t a l costs under a staged mine development scenario. - Mitigation of uncertain environmental and s o c i a l impacts (e.g., Native Land claims). 161 - Engineering design of geotechnical ( t e r r a i n , foundation, climate) factors related to route s e l e c t i o n and cost. c) Alternative 2 Alternative 2 i s premised on the completion of the Stikine/Iskut mega-hydroelectric project proposed by B.C. Hydro. The 2800 MW project would generate nearly 13000 GW.h yearly and as recently as 1980 was scheduled for an i n - s e r v i c e date of 1991 (B.C. Hydro, 1980). In 1982 t h i s date was revised to 1994, and i n 1984 the project was deferred i n d e f i n i t e l y (B.C. Hydro, 1982). B.C. Hydro Corporate Group (1983) has ca l c u l a t e d the average energy cost to RED-CHRIS i f the mine were to proceed at the time of hydro i n service dates between 1995 and 2000. The average energy cost was determined as 65 mills/kWh at 8% discount rate, to 90 mills/kWh at 12%. Considering the nature of the uncertainties surrounding t h i s project, and that i t i s not a private option a v a i l a b l e to RED-CHRIS, t h i s a l t e r n a t i v e w i l l not be reviewed further. d) Alternative 3 Development of the More Creek hydroelectric project (the smallest component of Stikine/Iskut) some 80 kilometres south of RED-CHRIS, has been proposed i r r e s p e c t i v e . o f Stikine/Iskut status. The project would have an i n s t a l l e d capacity of 155 MW and provide a firm 600 GW.h energy annually. This would be s u f f i c i e n t to serve the requirements of Stikine Copper, Schaft 162 Creek and RED-CHRIS provided a 50 MW d i e s e l standby generator were i n s t a l l e d for c r i t i c a l water periods. The More Creek hydroelectric project could be constructed i n 5 years at a cost of about $305 m i l l i o n (1984$) and supply energy at an average annual cost of 60 - 79 mills/kWh (1982) m i l l s ) , excluding i n t e r e s t during construction and the cost of transmission to mine s i t e s (B.C. Hydro Corporate Group, 1983). Transmission to RED-CHRIS i s estimated to cost an a d d i t i o n a l $6.4 m i l l i o n . Therefore t o t a l average annual energy costs for RED-CHRIS could be expected to approach the range of 80 - 100 mills/kWh (1984 m i l l s ) . Technical aspects of the proposal involve a 135 meter high e a r t h f i l l or concrete arch dam impounding 1300 m i l l i o n m^  of storage covering 4100 hectares. A 37 meter high dam constructed on upper Forrest Kerr Creek would d i v e r t t h i s creek water into the upper part of the r e s e r v o i r . Few insurmountable technical constraints are envisaged for a 22 meter wide corridor for 138 kV transmission to RED-CHRIS. Preliminary assessment by Ministry of Energy, Mines and Petroleum Resources, and Ministry of Environment (1983) determined that impacts could occur in the following areas: - altered stream and sediment flows in the Stikine River del t a . - loss of More Creek valley as an access option to Schaft Creek minesite. - loss or diminished heritage resources, w i l d l i f e habitat, water quality a l t e r a t i o n , and v i s u a l c orridor impact 163 a d j a c e n t t o K i n a s k a n Lake P a r k d e p e n d i n g on r o u t e s e l e c t i o n o f t r a n s m i s s i o n l i n e s . Impact on N a t i v e L a n d c l a i m s i s a l s o c e r t a i n . - t r a n s m i s s i o n t o RED-CHRIS would p r o v i d e t h e o p p o r t u n i t y t o s u b s t i t u t e h y d r o e l e c t r i c power f o r s u b s i d i z e d d i e s e l g e n e r a t i o n a t E d d o n t e n a j o n . In summary, t h e main f a c t o r s r e q u i r i n g c l a r i f i c a t i o n b e f o r e t h i s o p t i o n c a n be c o n s i d e r e d more s e r i o u s l y i n c l u d e : - A commitment o f B.C. Hydro t o p u r s u e More C r e e k p r o j e c t i n d e p e n d e n t l y o f t h e S t i k i n e / I s k u t s y s t e m . - T i m i n g o f t h e S t i k i n e C o p p e r , S c h a f t C r e e k and RED-CHRIS mine s t a r t - u p s . - E f f e c t on t r a n s m i s s i o n c o n s t r u c t i o n c o s t s o f v a r i o u s r o u t e s e l e c t i o n o p t i o n s and s o c i a l / e n v i r o n m e n t a l c o n d i t i o n s f o r w h i c h a m e l i o r a t i o n and m i t i g a t i o n may be r e q u i r e d . e) A l t e r n a t i v e 4 A 230 kV t r a n s m i s s i o n l i n e c o n n e c t e d t o a Yukon g r i d i s p r o p o s e d as a f u t u r e o p t i o n f o r s e r v i n g power r e q u i r e m e n t s o f n o r t h e r n B.C. m i n e s . The p r o p o s a l stems f r o m c o n s i d e r a t i o n o f t h e f o l l o w i n g : - I f l a r g e s c a l e m i n i n g or aluminum s m e l t i n g (Thompson, 1981) a r e t o p r o c e e d a t some f u t u r e d a t e i n t h e Yukon, t h e y w i l l r e q u i r e l a r g e power i n s t a l l a t i o n s . S u r p l u s power may be a v a i l a b l e on a f i r m o r t e m p o r a r y / i n t e r r u p t i b l e b a s i s . - D e p e n d i n g on t h e n a t u r e and l o c a t i o n o f power g e n e r a t i o n ( i . e . , h y d r o e l e c t r i c v. n a t u r a l g a s - f i r e d ) and 164 transmission grids, power may be within economic transmission distance of northern B.C. - Transmission distances south to some northern B.C. deposits (e.g., Midway, Cassiar area, Kutcho area) are shorter than comparable gri d extensions from the B.C. grid at Telkwa, and equidistant for other deposits (e.g., Stikine Copper, Schaft Creek and RED-CHRIS). The p r i n c i p a l issues that would require c l a r i f i c a t i o n in order to further consider the v i a b i l i t y of t h i s proposal include: - Patterns of i n d u s t r i a l growth and power supply i n the Yukon. - Transboundary p r o v i n c i a l / t e r r i t o r i a l energy transfer p o l i c y . - The issue of who pays? and how much?, which i s p a r t i a l l y dependent on mine start-up dates. - The estimated average energy cost to i n d i v i d u a l mines such as RED-CHRIS. - The nature of s o c i a l and environmental impacts. i i i ) Small Hydropower: a) Introduction Small hydropower i s defined as a hydroelectric project with i n s t a l l e d capacity of less then 20 MW in accordance with the regulation guidelines of the B.C. U t i l i t i e s Commission Act. Small hydropower would thus be p o t e n t i a l l y exempted from review under the Energy Project Review Process. 165 Small hydropower has experienced a modest r e v i v a l over the l a s t 10 years i n North America (Broad, 1978). The r e v i v a l commenced i n the northeastern U.S. as an attempt to seek out lower cost means of generating e l e c t r i c i t y i n an oil-dependent i n d u s t r i a l economy, and has spread westward and north into Canada for similar reasons of economics and environmental impact of a l t e r n a t i v e s (Wilier and Alden, 1979; Lawrence, 1979; Wi l i e r , 1978; Engebretson, 1978; Alward et a l , 1979). Indeed, small hydropower has been vigorously advocated as conforming to the ideals of soft-energy path popularized by Lovins (1978) and Brooks and Paehlke (1980). The small hydropower resource in B.C. was investigated by several recent studies (Crippen Consultants, 1980a, b; Sigma Engineering Ltd., 1984a, b). Special emphasis was placed in these studies on the app l i c a t i o n of small hydro to serving the needs of remote load centres which are currently served lar g e l y by d i e s e l e l e c t r i c generation. A d d i t i o n a l l y , i n a more focused study, B.C. Hydro Corporate Group (1983) undertook a preliminary examination of several pot e n t i a l small hydropower s i t e s to serve proposed mines i n the northwest. These B.C. studies along with other recent work reported i n Energy, Mines and Resources Canada (1983) and Gladwell and Warnick (1978) furnish an excellent base of information and guidelines for reconnaissance assessment of small hydropower as an energy al t e r n a t i v e for RED-CHRIS. Before an examination of this a l t e r n a t i v e ' s a p p l i c a t i o n to RED-CHRIS i s presented, a br i e f review i s ca r r i e d out of 166 common technologic, economic and environmental features. b) Technology Technology for small hydropower was well developed nearly 50 years ago. Since then, improvements have been i n the area of standardized materials, e f f i c i e n c y , and the use of microprocessor flow optimization and equipment protection (Mayo, 1979; Sigma Engineering Ltd., 1984a; Department of Environment, 1982). Operational e f f i c i e n c i e s currently achieve over 80%, and system l i f e expectancies of over 30 years are common. The scope for dramatic technologic improvement in forthcoming years i s therefore r e s t r i c t e d . The p r i n c i p a l components of a small hydropower system which f a c i l i t a t e the conversion of moving water into e l e c t r i c i t y include: water intake, penstock to transmit water to powerhouse, turbine linked to a generator to convert water pressure into e l e c t r i c a l energy, a transformer to boost the low voltage to minimize power loss during transmission, and a step-down transformer to reduce transmission voltage to a useable l e v e l (Sigma Engineering Ltd., 1984a). Highly competitive s p e c i a l i z a t i o n by component manufacturers permits maximum f l e x i b i l i t y in choice of system design to harness almost every conceivable hydrological environment. c) Economics The economics of small hydropower are examined in a number of recent studies (Engebretson, 1978; Williamson, 1978; Chen, 1978; S t i l w e l l , 1980; Crippen Consultants, 1980a, b; Sigma Engineering Ltd., 1984a, b). The p r i n c i p a l factors 167 a f f e c t i n g economic v i a b i l i t y which were c i t e d include c a p i t a l costs of plant, c a p i t a l costs of transmission and access roads, operation and maintenance costs, management costs, transmission downtime costs which may include alternate energy costs, water rent and l i c e n c e s , environmental costs such as fishways and habitat improvement, and energy costs of the next best a l t e r n a t i v e . Non-linear cost r e l a t i o n s h i p s ex i s t between many of the foregoing components under various hydrologic conditions. I n f l a t i o n i s manifest mainly i n the escalation of annual operation and maintenance costs and taxes. Operation and maintenance costs are t y p i c a l l y i n the range 0.5 - 1.5% of c a p i t a l costs. Taxes i n B.C. include a water licen c e of $.05/kW, water rent of $2.50/thousand kWh, school tax and income tax. Economic v i a b i l i t y i s therefore primarily dependent on c a p i t a l cost financing and, to a lesser extent, e x i s t i n g taxation rates. Preliminary cost estimates for proposed small hydropower projects i n B.C. are derived in the Sigma Engineering Ltd. (1984a,b), Crippen Consultants (1980) and B.C. Hydro Corporate Group (1983) studies. Sigma Engineering Ltd., i d e n t i f i e d 13 s i t e s i n northwestern B.C. with i n s t a l l e d capacities ranging from 320 kW to 10,300 kW (mean=l,616kW). Energy costs were forecast to range from 32 to 100 mills/kWh (mean=59 mills/kWh). Substantially higher costs were forecast by B.C. Hydro Corporate Group (1983) for 7 potential small hydro s i t e s 168 Table VIII. Data For Proposed Small Hydropower SItea Shown ln Appendix Two SITE DRAINAGE DESIGN FRAC.1 HEAD(a) P.LEN ACCESS T.LIHE(kV) INST. EST.ANNUAL AREA(lo»2) FLOW FIRM I.ELEV (m) (km) DIST (lu) CAP(MW) POWER(GW.h) (•3/s) (m) 1. Unnamed Creek2 88 1.76 2. TODAGIN CREEK3 320(est) 6.5 3. Unnamed Creek A 92 B 81 4. MAITLAND CREEK 200 5. He EUAN CHEEK4 162 6. BURRAGE5 CREEK 7. LITTLE ISKUT RIVER 580 366 1.84 1.63 4.0 3.24 33.64 21.2 0.45 0.5 0.45 0.45 0.45 0.45 0.50 0.50 100 985 110 1075 162 1060 182 1060 121 1030 106 924 136 818 61 818 3600 5000 4200 4500 3800 4200 1600 7000 3.5 5.0 7.0 26.0 1.0 1.0 7.0 60 15 60 12 60 38 138 52 60 16 230 55 138 45 1.2 5.0 2.3 2.1 3.4 2.4 32.0 9.1 FRAC.FIRM HEAD I.ELEV P.LEN ACCESS T.LINE(kV) INST.CAP EST.ANNUAL POWER(GW.h) - Estimated annual power output ln glgawatt hours (kWh x 106) base on fraction of flow estimated to be firm - Fraction of annual flow which can be considered to be firm - Net vertical distance ln metres between intake and turbine - Elevation at Intake - Penstock length ln metres - Length of new access required to powerhouse from HWY 37 or BCR subgrade - Transmission line rating in kllovolts, and distance of line to mine - Installed capacity ln megawatts (kW x 1000) for IOCS design flow 4.7 21.9 TOTAL-17.4 14.8 9.5 140.3 39.7 Jsites 1-5 referenced to Klappan Gauge 08CC001 - 0.02m3/s/km2; Sites 2,6,7 referenced to More Creek Gauge 08CG005 - 0.058B3/B/1O»2 2B.C. Hydro proposal estimated installed capacity aa 2 MW. B.C. Hydro Corporate Group (1983) 3B.C. Hydro proposal. Ibid. *McEwan Creek marks the northern boundary of SpatBizl Park, the proposal i s outside the park -•Proposal includes a dam 400 metres wide and 140 metres high; power output calculated on run-of-river designed to serve 7 potential mines in the northwest. Average annual energy costs ranged from 90 mills/kWh at Adanac for a storage system u t i l i z i n g Surprise Lake, to 175 mills/kWh for two small run-of-the-river i n s t a l l a t i o n s to supply 7 MW peak demand to RED-CHRIS. Both estimates used an 8% discount rate. Further to the south, studies in Washington State and Oregon State by Engebretson (1978) and Kaufman e_t a l , (1980) reported energy costs at recent i n s t a l l a t i o n s as ranging from 29 mills/kWh to 68 mills/kWh for units of 500 kW to 85 MW. these costs are biased downwards owing to lower transportation costs, shorter transmission distances, and federal and state f i n a n c i a l assistance programs. C l e a r l y , energy costs can vary widely depending on s i t e s p e c i f i c hydrology and t e r r a i n features, and assumptions used in f i n a n c i a l models. d) Environment Environmental considerations for small hydropower f a l l into two categories: those caused by the project and those which may a l t e r the i n t e g r i t y of the project. Since most small i n s t a l l a t i o n s are run-of-the-river, impacts occur primarily in the stream course between the diversion intake and the powerhouse t a i l r a c e (Green, 1980; Woodworth, 1978). Impacts include reduced water flows and altered temperature for aquatic resources, altered sediment load transport and possible reduction in aesthetic appeal. In steep gradient remote northern streams these impacts may be d i f f i c u l t to d i s t i n g u i s h from those caused by annual stream flow v a r i a t i o n s . Greater impacts are l i k e l y to be associated with transmissiion l i n e and 170 a c c e s s r o u t i n g . T h e s e a c t i v i t i e s c a n r e s u l t i n t i m b e r and w i l d l i f e h a b i t a t l o s s e s , and i n c r e a s e d p u b l i c a c c e s s t o s e n s i t i v e t e r r a i n s . S m a l l h y d r o p o w e r p r o j e c t s w h i c h use dams and s t o r a g e i n l a k e s would p o t e n t i a l l y c a u s e a d d i t i o n a l i m p a c t s on s h o r e l i n e a q u a t i c and r e c r e a t i o n a l r e s o u r c e s . I n t h e n o r t h w e s t , s p e c i a l a t t e n t i o n may be n e c e s s a r y t o m i n i m i z e p o t e n t i a l l y n e g a t i v e i m p a c t s on n a t i v e f o o d f i s h e r i e s . The i n t e g r i t y o f s m a l l h y d r o p o w e r p r o j e c t s may be a l t e r e d by s u c h w a t e r s h e d a c t i v i t i e s as l o g g i n g , m i n e r a l e x p l o r a t i o n , and a s s o c i a t e d a c c e s s c o n s t r u c t i o n . e) S o c i a l I m p l i c a t i o n s S o c i a l b e n e f i t s t o t h e p u b l i c a r i s i n g f r o m t h e i m p l e m e n t a t i o n o f s m a l l h y d r o p o w e r a r i s e l a r g e l y f r o m t h e use o f a r e n e w a b l e e n e r g y s o u r c e w h i c h r e d u c e s t h e n a t i o n ' s d e p endence on n o n - r e n e w a b l e and i m p o r t e d p e t r o l e u m - b a s e d f u e l s . R e l a t i v e l y few j o b s a r e c r e a t e d o u t s i d e t h e c o n s t r u c t i o n p h a s e and p e r i o d i c p l a n t and t r a n s m i s s i o n m a i n t e n a n c e . f ) R e s o u r c e S u p p l y H y d r o l o g y and t e r r a i n c o n d i t i o n s i n t h e a r e a s u r r o u n d i n g RED-CHRIS a p p e a r f a v o u r a b l e f o r c o n s i d e r a t i o n o f s m a l l h y d r o p o w e r . A c o m b i n a t i o n o f mo d e r a t e p r e c i p i t a t i o n , a b u n d a n t s t r e a m s w i t h g r a d i e n t s g r e a t e r t h a n 10 d e g r e e s and head p o t e n t i a l s e x c e e d i n g 100 m e t e r s a r e common w i t h i n 50 k i l o m e t r e s o f t h e d e p o s i t . Seven s i t e s w i t h i n 50 k i l o m e t r e s t r a n s m i s s i o n d i s t a n c e a r e i d e n t i f i e d i n A p p e n d i x 2. T a b l e V I I I l i s t s t h e main 171 p a r a m e t e r s o f e a c h s i t e . W i t h t h e e x c e p t i o n o f S i t e 6 on B u r r a g e C r e e k , a l l s i t e s a r e p r o p o s e d as r u n - o f - t h e - r i v e r , no impoundments a r e p r o p o s e d . B u r r a g e C r e e k s i t e w ould i n v o l v e c o n s t r u c t i o n o f a 140 meter h i g h dam, 400 m e t e r s wide a t i t s c r e s t , i n a n a r r o w , s t e e p w a l l e d g o r g e a p p r o x i m a t e l y 2 k i l o m e t r e s above Highway 37. A p r e l i m i n a r y a i r p h o t o a n a l y s i s i n d i c a t e s t h e a r e a t o be u n d e r l a i n by s t e e p l y d i p p i n g s e d i m e n t a r y r o c k s m a n t l e d by s a n d and g r a v e l d e p o s i t s . 380 h e c t a r e s w o u l d be i n u n d a t e d a t a mean r e s e r v o i r e l e v a t i o n o f 820 m e t e r s . A d e t a i l e d a n a l y s i s was n o t p e r f o r m e d t o d e t e r m i n e r e s e r v o i r v o l u m e s and hence i t s c o n t r i b u t i o n t o y e a r l y e n e r g y o u t p u t i s u n c e r t a i n . The r u n - o f - t h e - r i v e r c a l c u l a t i o n s i n T a b l e V I I I c a n t h e r e f o r e be v i e w e d as c o n s e r v a t i v e . T o d a g i n R i v e r s i t e i s i n a b a s i n where e n e r g y o u t p u t c a n most l i k e l y be e n h a n c e d by l o w - c o s t o u t f l o w r e g u l a t i o n o f K l u e a and T o d a g i n L a k e s . A l l s i t e s p r o p o s e d a r e t r i b u t a r i e s o f t h e S t i k i n e o r I s k u t R i v e r s , and t y p i c a l l y e x h i b i t l a r g e a n n u a l s t r e a m f l o w v a r i a t i o n s . Peak f l o w s o c c u r f r o m May t h r o u g h A u g u s t , an a d d i t i o n a l peak o f s h o r t d u r a t i o n commonly o c c u r s i n O c t o b e r . December t o March a r e t y p i f i e d by v e r y low f l o w s d o m i n a t e d by i c e c o n d i t i o n s . F i g u r e 13 shows a t y p i c a l h y d r o g r a p h f o r t h e r e g i o n . W i t h o u t p r o v i s i o n f o r s t o r a g e , t h e maximum f l o w t h a t c o u l d be u t i l i z e d , i r r e s p e c t i v e o f i n c r e a s e d i n s t a l l e d c a p a c i t y , would be t h a t r e p r e s e n t e d by t h e l o w e s t f l o w p e r i o d i n M a r c h , 172 StAtMA&e A AHA i g u r e 1 3 . K l a p p a n R i v e r H y d r o g r a p h 1 9 6 2 - 1 9 7 9 S t a N o . 0 8 C C 0 0 1 1 7 3 t y p i c a l l y o n l y a few c u b i c m e t e r s per s e c o n d . C l e a r l y , power o u t p u t s c a n be m e a s u r a b l y e n h a n c e d by u t i l i z i n g n a t u r a l l a k e s t o r a g e o r c r e a t i n g a r e s e r v o i r t o r e a l l o c a t e peak summer f l o w s t o w i n t e r months, w h i c h c o i n c i d e w i t h h e a v i e s t power demands. The i n c r e a s e d b e n e f i t s p r e s e n t e d by s t o r a g e w o u l d have t o be w e i g h e d a g a i n s t c o r r e s p o n d i n g c a p i t a l c o s t and e n v i r o n m e n t a l c o s t s w h i c h w o u l d t e n d t o r e d u c e o v e r a l l e c o n o m i c a t t r a c t i v e n e s s . 6.3.2.B. C a t e g o r y I I i ) C o a l - F i r e d T h e r m a l - E l e c t r i c G e n e r a t i o n a) I n t r o d u c t i o n C o a l - f i r e d t h e r m a l - e l e c t r i c g e n e r a t i o n as an e n e r g y s u p p l y a l t e r n a t i v e i s b r i e f l y e x a mined f r o m t h e p o i n t o f v i e w o f two g e n e r a t i o n s c a l e s and two g e n e r a t i o n t e c h n o l o g i e s . The g e n e r a t i o n s c e n a r i o s examined a r e : a l a r g e (> 100 MW) c o a l - f i r e d g e n e r a t i o n p l a n t a t Mt. K l a p p a n w h i c h s e r v e s t h e Mt. K l a p p a n c o a l mine and o t h e r r e g i o n a l n e e d s , and g e n e r a t i o n d e s i g n e d s o l e l y t o meet t h e n e e d s o f RED-CHRIS. The two p r i n c i p a l g e n e r a t i o n c o m b u s t i o n t e c h n o l o g i e s examined a r e : c o n v e n t i o n a l c o m b u s t i o n and f l u i d i z e d bed c o m b u s t i o n . C o a l g a s i f i c a t i o n t e c h n o l o g y i s v e r y e x p e r i m e n t a l a t t h i s s t a g e and w i l l n o t be c o n s i d e r e d . T h e s e d i s c u s s i o n s a r e p r e c e d e d by an e x a m i n a t i o n o f t h e a v a i l a b i l i t y o f t h e r m a l c o a l f o r e l e c t r i c g e n e r a t i o n i n t h e n o r t h w e s t . 174 b) Resource Supply Thermal coal i s currently mined i n northeast B.C. near the townsite of Tumbler Ridge and exported to Japan via r a i l transport through Prince Rupert. The substandard and incomplete B.C.R. r a i l spur to the northwest could be upgraded and t e c h n i c a l l y permit the transport of thermal coal to the region. However t h i s option cannot be seriously considered in the short-term. Coal resources are known to occur i n the study area at three locations as shown in Figure 2-7 (Dolmage, Campbell and Associates, 1975). Location 1 - L i g n i t i c coal occurs i n spo r a d i c a l l y explored seams up to 0.3 meters thick in a northwest trending basin measuring 17 kilometres by 5 kilometres which straddles the Rapid River 10 kilometres above i t s confluence with the Dease River and approximately 50 kilometres east of Cassiar (Dolmage, Campbell and Associates, 1975). No reserve and quality data are av a i l a b l e from t h i s deposit. Location 2 - L i g n i t i c coal occurs i n f i v e known locations in the Tuya River drainage and one location i n the Tahltan River drainage approximately 40 kilometres northeast of Telegraph Creek. Coal exposed in seams up to 10 meters thick in canyon walls returned c a l o r i f i c values of 20,230 kj/kg (9680 BTU/lb) for the Tuya River occurences and 13542 kJ/kg (6480 BTU/lb) for the Tahltan River occurence. PetroCanada i s currently exploring these deposits (B.C. Hydro Corporate Group, 1983) . 175 Location 3 - Low v o l a t i l e bituminous to anthracite coal occurs over an area of nea r l y 3800 km2 in an area known as the Groundhog C o a l f i e l d at the headwaters of the Nass, Skeena, S p a t s i z i and Klappan Rivers. Past attempts to develop these extensive coal measures have been stymied by the area's remoteness and s t r u c t u r a l complexity of coal seams. Presently, Gulf Canada Resources work at Mt. Klappan some 80 kilometres southeast of RED-CHRIS has outlined an anthracite deposit which they estimate contains i n f e r r e d reserves of over 890 m i l l i o n tonnes in 12 seams averaging 0.5 to 5.5 meters thick (Western Miner, 1984). Gulf Canada Resources i s proceeding to develop the deposit for surface mining at an annual output of 1.0 to 5.0 m i l l i o n tonnes for export to Asian and European markets. C o a l - f i r e d thermal e l e c t r i c generation to supply the Mt. Klappan Mine's estimated 280 GW.h annual energy requirements i s currently one of three power options under i n v e s t i g a t i o n (B.C. Hydro Corporate Group, 1983; Western Miner, 1984; L. Sivertson, personal communication). By a l l accounts, the Groundhog coal deposits, and the Mt. Klappan anthracite deposits in p a r t i c u l a r warrant closer examination as a coal-based energy supply source for RED-CHRIS. c) Technology Two methods of coal combustion can be considered to f a c i l i t a t e t h i s requirement. Conventional coal-combustion involves introducing f i n e l y milled coal mixed with a i r into a suspension where combustion occurs at high temperatures. The technology i s well-proven and 176 has been extensively used in plants of several hundred MW. While t h i s system o f f e r s f l e x i b i l i t y in i t s use of coals with d i f f e r i n g thermal q u a l i t y , expensive grading and s i z i n g q u a l i t y control i s necessary (MacGregor e_t a_l, 1976). Typical conversion e f f i c i e n c i e s attained in the process are i n the range of 30-40%. The p r i n c i p a l drawbacks of t h i s technology re l a t e to emissions of f l y ash, sulphur dioxide, nitrogen oxides, carbon dioxide and thermal and trace element-contaminated cooling waters. F l u i d i z e d bed combustion involves combustion of granular coal p a r t i c l e s i n a turbulent bed composed of a t x l e a s t 99% i n e r t p a r t i c l e s comprised of coal ash, and lesser limestone and dolomite. The bed i s kept in a f l u i d state by the upward motion of a i r which may be pressurized. The f l u i d i z e d bed permits high heat release and heat transfer rates. The addition of limestone or dolomite as sulphur absorbent and the r e l a t i v e l y low combustion temperatures below ash - p a r t i c l e fusion point permit up to 90% removal of sulphur oxides and suppressed nitrogen oxide emissions. In a d d i t i o n , a wide range of coal q u a l i t i e s can be burned (Markowsky and Wickstrom, 1979; Coal Processing Consultants, 1978). Pressurized f l u i d i z e d bed combustion (PFBC) can occur in small b o i l e r sizes ( i n s t a l l e d capacity of several 10's of MW) at e f f i c i e n c y l e v e l s approaching 50%. Thus advantages are offered over conventional combustion i n small-scale a p p l i c a t i o n s . The p r i n c i p a l problems with PFBC technology concern premature materials corrosion, sulphur and nitrogen oxide and 177 carbon dioxide emissions, and disposal of trace elements (mercury, arsenic, f l o u r i n e and bromine) concentrated in spent bed material (Hoy et a l , 1979; Davidson and Moore, 1979; Fennelly e_t a_l, 1977; Department of Environment, 1982). It should be noted that t h i s technology i s s t i l l l a r g e l y in the experimental stages. B.C. Hydro has investigated the application of PFBC to Hat Creek thermal coal but few data are available . d) Economics The f i r s t a l t e r n a t i v e , a large c o a l - f i r e d plant to serve Mt. Klappan coal mine and other regional needs, was examined by B.C. Hydro Corporate Group (1983) in th e i r power supply study for the North West Economic Development Task Force. Under conditions of assured thermal coal supply, the study was able to derive economic costs of coal plant i n s t a l l a t i o n . Using experience elsewhere in western Canada, where costs of i n s t a l l a t i o n are reported at $1220 to $3000/kW (1982$), the present value of c a p i t a l costs per kW with a 10% discount rate at Klappan Coal ranged from $674 to $2006/kW (1982$). Assuming that i n d i v i d u a l mines pay for the c a p i t a l costs incurred to supply e l e c t r i c i t y requirements, then the costs attributed to RED-CHRIS under d i f f e r e n t production scenarios can be determined. At $1220/kW and 8% discount rate, c a p i t a l costs for the two production scenarios suggested for RED-CHRIS would be $6.85 x 106 (20 year mine l i f e ) and $17.17 x 106 (8 year mine l i f e ) . At $3000/kW and 12% discount rate, c a p i t a l costs would be $16.6 178 x 10° (20 year mine l i f e ) and $41.6 x IO 6 (8 year mine l i f e ) . Using mid-range c a p i t a l c o s t s ($2000/kW) B.C. Hydro c a l c u l a t e d average annual energy c o s t s at RED-CHRIS to be i n the range of 91 to 116 mills/kWh (1984$). B.C. Hydro's a n a l y s i s was based on employment of c o n v e n t i o n a l combustion technology. P r e l i m i n a r y a n a l y s i s by r e s e a r c h e r s elsewhere i n d i c a t e that l a r g e s c a l e PFBC may be l e s s c o s t l y by v i r t u e of higher f u e l e f f i c i e n c i e s , lower environmental c o s t s , and more c o s t - e f f e c t i v e d e s i g n (Kennedy e_t a l , 1979; Corman, 1979). A l t e r n a t i v e two, c o a l - f i r e d g e n e r a t i o n at Mt. Klappan s o l e l y f o r RED-CHRIS, can only be c o n s i d e r e d i f : (a) i t out-competes other a l t e r n a t i v e s , and (b) the Mt. Klappan mine u t i l i z e d e l e c t r i c i t y other than c o a l - f i r e d thermal e l e c t r i c or g r i d e x t e n s i o n s . A s m a l l c o a l - f i r e d p l a n t to serve the needs of RED-CHRIS would most c e r t a i n l y c o n s i d e r PFBC because of e f f i c i e n c y and cost advantages at s m a l l e r s c a l e s . F u e l c o s t s are a n t i c i p a t e d to be h i g h , although s u b s t a n t i a l l y l e s s than d i e s e l g e n e r a t i o n f u e l c o s t s . For example, i f one assumes year round o p e r a t i o n at 40% e f f i c i e n c y , with s e m i - a n t h r a c i t e c o a l with an average heat value of 29,600 kJ/kg (13,500 BTU/lb) and a p l a n t heat r a t e of 11,400 kJ/kWh, then 18.8 and 7.5 MW p l a n t s would a n n u a l l y consume 54,470 tonnes and 21,786 tonnes of c o a l . At $91/tonne c o a l (1984$, i n f l a t e d B.C. Hydro d e r i v e d mine-head c o s t ) , t h i s consumption r e p r e s e n t s annual f u e l c o s t s i n the f i r s t year (1984) of $4.96 m i l l i o n and $1.98 m i l l i o n f o r a mine 179 l i f e of 8 and 20 years respectively or an equivalent of about 35 mills/kWh contribution to energy costs. The c a p i t a l costs of these small c o a l - f i r e d plants are unknown, however they most c e r t a i n l y would be higher than the B.C. Hydro estimates for larger plants. e) Environment Environmental impacts attributed to c o a l - f i r e d power generation w i l l be a d d i t i o n a l to those created by Gulf Canada Resources Mt. Klappan coal mine. The general nature of environmental impacts related to t h i s technology has been investigated by Coal Processing Consultants (1978) and Henschel, (1978). The p r i n c i p a l areas of concern which are l i k e l y to emerge include the following: - I n d u s t r i a l land use and landscape a l t e r a t i o n s are anticipated to occur adjacent to S p a t s i z i and T a t l a t u i Wilderness Parks. - W i l d l i f e habitat ( p a r t i c u l a r l y for moose) w i l l be temporarily and i n some cases permanently displaced. - Some guide o u t f i t t i n g and r i v e r r a f t i n g / t o u r i n g a c t i v i t y along the Klappan system may be displaced. - Increased hunting pressures w i l l occur from new access and worker r e c r e a t i o n a l demands. - Careful s i t i n g of spent fuel bed materials w i l l be necessary to avoid leaching of p o t e n t i a l l y concentrated trace elements into major r i v e r systems which support resident and anadromous f i s h populations. - Air emissions containing sulphur and nitrogen oxides 180 w i l l d r i f t over adjacent parks with the p r e v a i l i n g winds and p o t e n t i a l l y cause a c i d i f i c a t i o n of p r e c i p i t a t i o n , f) S o c i a l Implications Social issues which are l i k e l y to emerge from these projects include: - Native land claims. - Emissions, land use and aesthetic impact on S p a t s i z i and T a t l a t u i Parks. - Community l o c a t i o n , access, housing and l e v e l of services. - Opportunities such as employment, education and health care which may become available to the l o c a l populace. i i ) Geothermal: a) Introduction Geothermal energy i s the earth's natural heat. It i s generally d i f f u s e near the surface of the crust but i s concentrated occasionally under favourable geologic conditions. Mountainous areas in western Canada t y p i f i e d by high r e l i e f , high l e v e l s of p r e c i p i t a t i o n and groundwater recharge, and r e l a t i v e l y young geological environments with high thermal gradients are i d e a l environments for deep c i r c u l a t i o n of meteoric waters, and hence have given r i s e to major geothermal f l u i d systems (Souther and Halstead, 1973; Geothermal Resources Council, 1980). Surface manifestations of geothermal energy commonly occur as hot mineral springs, geysers, or other water and 181 vapour emanations, although the r e l a t i o n s h i p i s not equivocal. Thermal f l u i d s t y p i c a l l y contain high l e v e l s of dissolved s o l i d s , a function of the depth and composition of the rock and heat regime through which these waters were c i r c u l a t e d . Knowledge of f l u i d composition aids geoscientists in the i r understanding of subsurface geology and rese r v o i r c h a r a c t e r i s t i c s , and allows an i n t e r p r e t a t i o n of energy potential and possible future environmental d i f f i c u l t i e s . The e x p l o i t a t i o n of geothermal energy to provide e l e c t r i c i t y and i n d u s t r i a l or domestic heat a p p l i c a t i o n s has been car r i e d out succe s s f u l l y in La r d a r e l l o , I t a l y ; Iceland; Wairaki, New Zealand; and The Geysers in C a l i f o r n i a . The Geysers, with an i n s t a l l e d capacity of over 900 MW i n 1980, are projected to eventually provide 2000 MW for the c i t y of San Francisco (National Academy of Science, 1979; Nevin, Sadlier-Brown Goodbrand Ltd., 1981). Geothermal energy i s contained in six types of res e r v o i r s : hot water, natural steam, geopressurized, normal heat gradient, hot dry rock, and molten magma. Only the f i r s t two categories have proven economically viable and t e c h n i c a l l y f e a s i b l e to date. Energy contained i n the remaining four i s either too di f f u s e or t e c h n i c a l l y i n a c c e s s i b l e at present. Hot water reser v o i r s are created when meteoric water c i r c u l a t e s through permeable c r u s t a l rocks, r i s e s by convection, and i s trapped by an overlying r e l a t i v e l y impermeable formation (National Academy of Sciences, 1979; Peck, 1972). Water from the top and sides of the rese r v o i r 182 cools and descends, where i t regains heat and once again r i s e s . Along the way, minerals are dissolved to form a d i l u t e brine. Minerals generally consist of s i l i c a , sodium, potassium chloride, bicarbonate, sulphate, and borate (Peck, 1972). Occasionally radionuclides or heavy metals are present i n trace amounts (Swain et_ a_l, 1980). The trapped nature of these waters often r e s u l t s in superheated temperatures and, consequently, greatly accentuated s a l i n i t y l e v e l s . This presents technical problems i n the areas of equipment corrosion, equipment fouling leading to lower e f f i c i e n c i e s and environmental a i r and water emissions. When the water i s tapped i t i s permitted to r i s e in a borehole, r e s u l t i n g in a pressure drop, causing spontaneous vaporisation or 'f l a s h i n g ' to steam, followed by decrease in temperature. The f l u i d may be allowed to f l a s h several times, each time the wet steam i s bled o f f , removed of condensates, and allowed to pass through turbines to generate e l e c t r i c i t y . The r e s i d u a l brine may be re-i n j e c t e d , or not, or passed through a heat-exchanger where a 'clean' f l u i d i s heated and u t i l i z e d for domestic or i n d u s t r i a l heating purposes. Because the temperatures are low, o v e r a l l e f f i c i e n c i e s are also low when compared to other forms of e l e c t r i c i t y generation. Typical e f f i c i e n c i e s range from 10-20% (United Nations, 1978, p. 74) compared to 30-35% for a conventional.coal-fired plant. Attempts to raise e f f i c i e n c i e s and extend useful reservoir l i f e have led to alternate modes of production using pressurized downhole pumps or 'binary-cycle' heat-exchangers. The l a t t e r 183 use low-temperature b o i l i n g f l u i d s such as freon which are less damaging to power equipment. Natural steam reservoirs are less common than hot-water systems. The environment of formation i s e s s e n t i a l l y s i m i l a r to the hot water one described above, however, as a r e s u l t of low hydrostatic pressures, the water b o i l s i n the reservoir and a steam pocket develops near the top. The b o i l i n g process leaves behind most of the dissolved s o l i d s and thus tapped steam i s usually tainted only by hydrogen sulphide, carbon dioxide, ammonia, and traces of boron. Steam i s passed through turbines, af t e r which i t i s condensed and cooled in forced draft towers prior to being re-injected (Riva and Mielke, 1978, p. 22). 'Waste heat' may fi n d i t s way to l o c a l heating a p p l i c a t i o n s . The technology to extract e l e c t r i c a l energy from natural steam r e s e r v o i r s i s quite advanced, the best example of current use i s the large Geysers geothermal f i e l d i n C a l i f o r n i a . Where geothermal steam e x i s t s , i t i s a p a r t i c u l a r l y desirable, economic, and environmentally innocuous energy resource. Having thus introduced geothermal energy, what p o t e n t i a l contribution to energy supply at RED-CHRIS can t h i s form of power generation provide? b) Resource Supply Geothermal resource supply, economicsenvironmental and i n s t i t u t i o n a l factors were examined for B.C. in an extensive study by Nevin Sadlier-Brown Goodbrand (1981) for the Conservation and Technology Division of B.C.'s Ministry of 184 Energy, Mines and Petroleum Resources. A review of t h i s study allows an assessment to be made of geothermal energy as a poten t i a l energy source for RED-CHRIS. D e f i n i t i o n of geothermal resources i n B.C. i s in i t s infancy. Nevertheless, based on i n t e r p r e t a t i o n s of the d i s t r i b u t i o n of young volcanic rocks, regional structures, and known thermal springs, i t i s possible to i d e n t i f y regions of high p r o b a b i l i t y of geothermal energy occurrence. One such area, Meager Creek some 55 kilometres northwest of Pemberton in southern B.C. has been the focus of geothermal exploration for over 10 years, and the s i t e of a recent attempt to i n s t a l l a 55 MW p i l o t plant (Fairbank eit a l , 1979; Reid, Crowther, and Partners, 1979; Reader, 1982; B.C. Hydro e_t a l , 1981). Northwest B.C. contains a major zone of moderate p r o b a b i l i t y for geothermal resources of high temperature, and two smaller zones of high p r o b a b i l i t y for high temperature geothermal (Figure 6). The high p r o b a b i l i t y areas encompass the Mt. Edziza complex and lower Stikine and Iskut Rivers. Mt. Edziza P r o v i n c i a l Park encompasses nearly a l l of the high p r o b a b i l i t y zone. Surrounding areas are of somewhat lower p o t e n t i a l . Despite an amended Geothermal Resources Act which permits private development of t h i s resource, the Park Act s p e c i f i c a l l y p r ohibits the a c t i v i t y in a l l Parks by virt u e of Sec. 5(3) which states: No natural resource except f i s h and w i l d l i f e taken . . . In a park of Class A . . . s h a l l be granted, sold, removed, destroyed, damaged, disturbed or exploited except as authorized by a v a l i d and subsisting Park Use Permit, which s h a l l not be issued 185 Table IX. Summary of Geothermal Energy Coata From 50 MW Plants on Three Model F i e l d s Case (Basis i s Quality of Reservoir)1 Avai l a b l e Wellhead Energy (U/kg) Number of Wells Required; Total well Cost (Imillions)2 Generating Plant Type; C a p i t a l Cost ( $ m i l l i o n s ) Total C a p i t a l Costs per kWh (I): T o t a l C a p i t a l Costs ^ m i l l i o n s ) 3 Levelized T o t a l Energy Costs ( i n mills/kWh) A a u t i l i t y ' s discount rate of: 3% 61 . 102 00 O N 1. Dry Steam 100% steam 2. Wet Steam 20-35% steam 3. Hot Water 0% steam 880 305 150 7 11 17 27 40 64 d i r e c t 30 flashed-steam 38 binary 60 1 400 72 1 900 95 3 200 159 18.3 23.7 24.8 31.8 32.4 43.4 41.8 53.2 71.8 ^The dry steam r e s e r v o i r i s at 240°C and i s analogous to the Geyers, C a l i f o r n i a ; Case 2 i s analogous to Roosevelt, Utah, and i s at 270°C (despite the higher temperature i t has lower heat content); Case 3 i s analogous to East Mesa, C e U f o r n i a , and i s at 180°C. ^Includes production, r e i n j e c t i o n (waste d i s p o s a l ) , and spare w e l l s . 3Costs other than w e l l f i e l d and plant are included, v i z . $10 m i l l i o n c a p i t a l i z e d e x p l o r a t i o n , gathering system, 75 km transmission l i n e s , e t c . ^Operating, maintenance and administration costs are included; one component i s r e d r l l l i n g w ells a f t e r 15-year l i f e ; l i f e of plant i s 30 years, 1991-2015; capacity f a c t o r i s 80%. Source: Nevin Sadlier-Brown Goodbrand (1981) Geothermal Resources - Executive Summary Study prepared f o r Conservation and Renewable Energy Branch, M i n i s t r y of Energy, Mines, and Petroleum Resources. unless, in the opinion of the Minister, issuance i s necessary to the preservation or maintenance of the recre a t i o n a l values of the Park involved. and furthermore i n Sec. 18(e) neither s h a l l any person "establish or carry on any commercial or i n d u s t r i a l a c t i v i t y or enterprise in a Park." The second area of high temperature, high p r o b a b i l i t y i s located nearly 160 kilometres southwest of RED-CHRIS. The intervening t e r r a i n and c l i m a t i c conditions preclude consideration of i t s f e a s i b i l i t y at t h i s time. Remaining therefore are lower p r o b a b i l i t y areas flanking and north of Mt. Edziza. Within these areas, the only 'window' that appears to exist for geothermal e l e c t r i c u t i l i z a t i o n for RED-CHRIS appears to be i f a high temperature, high p r o b a b i l i t y area were newly discovered in a zone formerly considered to be low p r o b a b i l i t y . Discovery of such a f i e l d would need to occur many years p r i o r to mine start-up to allow for adequate exploration and development. c) Economics The opportunity for geothermal u t i l i z a t i o n appears r e s t r i c t e d . Nevertheless, from a s t r a t e g i c data base perspective, i t i s worthwhile to review geothermal energy costs in the event a p o t e n t i a l f i e l d i s discovered. Nevin Sadlier-Brown Goodbrand (1981) have determined energy costs for hypothetical geothermal plants with 50 MW and 1500 kW i n s t a l l e d capacity. Table IX summarizes reservoir conditions and energy costs for the 50 MW plant under private development. The uncertainties l i k e l y to be encountered during 187 geothermal exploration and development i n remote and inaccessible northwestern B.C. would e n t a i l a high l e v e l of expenditures and suggest that energy costs would be high r e l a t i v e to other forms of energy production, d) Summary To summarize, geothermal energy u t i l i z a t i o n for e l e c t r i c a l generation i s a t e c h n i c a l l y well-proven, and f l e x i b l e energy resource dependent on a r e l a t i v e l y " i n f l a t i o n proof" " f u e l " . Northwestern B.C. contains a broad zone of moderate p r o b a b i l i t y for high temperature geothermal resources adjacent to high temperature, high p r o b a b i l i t y resources contained within Mt. Edziza P r o v i n c i a l Park. The status of resource knowledge in the northwest warrants close monitoring to e s t a b l i s h when i t may become fe a s i b l e for i n d i v i d u a l mine owners to explore for and develop geothermal energy at an acceptable l e v e l of r i s k . i i i ) Biomass: a) Introduction Forest biomass has proven to be an enduring and renewable source of inexpensive energy e s p e c i a l l y suited for l o c a l economies. Its decline as a primary f u e l i n Canada from 12% in 1945 to 2% in 1969 (Biswas, 1974) has now been reversed with the progressive r i s e in the price of petroleum based f u e l s . Forest biomass i s now a growing competitor as a primary source for l i q u i d hydrocarbon feedstock, feedstock for process heat, e l e c t r i c i t y generation, and steam. 188 b) Resource Supply Examination of forest biomass as a primary f u e l source for e l e c t r i c i t y generation for RED-CHRIS involves a complex consideration of factors such as resource supply, imposition of new widespread logging a c t i v i t y in the remote northwest, s o c i a l and environmental concerns a r i s i n g from t h i s logging a c t i v i t y , ownership and management of the forest resource, as well as examination of the technological and economic factors pertaining to the power generation. Figure 14 i l l u s t r a t e s the major processes from a standing wood resource through power generation. Raw biomass i s a bulky commodity. It i s most c o s t - e f f e c t i v e l y used i f transportation distances, and hence costs, are minimized. A prime r e q u i s i t e for the assessment of biomass power generation v i a b i l i t y i s thus an a v a i l a b i l i t y of adequate uncommitted biomass. RED-CHRIS i s located central to the proposed Stikine and Klappan Public Sustained Yie l d Units (PSYU) (although actual timber management designation may have changed, i . e . , now part of Cassiar Timber Supply Area (T.S.A.), the data presented here are s t i l l v a l i d ) . Stikine and Klappan PSYU'S encompass combined areas of 3,852,000 hectares of productive forest land containing 106,953,000 m3 (110 m3/ha) of merchantable coniferous timber greater than 18 centimetres diameter at breast height and 10 centimetres at the top. The t o t a l net recoverable annual allowable cut i s 887,300 m3 per year on 189 M A J O R P R O C E S S E S WOOO RESOURCE 1 VOlua E X T R A C T I O N r — Py«t» a n * r t j u i o n t o n l , 1 Matt f ta l f t , \ rgci l i> '«g T R A N S P O R T A T I O N SITE SELECTION SITE P R E P A R A T I O N . E L L I N G - LIMBING SUCKING - T A R O I N G I N WOOO PROCESSING - L*>OING SPECIAL , ' " . A T M E N T I C L E A N ,a at -COESTATIONl I TRANSPORT OF I F ; U > P V £ N T S. I M - I T E R I A L S MAINTENANCE I L annea l L , L -»Ci f t fno l L r — Fuata antf E l K m c i f * Equiomant, M a i a n a i t , Facil t t iaa val«» r - T A R O I N G - COMBINATION* - PIPELINE _ LOAOING UNLOAOING MAINTENANCE - D E B A R R I N G E W H T VdlUt P n , v c a i L o t s Ci tarno l L o t s P R O C E S S I N G • fvmlt ond E lac t t t t i f v ' Eawpmant, Matar ta i t , D I S T R I B U T I O N A D M I N I S T R A T I O N E N O - P O I N T L O A O I N G U N L O A O I N G L IMBING BARKING C H I P P I N G H O G G I N G - Enarq, vohi« - C L E A N I N G - SPLITTING STORAGE SEASONING WASTE OI5POSAL MAINTENANCE ost 01% , — f m i . ana E l a c l r c i t , Equipment, M a t e r i a * . Facjlihaa - T R U C K COMBINATION _ L O A O I N G " U N L O A D I N G " MAINTENANCE E t t t m a l Lost valua I — f u t i t and E l t c f n c i t v r Equipment, M a f t f o n , iFoe i i ' i'M ADMINISTRATION MAINTENANCE ENVIRONMENTAL j~ONITORiNG nftrnat Con»umo-«>fi D * y » « a t Lo t * in ferna l Coft4ump< M M C t l t f n a t L o u va-u« • fmH on* EltcrneitT M C I FQCII.it.JI OIRECT COMBUSTION -PROCESSING M A I N T E N A N C E 1 £i t t r -»oi Lost Comoutf <on LOtt S o u r c e : B a l t i c , T o n y J . a n d D a v i d R. B e t t e r s , ( 1 9 8 3 ) N e t E n e r g y A n a l y s i s o f a F u e l w o o d E n e r g y S y s t e m , R e s o u r c e s and  E n e r g y , V o l . 5 (1983) pp. 45-64. F i g u r e 14 B i o m a s s F i r e d P o w e r G e n e r a t i o n P r o c e s s e s a n d E n e r g y F l o w s 1 9 0 good, medium, and poor s i t e s (Forestal International Ltd., 1980). No estimate i s available for t o t a l biomass per hectare, which would include decadent, non-commercial and deciduous volumes. The forest resource i s presently uncommitted to harvesting except for several small l o c a l timber sales for l o c a l uses. RED-CHRIS therefore appears i d e a l l y situated to consider biomass as a power generation a l t e r n a t i v e . c) Technology Biomass i s combusted either d i r e c t l y , i n a f l u i d i z e d bed state or using a g a s i f i e r / t u r b i n e system. The technology i s well established and r e l i a b l e (Energy, Mines and Resources, 1978). For example, in 1978 B.C. pulp and paper m i l l s generated about 33% of t h e i r e l e c t r i c i t y requirements from 'waste' hog f u e l , a trend which i s forecast to increase (Hi b a l l e r Forest Magazine, 1981). Commercial applications of conventional and f l u i d i z e d bed combustion are capable of combusting a wide range of feedstock q u a l i t i e s , often with high moisture contents. Total biomass harvesting i s therefore more e a s i l y accommodated. Energy Products of Idaho Ltd. have successfully employed f l u i d i z e d bed technology to combust f u e l , sized less than 8 centimetres, containing up to 65% moisture and variable amounts of mineral matter (Levelton and Associates, 1978). d) Economics Economic analysis of wood-based energy conversion systems can be broken down into two components: economics of wood supply 191 Table X. Biomass-Flred Power G e n e r a t i o n Cost E s t i m a t e s From Recent S t u d i e s 1 PLANT SIZE CAPITAL COST COST/INST. OPERATION ENERGY COST LOGGING COST REFERENCE (MW) $ x 10 6 kW & MNTNCE mills/kWh CONTRIBUTION  50 40 (70.9) $800/kW $700,000 44.8 ($1417/kW) ($1.24 x 10°) (79.4) 19.9 (35.3) vO to 37.6-49.5 25 30-35 (53-62) 12. 5 3 (26.2) $700-800/kW $1.5-1.75M 13.5-17.3' (1240-1417) ($2.7-3.1) (24-30.7) $500/kW ($1047/kW) n/a 33.7 (70.6) n/a 16 (37) B 14 27.8 (37) 1985 (2642) $2.0 x 10 52 ($2.7 x 10°) (69.2) n/a D R e p o r t e d d a t a h a s b e e n e s c a l a t e d b y 10% p . a . t o 1984$ a n d shown i n ( ) . 2 Hog f u e l a v a i l a b l e l o c a l l y a t v i r t u a l l y no c o s t 3U.S.$ c o n v e r t e d t o CDN$ a t r a t e o f 1.3 A) L o v e , P and R. O v e r e n d , ( 1 9 7 8 ) TREE POWER,An A s s e s s m e n t o f t h e E n e r g y P o t e n t i a l o f F o r e s t B i o m a s s i n C a n a d a , E n e r g y , M i n e s a n d R e s o u r c e s C a n a d a , R e p o r t ER 78-1 B) B.C. Wood W a s t e E n e r g y C o o r d i n a t i n g C o m m i t t e e , ( 1 9 7 8 ) Q u e s n e l Hog F u e l S t u d y C) Rose,D.W. a n d K . P . O l s o n , ( 1 9 7 9 ) "Wood- An E c o n o m i c a n d R e l i a b l e F u e l f o r G e n e r a t i n g E l e c t r i c i t y i n N o r t h e r n M i n n e s o t a " , J o u r n a l o f F o r e s t r y , F e b r u a r y 1979,pp88-90 D) A c r e s S h a w i n i g a n L t d , ( 1 9 7 9 ) and harvesting a c t i v i t y , and power plant economics. Estimates for the former are the least precise because of fewer fixed costs and the unknown relationships between t e r r a i n , climate, access constraints, stand v a r i a b i l i t y and decadence i n the l o c a l area. Several recent detailed cost estimates for biomass-fired generating plants are presented i n Table X. Capital costs for a biomass-fired plant can be calculated very roughly for RED-CHRIS based on these data more precise net present value c a l c u l a t i o n s are presented i n Appendix 3. A s i t e factor of 1.5 i s employed to allow for the area's remoteness and anticipated higher costs. Using the range of costs for the smaller power plants, and an operation and maintenance factor of 5% of c a p i t a l costs, the following cost estimates would apply to RED-CHRIS: Scenario 1 - 7.5 MW Ca p i t a l Costs - $11.8 to $29.8 m i l l i o n 0 & M Costs - $ 0 . 6 to $1.5 m i l l i o n Scenario 2 - 18.8 MW Capital Costs - $29.5 to $74.7 m i l l i o n 0 & M Costs - $1.5 to $3.7 m i l l i o n Biomass f u e l costs can be determined for the Stikine and Klappan PSYU's from Forestal International Ltd.'s (1981) data for logging the Stikine/Iskut proposed h y d r o e l e c t r i c impoundments. Logging costs are estimated at $13.60 per cubic meter, (1981$) or $18.10 per cubic meter (1984$), based on 10% annual i n f l a t i o n . Volume requirements are determined using conversion data 193 from Burgess, (1978) and Energy, Mines and Resources Canada (1978). 6200 tons of a i r - d r i e d wood per year are needed to produce 1 MW year of power. Since 6200 tons of a i r - d r i e d wood are equivalent to'17,050 green cubic meters of wood, 7.5 MW and 18.8 MW plants would consume approximately 128,000 m^  and 321,000 m3 annually. Annual fuel costs would amount to $2.3 m i l l i o n and $5.8 m i l l i o n in 1984$. A cost which i s not included here i s the opportunity cost to the public of not using the biomass for lumber, paper or other products i f the timber i s accessible and merchantable. If a net opportunity cost i s foregone to the public by power generation from biomass, then stumpage fees may be an appropriate vehicle for the government to recapture t h i s l o s s . The cost of a l t e r n a t i v e fuels and the value of mining to society would have to be considered as well. The absence of government policy in t h i s area suggests further research to determine these economic r e l a t i o n s h i p s . e) Environment Environmental impacts related to biomass energy conversion must be examined from two aspects: harvesting and combustion. Harvesting produces land impacts not unlike those for commercial clearcut logging. However, r e f o r e s t a t i o n of an area where t o t a l biomass harvesting has occurred, may create a landscape of greater aesthetic appeal because of more uniform ' greening up'. Other environmental impacts would l i k e l y r e s u l t from increased public access into previously remote areas. 194 P o l l u t i o n , increased erosion p o t e n t i a l , f i r e r i s k , modified w i l d l i f e habitats, and altered water quality may be other issues. Conversion f a c i l i t i e s also generate environmental impacts. The primary concerns are related to a i r emissions, ash disposal, land use, and disposal of cooling waters. Thermal losses can be minimized by waste heat recovery, and a i r emissions are generally of l i t t l e concern since wood lacks the undesirable sulphur compounds found in coal and petroleum fuels (Rose and Olson, 1979). Land use requirements for a conversion f a c i l i t y are l i k e l y to be minimal. The Hearst study i n Ontario (1980), for example, estimated only 2.5 hectares would be required for i t s 14 MW plant. The land use demands of harvesting can be roughly calculated from forest inventory data i f one assumes the PSYU volumes to be evenly d i s t r i b u t e d over the PSYU area. Thus a 7.5 MW and 18.8 MW plant consuming 128,000 m3 and 321,000 m3 annually would require logging of 1164 hectares and 2918 hectares. It i s notable that the volumes represent 14.4% and 36.2% of the net annual allowable cut i f only merchantable coniferous. timber were used. The use of other timber would tend to overestimate both the land use and AAC f r a c t i o n s . Nutrient loss c i t e d as a poten t i a l environmental problem by C a r l i s l e (1976) i s not anticipated to be a problem for RED-CHRIS because harvesting would not exceed one r o t a t i o n . P o s i t i v e environmental benefits may r e s u l t from creating new moose habitat and forage. 195 f) Social Implications The s o c i a l impacts of a biomass a l t e r n a t i v e w i l l d i f f e r from most other energy a l t e r n a t i v e s since harvesting and transportation of biomass are labour intensive occupations compared to hyd r o e l e c t r i c and d i e s e l - e l e c t r i c generation for example. The biomass a l t e r n a t i v e would allow l o c a l people to expand the i r s k i l l s from a subsistence-dominated l i f e s t y l e , and eventually d i v e r s i f y the l o c a l economy through local-based for e s t r y a c t i v i t y . C l e a r l y , there are many complex s o c i a l issues implied by this form of power generation which are deserving of further study. iv) Natural Gas: a) Introduction and Discussion Natural gas i s extracted from extensive deposits in northeast B.C. and subsequently d i s t r i b u t e d for domestic power generation and space heating, and sold to foreign markets. The study area does not contain any natural gas deposits, nor i s the regional geology conducive to the entrapment of natural gas deposits. Consideration of natural gas as feedstock for e l e c t r i c i t y production for RED-CHRIS would necessitate transport of gas into the region. Technically t h i s might be accomplished in one of two ways: - Construction of a small diameter pipeline from P a c i f i c Northern Gas's l i n e 450 kilometres to the south, perhaps along the Highway 37 c o r r i d o r . 196 - Construction of a small diameter pipeline from the Alaska Highway Pipeline some 300 kilometres to the north in the Yukon, either south along the Highway 37 c o r r i d o r , or generally southeast across the Kawdy Plateau. Natural gas i s used to generate e l e c t r i c i t y i n a manner sim i l a r to d i e s e l ; c a p i t a l costs are therefore comparable. Natural gas i s a cleaner f u e l than d i e s e l from an emissions standpoint, however e f f i c i e n c i e s are i n the same range of 32%-34% (John Wong, pers comm, B.C. Hydro). Serious consideration of natural gas as an energy a l t e r n a t i v e for RED-CHRIS means that a number of preconditions would have to be s a t i s f i e d . The following preconditions and comments apply: - Surplus natural gas would have to be a v a i l a b l e from either northern or southern p i p e l i n e . U n t i l recently P a c i f i c Northern Gas has had surplus capacity although the implementation of a number of proposed LNG or petrochemical plants i n the Prince Rupert or Kitimat area would a l t e r t h i s s i t u a t i o n . - P i p e l i n e costs are subject to well-defined economies of scale related to the exponential increase i n volumes of gas transportable with an increase i n pipeline diameter. The unit costs of a small diameter pipeline b u i l t to serve RED-CHRIS are expected to be exceedingly high. D i f f i c u l t t e r r a i n would be a major constraint to construction. Teck Corporation has recently investigated the f e a s i b i l i t y of constructing a natural gas pipeline on t h e i r 197 Schaft Creek deposit some 80 kilometres southwest of RED-CHRIS. The r e s u l t s of t h e i r analysis are unknown. - The environmental, s o c i a l policy and technical aspects of pipeline construction are anticipated to be more demanding and c o s t l i e r than a transmission l i n e transporting comparable amounts of energy. - The pipeline l i f e expectancy would outlast mine development, so that a l i k e l y precondition for construction might be the i d e n t i f i c a t i o n of future customers. - Once a pipeline i s i n place, the sunk costs e f f e c t i v e l y n u l l i f y the opportunity for i n t e r f u e l s u b s t i t u t i o n . Careful supply/demand and price forecasts would be necessary. b) Summary In conclusion, i t appears that natural gas as an energy source for RED-CHRIS would be subject to major areas of uncertainty ard high 'front-end' costs which are l i k e l y to compromise i t s economic attractiveness considering the r e l a t i v e l y short duration of mining operations. From an environmental policy standpoint the use of an abundant indigenous source i s c e r t a i n l y desirable, however there are o f f s e t t i n g environmental and s o c i a l concerns related to land use and construction. The p o s s i b i l i t y of sharing pipeline costs among several p o t e n t i a l mines i n the northwest c e r t a i n l y deserves further i n v e s t i g a t i o n . 198 6.3.2.C. Category III i ) Solar a) Introduction and Technology Solar e l e c t r i c power i s produced by d i r e c t conversion of solar energy to e l e c t r i c i t y i n photovoltaic c e l l s . Photovoltaic c e l l s are arranged i n f l a t , curved stationary or d i r e c t i o n a l arrays connected to storage batteries and load regulating systems for s p e c i f i c applicatons. An i d e a l solar c e l l array has a high power output per unit weight (watts/kg) and low cost per unit power output ($/peak watt) (Rauschenbach, 1980) . S i l i c o n c e l l s are the most widely used thus far because of low material cost, higher e f f i c i e n c i e s , low maintenance and l i t t l e d i r e c t p o l l u t i o n (Council on Environmental Quality, 1978). Typical e f f i c i e n c i e s for a l l types, notwithstanding greater semiconductor purity, range from less than 5% to about 13%, although experimental e f f i c i e n c i e s up to 50% have been reported ( E l e c t r i c Power Research I n s t i t u t e , 1978). b) Economics An analysis of cost trends reveals a marked decline from the late 1950's to late 1970's in terms of i n s t a l l a t i o n costs per kilowatt of output. During t h i s period, costs had declined from about $200,000/kW to less than $2000/kW by the early 1980's (Hayes, 1978; Bailey, 1980; Wiggins, 1978). Most estimates are derived for i d e a l i n s o l a t i o n conditions based on optimum capacity f a c t o r s : less than i d e a l conditions with low capacity factors w i l l n aturally r e s u l t in higher costs. As an example, a study ca r r i e d out by Wiggins for the 199 Alberta Energy and Natural Resources found that for solar c o l l e c t o r s positioned at Fort Smith (60 degrees north compared to 57.5 degrees north for RED-CHRIS) and S u f f i e l d (50.2 degrees north with high annual solar r a diation) the actual annual u t i l i z a t i o n of peak power ranged from 14.3% to 17.8% r e s p e c t i v e l y . Thus the actual costs of solar e l e c t r i c energy w i l l be s i g n i f i c a n t l y higher for northern Canadian applications than p r e v a i l i n g estimates i n the l i t e r a t u r e based l a r g e l y on southern U.S. a p p l i c a t i o n s , c) Resource Supply Climatic data for the study area i s incomplete. The best avai l a b l e data are for recording stations at Telegraph Creek and Dease Lake. Intermittent observations are a v a i l a b l e for Kinaskan Lake, 20 kilometres south, with two continuous record periods: during 1967 to 1970, and 1976 to 1977 (Meteorological Branch Records, 1967-1980). The l o c a l climate can be characterized as generally cool to warm and moist during the short summer, with cold somewhat d r i e r , long winters. The d i s t r i b u t i o n of p r e c i p i t a t i o n and cloud cover i s l a r g e l y dependent on the i n t e r a c t i o n of rugged l o c a l t e r r a i n and the d i r e c t i o n from which influencing a i r masses o r i g i n a t e . As a general r u l e , higher elevations receive greater p r e c i p i t a t i o n and cloud cover, whilst lower elevation valleys are less subject to the vagaries of diurnal cloud cover. This i s r e f l e c t e d i n an appropriate l o c a l comment which states, " I t never rains at Kinaskan Lake." 200 Cockshutt (1980) has estimated l i g h t annual solar i n s o l a t i o n as approximately 120 watts/m^. Because of the high l a t i t u d e , the amount of solar r a d i a t i o n i n the winter i s s i g n i f i c a n t l y reduced, coinciding with peak demands for power. The technology of large capacity storage battery systems i s not s u f f i c i e n t l y advanced to provide the type of storage l e v e l s that would be required by RED-CHRIS under these types of severe conditions. d) Summary In summary, at the present time the technology appears to have lim i t e d a p p l i c a t i o n to meeting RED-CHRIS pot e n t i a l base-load power requirements. Solar's p r i n c i p a l contribution w i l l be r e s t r i c t e d to passive solar gain afforded by buildings s i t e d as to take advantage of southern aspects. As the technology improves, and storage c a p a b i l i t i e s improve, solar may make a contribution to power requirements during long summer days. This conclusion i s founded on a survey of recent l i t e r a t u r e concerning advances in design, economics, and commercialization (Bailey, 1980; Wiggins, 1978; Department of Environment, 1982; L e s l i e , 1980; Berkowitz, 1980; Council on Environmental Quality, 1978; International Solar Energy Society, 1978; and Shewchun, 1976). The conclusion i s reinforced by consideration of the l a t i t u d e and c l i m a t i c regime where the deposit i s located (Kendrew and Kerr, 1955; Hay, 1977; Thomas, 1975; Province of B.C. Department of Agriculture, 1967-1970). 201 i i ) Wind a) Introduction Wind i s a product of solar energy that i s constantly renewed at the surface of the earth because of the uneven d i s t r i b u t i o n of solar energy i n the atmosphere. Wind has been termed a "non-polluting, non-depleting, safe solar energy source" (Mayer, 1981). The power contained i n wind increases as the cube of wind v e l o c i t y , therefore i d e n t i f y i n g areas which sustain high average annual wind v e l o c i t i e s i s necessary for in v e s t i g a t i n g the po t e n t i a l economic conversion of latent wind energy into k i n e t i c energy to produce high qu a l i t y e l e c t r i c a l energy. The h i s t o r i c a l development of wind energy conversion systems (WECS) occurred over 1300 years ago i n Persia, where a v e r t i c a l axis windmill was invented to grind grain (Hunt, 1981). Harnessing wind declined i n popularity with the advent of steam powered systems in the late 1800's, but during the l a s t decade has experienced a modest r e v i v a l i n i n t e r e s t as a r e s u l t of high petroleum p r i c e s . A survey of recent l i t e r a t u r e has revealed a pervasive trend towards reinvestment in t h i s technology with the r e s u l t that wind energy conversion systems can now be considered on a competitive basis with conventional forms of energy conversion (Franklin I n s t i t u t e , 1978; DeRenzo, 1979; McCaull, 1973; Council on Environmental Quality, 1978; Wiggins, 1978; Haack, 1977; Hunt, 1981, Department of Environment, 1982; M i l l e r , 1978). 202 b) Economics An economic assessment of WECS cost trends by the Franklin I n s t i t u t e i n 1978 concluded that optimum economies of scale occurred for units in the 1 to 3 MW range. An important consideration i n their analysis i s the cost-size r e l a t i o n s h i p . Simply put, as the diameter of the blade i s doubled, the area of wind intercepted quadruples. Cost decreases with increasing size to a cer t a i n point, a f t e r which costs escalate because s t r u c t u r a l d i f f i c u l t i e s a r i s i n g from large streses necessitate c o s t l i e r engineering. Few r e l i a b l e cost data are availa b l e for large MW sized systems. The U.S. Department of Energy sponsored, c o s t - e f f e c t i v e designed MOD-2 unit, rated at 2.0 to 2.5 MW output at wind v e l o c i t i e s of 8.6 m/second, can provide very rough c a p i t a l and energy cost comparisons for RED-CHRIS. The machine i s a two-bladed large horizontal axis downwind teetered hub machine with rotor blade diameter of 91.4 meters. Cost of e l e c t r i c i t y i s based on production of the 100th turbine. Capital costs per unit are reported as $3.54 m i l l i o n (U.S.$) in 1981, or about $6.1 m i l l i o n (Cdn$ - 1984). Allowing for a s i t e factor of 1.5 for costs for RED-CHRIS, a 7.5 MW and 18.8 MW system of WECS would cost a minimum of $18.3 m i l l i o n and $55 m i l l i o n r e s p e c t i v e l y , assuming constant peak output ( i . e . , 100% capacity f a c t o r ) . The cost does not include storage, transmission, or an energy back-up system for periods of low wind v e l o c i t i e s , or operation and maintenance costs. Fuel costs are nonexistent for a completely 203 WECS based system. c) Resource Supply For RED-CHRIS, the nature of l o c a l winds must be evaluated so that a measure of the economic v i a b i l i t y of WECS may be assessed. Local wind data are v i r t u a l l y nonexistent. P o r t e l l i (1977) has compiled and summarized regional data in a study to help define a i r p o l l u t i o n climatology for Canada. His findings support those of an e a r l i e r study by Shaw e_t a_l (1972) who found that "generally speaking, persistent l i g h t winds ( l a s t i n g 24-47 hours or longer) occurred most frequently in B.C., Yukon, and Alberta." P o r t e l l i further points out that lowest mean wind speeds occur i n winter when a large " t y p i c a l l y stagnant continental a i r mass" s i t s over northern areas. Mean seasonal wind speeds for maximum afternoon mixing heights are tabulated below. The maximum (afternoon) mixing height i s a function of warm or cold a i r advection caused generally by daily heat inputs ( P o r t e l l i , 1977, p. 2). Table XI. Mean Wind V e l o c i t i e s for Afternoon Mixing Layer Northwestern B r i t i s h Columbia Spring Summer Autumn Winter - 6 m/sec <5 m/sec - 5-6 m/sec 5 m/sec Annual 5 m/sec 204 These values must be considered with reservation because of the profound e f f e c t that rugged t e r r a i n can have on l o c a l wind regimes. Kendrew and Kerr (1955, p. 43) observe that the strongest and most persistent winds occur i n val l e y bottoms for the northern part of the province, but that moderate v a r i a b i l i t y can occur over short distances. Wegley et a l (1978) elaborate further by concluding that l o c a l t e r r a i n v a r i a t i o n s such as gorges, passes, and ridgetops often enhance l o c a l winds by accelerating and c o n s t r i c t i n g a i r masses. A d e s c r i p t i v e , ecological-based wind-speed rating scale, the Griggs-Putnam Index, uses deformed coniferious trees as a basis for estimating annual wind speeds (see Wegley e_t a l , 1978, pp. 5.28-5.33). As the wind v e l o c i t y increases from 5 m/sec to 12.5 m/sec, trees show a tendency to become more deformed because branches grow p r e f e r e n t i a l l y to leeward in the zone of lowest energy. The above considerations plus the writers's experience and informal f i e l d observations during several summers throughout the study area indicate that areas of s i g n i f i c a n t l y higher and more persistent than average annual wind l e v e l s probably occur near RED-CHRIS. However, as much of the t e r r a i n in the immediate area i s at or above tree l i n e , the influence of other variables such as snow cover and ice storms must be considered as biasing influences when making.interpretations based on vegetation wind i n d i c a t o r s . Two areas i n p a r t i c u l a r are suggested as worthy of i n v e s t i g a t i o n for wind p o t e n t i a l evaluation (see Figure 6). 205 The f i r s t of these i s Mt. Ehachezetle, about 10 kilometres northwest of RED-CHRIS and southeast of Iskut. The second l o c a t i o n i s on an unnamed ridge immediately east of the north end of Kinaskan Lake. Mt. Ehachezetle r i s e s to over 2000 meters as an i s o l a t e d massif bounded by major valleys on i t s southeast and west sides, and i s renowned for i t s c h a r a c t e r i s t i c a l l y highly variable weather conditions. The ridge near the north end of Kinaskan Lake appears to help funnel winds down the lake and thus experiences moderate wind v e l o c i t i e s near i t s peak throughout much of the day, as evidenced by considerably deformed trees, d) Environment In order to i d e n t i f y more c l e a r l y the enviromental issues that pertain to WECS, an ERDA/NASA-Battelle Columbus Laboratory's study was ca r r i e d out on the pot e n t i a l environmental impacts of a 100 kW experimental wind turbine at Sandusky Ohio (DeRenzo, 1979, p. 325-335). Their r e s u l t s show that the environmental impacts outside of minimal land-use a l i e n a t i o n are la r g e l y r e s t r i c t e d to a l t e r a t i o n of the immediate micro-climate and poten t i a l impacts on resident or migratory bir d s . Near RED-CHRIS, the pot e n t i a l s i t e s which appear favourable at f i r s t blush are at or above t r e e l i n e and hence few c o n f l i c t s would arise regarding displacement of productive forest or w i l d l i f e habitat. Migratory bird route impacts are expected to be so low as to be n e g l i g i b l e but would require further research. 206 The greatest land-use impacts would probably occur when providing for transmission corridors and access routes. These types of l i n e a r development would have impacts si m i l a r to transmission c o r r i d o r s from other s i t e - s p e c i f i c forms of e l e c t r i c i t y generation except for l o c a t i o n a l d i f f e r e n c e s . Route s e l e c t i o n impacts cannot be evaluated here as they are dependent on WECS s i t e s e l e c t i o n . Overall, the lack of airborne, l i q u i d , or s o l i d emissions make t h i s form of energy highly desirable from an environmental perspective. 6.3.3. Interpretation and Selection of Alternatives The f i n a l task of the Basic Evaluation Environment concerns the i n t e r p r e t a t i o n , ranking and se l e c t i o n of most favourable a l t e r n a t i v e s . This w i l l be conducted from the perspective of the mine planner who attempts to maximize the company's objective function, subject to external government and private i n t e r e s t constraints. It i s most important to note that the evaluation could also be ca r r i e d out from the perspective of one of the other three previously i d e n t i f i e d objective groups. The mine planner perspective i s chosen because i t can most e a s i l y be dealt with u t i l i z i n g the present data a v a i l a b l e to t h i s study. Tables XII and XIII have characterized the a l t e r n a t i v e s from the perspective of the mine planner. Table XII l i s t s the quantitative and q u a l i t a t i v e parameters pertaining to the firm's objective function variables, and examines the values and parameters for r i s k reduction c r i t e r i a . Table XIII l i s t s q u a l i t a t i v e and 207 Table X II. Characterization of Alternatives CRITERIA Objective Function Variables 1. Commercial A v a i l a b i l i t y 2. Anticipated Project Lead Time (years) CATEGORY I ENERGY ALTERNATIVES CATEGORY I I GRID DIESEL SHALL HYDRO EXTENSION COAL GEOTHERMAL BIOMASS Yes Yes 2 - 4 Yes 5 - 7 Yes 2 - 4 Yes Yes 7 - 1 0 2 - 4 CATEGORY I I I NAT.GAS SOLAR WIND Yes Small-Yes Small-Mod Large-No Yes Large-No 5 - 7 Unknown 5 - 1 0 3. Gross Investment Cost ($/kW I n s t a l l e d ) 910-1030 1600-7200 Unknown 1620-4000+ 1860-4260 1570-3970+ Unknown 4. Anticipated Energy Cost Range (mills/kWh) 175-185 32-175+ >100 90-116+ 43-96+ 70-100+ >2000 >24O0 n.a. >85 t o O CO Risk Reduction C r i t e r i a 5. Technical High High R e l i a b i l i t y 6. Technical Improve- Low Low ment F l e x i b i l i t y 7. Capacity U t i l i z a t i o n Factor (%) 95-100 >80 8. Probable Fuel Price Moderate- Low I n f l a t i o n Rate High High Moderate- Moderate- Moderate- High High High High Low Moderate- Moderate Moderate High 95-100 60-1007 Moderate Moderate >90 60-907 Low 95-100 Moderate- Moderate-Low High High Moderate Seasonal- Variable Low Low Moderate- Moderate-High High Low Low n.a. - data i n s u f f i c i e n t to permit reasonable estimation Table X I I I . Socio-economic. Environmental, and P o l i t i c a l Characterization of Alternatives CRITERIA CATEGORY I DIESEL SHALL HYDRO ENERGY ALTERNATIVES CATEGORY I I GRID EXTENSION COAL GEOTHERMAL Soc i o-Economlc Variables 1. P o t e n t i a l for new Industry created or None attracted 2. Potential impact on Low subsistence economies 3. Expenditures on l o c a l Minor goods and services 4. Potential for employ-ment opportunities: Minor/ construction/operation Minor 5. Possible o v e r a l l impact V.Lov on l o c a l Income l e v e l s 6. Potential Impact on l o c a l native land None claim options 7. Possible degree of l o c a l community V.Lov p o l i t i c a l response Minor Low-Mod-erate Minor Moderate/ Minor Low Minor-Moderate Moderate-High Major Minor Melor/ Minor Low High Minor Major Moderate- Moderate Moderate High Minor Minor Major/ Major Moderate/ Moderate Moderate Low-Moderate Moderate Moderate- Moderate High High Moderate-High BIOMASS Major Moderate Minor-moderate Major/ Major Moderate-High Moderate-High High CATEGORY I I I NAT.GAS SOLAR WIND Minor Low-Mod-erate Minor Major/ Minor Low None None Low Low Minor Minor Moderate/ Minor?/ Minor Minor Low Moderate- Minor Minor Low Minor Moderate Moderate- Moderate-Low Low Environmental Variables 6. Land area required Small 9. Water Volume Required Minor 10. Possible l e v e l of costs required to meet effluent/emissions V.Low-discharge standards N i l Small-Mod- Large erate Major N i l Minor?- N i l Moderate Large Moderate Large Major Minor- Minor Moderate Moderate Moderate? Small? N i l N i l N i l Major Moderate- Moderate? N i l -Major V.Low N i l N i l Table X I I I . cont'd CRITERIA 11. Potential for neg-a t i v e w i l d l i f e habitat impacts 12. Potential for negative f i s h e r i e s Impact DIESEL Low N i l CATEGORY I GRID SHALL HYDRO EXTENSION 13. Possible o v e r a l l l e v e l of costs associated with environmental N i l mitigation ENERGY ALTERNATIVES CATEGORY I I COAL GEOTHERMAL Low-Moderate Moderate-Low Low-Moderate High Moderate-Low Moderate-High High Low-Moderate Moderate- Moderate-High High High Moderate-High BIOMASS Moderate Moderate Moderate NAT.GAS Low Low Low-Moderate CATEGORY I I I SOLAR WIND Low? Low Low Low Low Low Social Energy P o l i c y Variables 14. Nature and type of energy source: Domestic (D), Canadian (C), Imported ( I ) / Renewable (R) CjI/NR D/R D/R Non-renewable (NR) 15. Energy Conversion 30-40% >90% >90Z ef f i c i e n c y 16. System's po t e n t i a l for Improved e f f i c i e n c y through conservation or improved technology technology Good Poor Poor D/NR D/NR D/R 30-50% 10-20+% 30-40% DiC/NR D/R 40-45% D/R Excellent Good Good Poor 10-15% >80% variable Excellent F a i r Government Administrative Variables 17. Probable l e v e l of gov-government adminis-trative/regulatory V.Lov costs Low-Moderate High High Moderate- Moderate- Moderate Low? High? High Low 18. P o s s i b i l i t y for public cost sharing i n energy resource or project N i l development 19. Overall probable l e v e l of i n t e r n a l -ized s o c i a l costs Low N i l - MaJ-r Minor Moderate High Minor- Minor? Moderate Minor-Moderate Major N i l - N i l -Minor Minor High Moderate? Moderate- Moderate- Low High Low Low quantitative parameters for socio-economic, environmental and p o l i t i c a l variables that are l i k e l y to be important as external constraints on the firm's e f f o r t s to maximize i t s objective function. Selecting a preferred a l t e r n a t i v e may be accomplished either formally or informally ( M c A l l i s t e r , 1980). Informal methods r e l y on judgemental evaluation and informed, subjective comparison of d i s s i m i l a r values to ar r i v e at a preferred choice or choices. Formal methods depend to varying degrees on the assignment of weighted values to c r i t e r i a , i n order to f a c i l i t a t e t h e i r comparison using mathematical procedures. MacCrimmon (1968) describes various formal decision making techniques with d i f f e r i n g information requirements which can be applied to m u l t i p l e - a t t r i b u t e problems. These include dominance, s a t i s f i c i n g , maximin, lexicography, additive weighting, u t i l i t y theory, non-metric s c a l i n g and others. Dominance and s a t i s f i c i n g are the procedures that w i l l be used here to narrow the range of energy a l t e r n a t i v e s which can be advanced to the p r e f e a s i b i l i t y stage. These techniques are e s p e c i a l l y suited to dealing with multi-objective, m u l t i - c r i t e r i a problems i n t h e i r f u l l dimensionality. Dimensionality refers to the treatment of each c r i t e r i o n (dimension) separately and independently. This requires that each c r i t e r i o n must stand on i t s own. More rigorous decision making procedures that combine c r i t e r i a to reduce the problem environment to one or a very few dimensions require more precise numerical s p e c i f i c a t i o n of c r i t e r i a values than can 211 normally be generated at the r e c o n n a i s s a n c e l e v e l of a n a l y s i s . The dominance procedure u t i l i z e s the concept of r e l a t i v e p r e f e r e n c e of one a l t e r n a t i v e over another. Thus a l t e r n a t i v e A i s s a i d to dominate a l t e r n a t i v e B i f a l l A's c r i t e r i a v alues are h i g h e r . I f s e v e r a l a l t e r n a t i v e s have e q u i v a l e n t v a l u e s f o r one or more c r i t e r i a and higher v a l u e s f o r s p e c i f i c c r i t e r i a , but no one a l t e r n a t i v e i s c l e a r l y dominant, then these may be r e f e r r e d to as a d m i s s i b l e . I f an a l t e r n a t i v e i s equal to or worse than other a l t e r n a t i v e s f o r a l l c r i t e r i a then i t i s s a i d to be dominated and can c l e a r l y be excluded from the a n a l y s i s . In i n s t a n c e s where i t i s not p o s s i b l e to p r e c i s e l y s p e c i f y the v a l u e s f o r c r i t e r i a , t h i s u n c e r t a i n t y can be r e f l e c t e d by s p e c i f y i n g a range of v a l u e s which r e p r e s e n t r e a s o n a b l e upper and lower bounds of some p r o b a b i l i t y d i s t r i b u t i o n . I f the range of v a l u e s f o r a l t e r n a t i v e s then o v e r l a p , no one a l t e r n a t i v e may be c l e a r l y dominant. Rather, v a r y i n g degrees of weak to s t r o n g dominance w i l l be apparent. S a t i s f i c i n g employs the procedure of a p p l y i n g minimum val u e s f o r c r i t e r i a to determine a c c e p t a b l e a l t e r n a t i v e s . I f an a l t e r n a t i v e f a i l s to s a t i s f y a minimal value then i t i s e x c l u d e d . Where an a l t e r n a t i v e narrowly f a i l s to s a t i s f y a minimal c o n s t r a i n t , but i s c l e a r l y a c c e p t a b l e f o r the m a j o r i t y , then the v a l i d i t y of the i n f o r m a t i o n which would cause the a l t e r n a t i v e to be r e j e c t e d should be reviewed. Dominance and s a t i s f i c i n g w i l l be combined i n the present a n a l y s i s to narrow and c l a r i f y the p r e f e r e n c e f o r energy a l t e r n a t i v e s . As an i n i t i a l step i n choosing among a l t e r n a t i v e s , the 212 mine planner may wish to specify c e r t a i n minimal guidelines or pre-conditions. These can vary from one project to another, but for the present analysis for RED-CHRIS, the following conditions w i l l apply: (a) the power generation a l t e r n a t i v e must be commercially a v a i l a b l e at the present time. (b) the power generation a l t e r n a t i v e must be able to come on stream i n 5 years, a reasonable amount of time to bring a remote medium-sized deposit into production. For t h i s study i t w i l l be assumed that a production decision has been reached for RED-CHRIS and that the deposit i s scheduled to commence operation i n 5 years. (c) the power generation f a c i l i t y must be capable of being the mine's sole power source, i . e . , i t w i l l i d e a l l y have a capacity factor approaching 100%, excepting shutdowns for periodic maintenance or e f f i c i e n c y improvements. The a l t e r n a t i v e s can now be examined i n l i g h t of these i n i t i a l minimal conditions. If an a l t e r n a t i v e f a i l s to s a t i s f y one or more of these conditions then i t i s deleted from further consideration at t h i s time. If the development of the deposit i s deferred, than an a l t e r n a t i v e f a i l i n g either (a) or (c) could ba reconsidered. Applying the requirement of commercial a v a i l a b i l i t y would appear to rule out both solar and wind at t h i s time. While small-scale units and systems are presently a v a i l a b l e , large 213 units and arrays capable of meeting RED-CHRIS's power requirements are s t i l l l a r g e l y in the experimental stage. A l l other a l t e r n a t i v e s meet t h i s i n i t i a l requirement. The a p p l i c a t i o n of condition (b), a 5 year time frame for development, would rule out geothermal and seriously question the v i a b i l i t y of either high voltage grid extension or natural gas pipeline construction. Concerning geothermal, r e c a l l that there i s presently no proven geothermal energy f i e l d within economic transmission distance of the pote n t i a l minesite and, therefore, construction lead time for geothermal power generation must allow for reservoir exploration and p i l o t t e s t i n g of prospective geothermal f i e l d s . Given the s i t u a t i o n where both a high voltage grid extension or natural gas pipeline a l t e r n a t i v e could be completed i n less than 5 years, or the s i t u a t i o n where mine development was delayed beyond 5 years, then i t would appear to be premature to delete these two a l t e r n a t i v e s from consideration at t h i s time. Application of the f i n a l i n i t i a l condition, a system capacity factor of close to 100% does not permit further narrowing of the remaining f i e l d of 6 candidates because of uncertainty i n the expected range of values. However based on th i s condition, a l t e r n a t i v e s can now be categorized into degrees of s a t i s f y i n g the o v e r a l l set of conditions. Thus d i e s e l , high voltage grid extension and a natural gas pipeline emerge as strongly s a t i s f y i n g i n i t i a l conditions, given a marginal relaxation of the project start-up time. Small-hydro, 214 coal and biomass apparently emerge as r e l a t i v e l y less capable of s a t i s f y i n g these conditions. Of these l a t t e r three, small-hydro could become a stronger candidate by improving i t s expected capacity u t i l i z a t i o n f a c t o r , for example by u n d e r - u t i l i z i n g a hydrologic system with an assured surplus of water. This improvement might, however, be o f f s e t by p o t e n t i a l l y greater i n s t a l l a t i o n costs. To summarize thus f a r , the a p p l i c a t i o n of three i n i t i a l project conditions have allowed the mine planner to reduce his set of energy supply options from nine to s i x . Solar, wind, and geothermal have been deleted at t h i s time. In the next step, remaining a l t e r n a t i v e s are further examined by using dominance procedures applied to economic c r i t e r i a . The most important economic c r i t e r i o n for comparing a l t e r n a t i v e s i s a project's net present value. Net present values are calculated from gross investment costs and discounted anticipated average annual energy costs. Values for gross investment cost and average annual energy cost (mills/kWh) are summarized in Table XII. Net present values for d i e s e l , small hydro, biomass, and coal a l t e r n a t i v e s are presented i n Table XIV. Summaries of assumptions, c a p i t a l and annual cost parameters used to determine the values i n Table XIV are contained i n Appendix 3. Net present values could not be determined for high voltage grid extension or natural gas pipeline options because th e i r expected costs are unknown without detailed engineering assessment of route options or further knowledge of possible j o i n t cost-sharing opportunities 215 with other end users. Communications with Combustion Engineering o f f i c i a l s i n Ottawa confirmed that the economics of these two options are l i k e l y to be unfavourable r e l a t i v e to d i e s e l , small hydro, biomass, and c o a l . Therefore grid extension and natural gas are deleted at t h i s point. Comparison of the values presented in Table XIV shows that small hydro c l e a r l y dominates the other three a l t e r n a t i v e s in both production scenarios and discount rate categories. Low annual costs are a major determinant in small hydro's economic f a v o u r a b i l i t y . Coal i s the second most dominant a l t e r n a t i v e , however i t s weak dominance must be q u a l i f i e d . Recall that the range of net present values for coal r e f l e c t uncertainty over c a p i t a l and engineering costs, and that no allowance has been made for re a l price v a r i a t i o n s for coal feedstock. If coal prices were to increase i n r e a l terms, then i t i s conceivable that biomass would become more desirable than c o a l . Conversely, i f coal prices were to experience r e a l price decreases over the l i f e of the RED CHRIS mine than coal would become competitive with small hydro given a 12% discount rate. Biomass dominates d i e s e l in nearly a l l categories except the 20-year low price 12% discount rate scenario. The reason for t h i s r e f l e c t s the greater s e n s i t i v i t y of d i e s e l generation to annual fuel costs whereas petroleum derived fuels form a smaller component of annual biomass costs. Logging costs and environmental protection costs of biomass are presently very imprecise and may be a major cost factor on more detailed 216 Table XIV. Summary of Net Present Value Estimates For RED CHRIS Power Generation Alternatives ($Millions) DIESEL SMALL HYDRO BIOMASS COAL PRODUCTION SCENARIO 1 : 8 YRS Low Fuel Price Est. 8 % High Fuel Price Est. $111.46 $146.58 63.30 102.61 120.80 74.20 - 93.0 Low Fuel Price Est. 12% High Fuel Price Est. $ 82.65 $107.31 53.77 77.88 90.99 57.39 - 72.0 PRODUCTION SCENARIO 2 : 20 YRS Low Fuel Price Est. 8% High Fuel Price Est. $ 73.59 $115.13 30.94 67.98 75.30 51.64 - 65.0 Low Fuel Price Est. 12% High Fuel Price Est. $ 48.07 $ 71.52 28.78 52.86 57.01 36.08 - 45.0 examination. This would tend to deteriorate biomass's apparent competitive advantage over d i e s e l . F i n a l l y , d i e s e l i s dominated by a l l other a l t e r n a t i v e s , a fact which r e f l e c t s the large influence that d i e s e l f u e l prices have on t h i s a l t e r n a t i v e ' s economics ( f u e l costs contribute on the order of 75-85% of net present value). To summarize, the p r o f i l e of candidates which has emerged from a comparison of net present value c a l c u l a t i o n s i s as follows. Small hydro strongly dominates a l l other a l t e r n a t i v e s . Coal exhibits weak to moderate dominance, while biomass i s weakly to strongly dominated, and d i e s e l i s apparently dominated by a l l others. I t i s emphasized, however, that these net present values are preliminary in nature and would require more detailed i n v e s t i g a t i o n to e s t a b l i s h d e f i n i t i v e r e l a t i o n s h i p s . High voltage grid extension and natural gas are deleted from further consideration because available data are i n s u f f i c i e n t to allow meaningful cost comparisons. The r i s k reduction c r i t e r i a , t echnical r e l i a b i l i t y and t e c h n i c a l improvement f l e x i b i l i t y were examined for the four remaining a l t e r n a t i v e s but no major differences are apparent which would j u s t i f y reducing the number of a l t e r n a t i v e s s t i l l further . The f i n a l step in the mine planner's task of narrowing down f e a s i b l e energy supply a l t e r n a t i v e s concerns the examination of s o c i a l and governmental objective function variables, l i s t e d i n Table XIII, as p o t e n t i a l constraints on 218 the d e s i r a b i l i t y of any one remaining a l t e r n a t i v e . A number of socio-economic variables r e f l e c t costs that the firm might be required to i n t e r n a l i z e . The most important would appear to be associated with the p o t e n t i a l for negative impacts on e x i s t i n g subsistence economies, and the p o t e n t i a l for negative impacts on l o c a l native land claim options. Diesel i s the preferred choice with very low impacts anticipated and hence few s o c i a l costs to i n t e r n a l i z e . The greatest impacts and necessary mitigative costs would r e s u l t from employing biomass and c o a l . However, the p o t e n t i a l for biomass harvesting to create new w i l d l i f e habitat, thus improving l o c a l subsistence hunting, would be a b e n e f i c i a l e x t e r n a l i t y which i s not r e f l e c t e d in costs borne by the firm. The socio-economic costs a t t r i b u t a b l e to small hydro can be minimized by c a r e f u l s i t e s e l e c t i o n , compared to more r i g i d s i t i n g constraints for coal and biomass. The important environmental costs constraining the firm's choice are p o t e n t i a l l y of the following two kinds: Costs required to meet e f f l u e n t or emission standards, and mitigative costs related to various forms of biophysical a l t e r a t i o n s (land, water, w i l d l i f e ) . In both categories, d i e s e l i s once again c l e a r l y the dominant choice. Coal would c l e a r l y e n t a i l the greatest environmental costs, r e f l e c t i n g the process of mining coal, disposal of spent combustion residue t y p i c a l l y with enhanced concentrations of toxic elements, venting of gaseous nitrogen and sulphur compounds, and the l i k e l y l o c a tion of a c o a l - f i r e d plant at the headwaters of major salmon fishery 219 streams (Skeena, S t i k i n e , and Nass) adjacent to two p r o v i n c i a l wilderness parks, S p a t s i z i and T a t l a t u i . Although i t appears that coal would be mined by Gulf Canada Resources, a company with no r e l a t i o n s h i p to RED CHRIS owners, environmental costs borne by Gulf i n mining coal would be passed on to the power-generation project in terms of coal p r i c e . The environmental costs r e s u l t i n g from employing small-hydro or biomass-fired generation can be minimized r e l a t i v e to coal because of greater design f l e x i b i l i t y , however they s t i l l s u b s t a n t i a l l y exceed the costs r e s u l t i n g from d i e s e l . S o c i a l energy policy variables are important to the mine planner insofar as an energy supply a l t e r n a t i v e advocated as desirable by s o c i a l energy policy may have some of i t s costs minimized through various forms of public development incentives. In recent years public energy policy has tended to favour abundant domestic energy resources capable of e f f i c i e n t conversion to usable energy forms. The order of preference for the four a l t e r n a t i v e s considering these policy constraints shows small-hydro dominant, followed by biomass, coal and d i e s e l . F i n a l l y , the mine planner's choice w i l l be constrained by an o v e r a l l l e v e l of anticipated i n t e r n a l i z e d s o c i a l costs a r i s i n g from government regulatory a c t i v i t i e s . The more regulated the project, the greater w i l l be costs borne by the developer. Of the four a l t e r n a t i v e s , d i e s e l i s anticipated to be the least regulated and hence least costly i n t h i s category. Since both biomass and coal involve extractive and transport 220 a c t i v i t i e s and r e l a t i v e l y greater labour forces not necessary for either d i e s e l or small-hydro, both coal and biomass w i l l l i k e l y be subject to more intensive regulation and the s o c i a l costs borne by the mine developer w i l l be accordingly higher. Small hydro i s anticipated to be intermediate between d i e s e l and the coal or biomass. Internalized s o c i a l costs a t t r i b u t a b l e to small hydro could s u b s t a n t i a l l y increase i f poor s i t i n g resulted i n c o n f l i c t s with productive f i s h e r i e s . To summarize the socio-economic, environmental, p o l i c y , and governmental analysis then, i t i s clear that d i e s e l i s the dominant choice in a l l categories except s o c i a l energy p o l i c y . However, f a i l u r e to "conform" to the ideals of s o c i a l energy policy does not r e a d i l y translate into d i r e c t costs borne by the firm employing d i e s e l powered generation. Hence the i n t e r n a l i z e d s o c i a l costs are anticipated to be a minimum for t h i s a l t e r n a t i v e . Small hydro i s second to d i e s e l i n a l l categories except s o c i a l energy policy where i t c l e a r l y dominates a l l others. Biomass i s generally an admissible a l t e r n a t i v e , i t exhibits weak dominance in environmental and s o c i a l energy policy categories, while being c l e a r l y dominated i n socio-economic and governmental categories. Coal i s dominated i n a l l categories except s o c i a l energy policy where i t dominates d i e s e l . Thus the s o c i a l costs l i k e l y to be i n t e r n a l i z e d by the firm are anticipated to be greatest for coal out of these four a l t e r n a t i v e s . If these r e s u l t s are now merged with the previous r e s u l t s a f t e r examining the a l t e r n a t i v e s with the firms objective 221 function v a r i a b l e s , the following conclusions can be made. Small hydro i s a highly favourable energy supply a l t e r n a t i v e e x h i b i t i n g the lowest net present value of the four f i n a l i s t s , design f l e x i b i l i t y and generally low anticipated i n t e r n a l i z e d s o c i a l costs. Diesel i s a favourable a l t e r n a t i v e from nearly every perspective except o v e r a l l economics and energy p o l i c y . Unless i t can be demonstrated that d i e s e l f u e l w i l l experience r e a l price decreases over the l i f e of the mine, thereby improving d i e s e l generation economics, there i s , however, l i t t l e j u s t i f i c a t i o n for promoting d i e s e l as a sole power source for consideration at the p r e f e a s i b i l i t y stage of analy s i s . Biomass and coal are generally comparable. Net present value c a l c u l a t i o n s demonstrate that coal i s more favourable than biomass i f non-petroleum f u e l feedstocks for both a l t e r n a t i v e s experience no r e a l price f l u c t u a t i o n s . Conversely, the higher anticipated s o c i a l , environmental, and regulatory costs related to c o a l - f i r e d power generation would tend to erode i t s comparative economic advantage and tend to favour biomass as a better o v e r a l l a l t e r n a t i v e . Biomass and coal should be modelled in greater d e t a i l at the p r e f e a s i b i l i t y stage of analysis so that an unequivocal comparison with small hydro may be achieved. High voltage grid extension and natural gas pipeline options require further cost study and deferred mine development to be reconsidered along with th*?- previous four. Geothermal, solar, and wind are not l i k e l y to be viable a l t e r n a t i v e s for many years. 2 2 2 6.4. PERIPHERAL STRATEGIC DATA Peripheral s t r a t e g i c data base information concerns regional development and other trends which are independent of the focused problem, but which can exact important influence on o v e r a l l mine f e a s i b i l i t y and s e l e c t i o n of energy supply a l t e r n a t i v e s for RED-CHRIS. Four peripheral areas are b r i e f l y introduced below. Each area could provide the focus of a much larger study. 6.4.1. Peripheral Data Base I - Status of Mineral Deposit Development Adjacent to RED-CHRIS Mineral deposits where exploration and development are s u f f i c i e n t l y advanced and therefore p o t e n t i a l l y i n f l u e n t i a l in RED-CHRIS's development are: Schaft Creek, Mt. Klappan, and possibly Kutcho Creek. Schaft Creek copper and molybdenum deposit i s located 75 kilometres southwest of RED-CHRIS. Development of the deposit by TECK CORPORATION, i t s present owners, i s e s s e n t i a l l y at the f e a s i b i l i t y stage. Given that the mine's townsite l o c a t i o n w i l l be adjacent to Highway 37, and power supplied from either More Creek, Klappan Coal, or g r i d / p i p e l i n e extensions from the south, then the economics of energy supply at RED-CHRIS would most c e r t a i n l y be improved. Mt. Klappan coal deposit i s situated 50 kilometres southeast of RED-CHRIS adjacent to the abandoned B.C. Railway grade. The planned development of Mt. Klappan by Gulf Canada Resources perhaps within 5 years, might s u b s t a n t i a l l y improve energy supply economics for RED-CHRIS, given that Mt. Klappan 223 r e l i e s on either c o a l - f i r e d or grid extension power supply. Access and community i n f r a s t r u c t u r e benefits are less l i k e l y to influence RED-CHRIS because Mt. Klappan commodity inflow and outflow, access/egress w i l l occur from the southwest. Kutcho Creek copper, zinc, and gold deposits situat.ed 100 kilometres northeast of RED-CHRIS i s a major p o t e n t i a l underground mine at the f e a s i b i l i t y stage. The deposit's development and required i n f r a s t r u c t u r e are u n l i k e l y to influence RED-CHRIS unless power supply i s secured from the south v i a Highway 37 or the B.C. Railway c o r r i d o r , i n which case shared transmission costs may be r e a l i z e d . 6.4.2. Peripheral Data Base II - Mineral Commodity, P r i c e , Demand/Supply Trends The metal price for copper and gold d i r e c t l y determine the status of RED-CHRIS development v i a b i l i t y . Metal prices and anticipated metal price trends can accelerate or defer mine development. Under a scenario of accelerated mineral development (high price scenarios), energy supply a l t e r n a t i v e s with short lead times, few uncertainties, and few regulatory constraints w i l l be favoured. Conversely, under a deferred scenario (low price f o r e c a s t ) , a greater range of energy a l t e r n a t i v e s can be considered. Furthermore, new technological or economic factors may emerge that would improve the f a v o u r a b i l i t y of previously less favourable options. Copper prices at present r e f l e c t the l a t t e r scenario. A recent survey of mineral analyst forecasts by 224 economists of the Mineral Policy and Evaluation Branch of the Ministry of Energy, Mines and Petroleum Resources (1983) concluded that the long run outlook for copper prices was for p o s i t i v e r e a l price increases, punctuated by short-term downward cycl e s . The major area of uncertainty i s therefore, the rate of r e a l price increases. 6.4.3. Peripheral Data Base III - Government Regional Mineral Development Policy Government policy regarding development of the northwest's mineral resources i s s t i l l in the formative stages. The Interministry Working Group on Northwest B r i t i s h Columbia's (1982-1984) recently completed series of preliminary studies did not present s p e c i f i c regional resource development p o l i c i e s . Nevertheless, governmental concern for orderly resource development in consideration of a l l s o c i a l and environmental issues emerged. Government appears ready to a s s i s t in areas of community, transportation, and port f a c i l i t y construction (as for Northeast Coal), while simultaneously promoting private investment whenever possible. No new government p o l i c i e s have been suggested to a l l e v i a t e the energy supply problems facing nearly every mineral deposit i n the northwest. 6.4.4. Peripheral Data Base IV - Changing Land Use Patterns Changing land use patterns or management adjacent to RED-CHRIS could p o t e n t i a l l y a l t e r the f a v o u r a b i l i t y of several indigenous energy supply a l t e r n a t i v e s such as biomass-fired 225 generation, and small hydropower. For example, commercial timber harvesting near RED-CHRIS could a l t e r the volume and quality of biomass a v a i l a b l e for combustion, and increase the cost of procurement. S i m i l a r i l y , f i s h e r i e s enhancement or private micro-hydro development could reduce the number of p o t e n t i a l l y a v a i l a b l e s i t e s , and increase costs at prime s i t e s . Native land claims could p o t e n t i a l l y a l t e r the f a v o u r a b i l i t y of grid extension or pipeline a l t e r n a t i v e s which cross expansive t r a c t s of land u t i l i z e d by native peoples for subsistence hunting and gathering. The s e n s i t i v i t y (and hence d e s i r a b i l i t y ) of energy supply a l t e r n a t i v e s to minor s h i f t s i n costs, and the a b i l i t y of certai n land uses to preclude consideration of s p e c i f i c energy a l t e r n a t i v e s underline the need for mineral deposit owners to become involved i n regional land use planning d e l i b e r a t i o n s . Conversely, the po t e n t i a l for s o c i a l and environmental impacts a r i s i n g from development of energy supply a l t e r n a t i v e s underlines the need for l o c a l i n t e r e s t s to be f a m i l i a r and involved with resource development planning. 6.5. FURTHER RESEARCH NEEDS An axiomatic feature of a reconnaissance l e v e l evaluation i s the need for further research. Further research should s t r i v e towards a more precise focusing of the problem area in order to reduce uncertainty, while maintaining an appropriate balance of s i m p l i c i t y and complexity. The types of ad d i t i o n a l information requirements i d e n t i f i e d may be c o s t l i e r and more 226 time-consuming to generate. This underlines the need for continuing assessment of p r i o r i t i e s to ensure c o s t - e f f e c t i v e a l l o c a t i o n of a n a l y t i c a l resources. The foregoing analysis has demonstrated the need for further research i n two p r i n c i p a l areas; refinement of ex i s t i n g data, and ongoing or i t e r a t i v e a n a l y s i s . Further research in the core information environment could be e f f e c t i v e l y employed in the following areas: (a) Interest groups and objectives - There i s a d d i t i o n a l scope to further define i n t e r e s t group i n t e r e s t s and to develop a clearer appreciation for the types of impacts they are l i k e l y to experience from the a c t i v i t i e s of mine development. Moreover, key i n t e r e s t group attitudes towards r i s k related to energy project development are presently unclear. (b) Mineral deposit energy demand - Further refinement of the energy demand estimations derived for RED-CHRIS are contingent on a more rigorous development of three i n t e r r e l a t e d sub-models: an up-dated three dimensional geological model with l a t e s t known d i s t r i b u t i o n s of mineral grades and mining c h a r a c t e r i s t i c s ( i . e . , rock hardness, fract u r i n g ) s p e c i f i e d , from which a conceptual mining plan may be developed; a mineral processing model based on met a l l u r g i c a l c h a r a c t e r i s t i c s of RED-CHRIS ore; and a conceptual model of i n f r a s t r u c t u r e (housing, transportation) s i t i n g , and design-. (c) Regional influences - Two areas of further research are indicated: a more precise c h a r a c t e r i z a t i o n of the development problems and opportunities facing p o t e n t i a l mining, 227 hydroelectric or for e s t r y operations adjacent to RED-CHRIS; and a better understanding of the nature of, and requirments f o r , native subsistence economies. The former i s important insofar as opportunities to reduce RED-CHRIS's development costs may be suggested. In the l a t t e r case, strategies can be formulated to minimize p o t e n t i a l s o c i a l impacts and minimize p o t e n t i a l l y unnecessary i n t e r n a l i z e d s o c i a l costs. The objective of further research i n the basic evaluation environment i s to achieve a more confident s e l e c t i o n of fe a s i b l e energy supply a l t e r n a t i v e s . Presently, considerable uncertainty e x i s t s for various a l t e r n a t i v e s i n determining t h e i r values for s p e c i f i c c r i t e r i a . This i s r e f l e c t e d by wide ranges i n expected costs and benefits and q u a l i t a t i v e assessment of key socio-economic vari a b l e s . One approach might be to d i r e c t research e f f o r t s to improving information for a narrowed set of a l t e r n a t i v e s during a second i t e r a t i o n of the an a l y s i s . S e n s i t i v i t y analysis using d i f f e r e n t discount rates, project financing scenarios, and fu e l price trend modelling are a c t i v i t i e s that could be pursued during the second i t e r a t i o n . An area of d e f i c i e n t knowledge that would warrant some in v e s t i g a t i o n concerns the r e l a t i o n s h i p of regulatory requirements to the economics of small energy projects for northern mining. C l e a r l y , the nature of, and differences between regulatory processes for the various- preferred a l t e r n a t i v e s i s an important area of cost uncertainty from both public and private perspectives. F i n a l l y , i t i s apparent that components outlined in the 228 p e r i p h e r a l environment can e x e r t a profound a f f e c t on the v i a b i l i t y of energy supply a l t e r n a t i v e s and indeed on the v i a b i l i t y of RED-CHRIS as a mine. Metal p r i c e s , n a t i v e and o f t e n p r o v i n c i a l land-use d e l i b e r a t i o n s , and government r e g i o n a l development p o l i c i e s , a l l deserve c l o s e m o n i t o r i n g to assess whether r e l a t i v e changes i n t h e i r s t a t u s enhance or d i m i n i s h the v i a b i l i t y of RED-CHRIS as a p o t e n t i a l mine, and a l t e r i t s p o t e n t i a l energy supply o p t i o n s . 6.6. CONCLUSIONS The purpose of t h i s chapter was to perform a re c o n n a i s s a n c e l e v e l e v a l u a t i o n of p o t e n t i a l energy supply o p t i o n s a v a i l a b l e f o r development of the RED-CHRIS copper-gold d e p o s i t . T h i s was achieved by a p p l y i n g the methodology o u t l i n e d i n Chapter Four. The examination of energy a l t e r n a t i v e s and t h e i r f i n a l s e l e c t i o n was performed from the p e r s p e c t i v e of a mine planner s u b j e c t to c o n s t r a i n t s imposed by p u b l i c and governmental i n t e r e s t s . The main c o n c l u s i o n s which emerged from the a n a l y s i s are o u t l i n e d below: (1) I n t e r e s t groups concerned with the p l a n n i n g , development, outcome or r e g u l a t i o n of an energy supply p r o j e c t are d i v i s i b l e i n t o three c a t e g o r i e s each with i t s c o r r e s p o n d i n g o b j e c t i v e f u n c t i o n . O b j e c t i v e Group A r e p r e s e n t s m i n e r a l d e p o s i t owners who have as t h e i r o b j e c t i v e , the d e s i r e to maximize p r o f i t . O b j e c t i v e Group B i n c l u d e s d i v e r s e i n t e r e s t s d i r e c t l y or i n d i r e c t l y a f f e c t e d by the proposed energy p r o j e c t who have as t h e i r g e n e r a l o b j e c t i v e the 229 desire to maximize economic and s o c i a l well-being, and environmental i n t e g r i t y . Objective Group C represents two components of s o c i e t a l i n t e r e s t relevant to the problem area: public energy p o l i c y , and government administrative i n t e r e s t s . The o v e r a l l objective of these categories i s to maximize economic, p o l i t i c a l and s o c i a l welfare pertaining to s p e c i f i c policy and administrative areas. (2) RED-CHRIS represents a large-tonnage low grade copper gold deposit extractable by open-pit mining methods. RED-CHRIS has many s i m i l a r c h a r a c t e r i s t i c s to other porphyry-style deposits in the circum-Pacific region and hence t h e i r energy use data can be used to derive gross energy requirements for RED-CHRIS. Gross energy requirements are estimated to range from 7.5 to 23.5 megawatts i n s t a l l e d capacity for an 8 to 20 year production schedule. These estimates require further refinement based on conceptual models of the deposit's geology, ore processing, and i n f r a s t r u c t u r e . (3) Energy supply options for RED-CHRIS may be influenced by other regional mining and non-mining i n d u s t r i a l development and native land claim negotiations. For example, development of Gulf Canada Resource's Mt. Klappan anthracite deposit may provide c o a l - f i r e d e l e c t r i c generating capacity within economic transmission distance of RED-CHRIS. (4) Energy supply options considered for RED-CHRIS can be categorized as: ( i ) commercialy proven and with h i s t o r i c a l 230 a p p l i c a t i o n to remote mining (e.g., d i e s e l - e l e c t r i e , high v o l t a g e g r i d e x t e n s i o n , s m a l l - h y d r o ) ; ( i i ) commercially proven but without h i s t o r i c a l a p p l i c a t i o n to remote mining (e.g., c o a l - f i r e d g e n e r a t i o n , biomass, n a t u r a l gas, peat, geothermal); and ( i i i ) commercially d o u b t f u l and without h i s t o r i c a p p l i c a t i o n to remote mining (e.g., s o l a r and wind). ( 5 ) S a t i s f i c i n g and Dominance procedures, methods of formal m u l t i - a t t r i b u t e d e c i s i o n - m a k i n g can be s u c c e s s f u l l y a p p l i e d from a mine p l a n n e r ' s p e r s p e c t i v e to e v a l u a t e , s e l e c t and rank a reduced group of a l t e r n a t i v e s f o r advancement to the p r e f e a s i b i l i t y stage of a n a l y s i s . S i m u l t a n e o u s l y , areas of p r i o r i t y r e s e a r c h can be i d e n t i f i e d f o r these a l t e r n a t i v e s . S i m i l a r success i n the a p p l i c a t i o n of these decision-making t e c h n i q u e s to a n a l y s e s c a r r i e d out from the other i n t e r e s t group p e r s p e c t i v e s would need to be i n v e s t i g a t e d . ( 6 ) D i e s e l , s m a l l - h y d r o , biomass and c o a l - f i r e d e l e c t r i c g e n e r a t i n g o p t i o n s , i n o r d e r , appear to be the most f e a s i b l e energy supply a l t e r n a t i v e s f o r RED-CHRIS at t h i s time. ( 7 ) C o s t - e f f e c t i v e a p p l i c a t i o n of r e s o u r c e s to f u r t h e r r e s e a r c h should c o n c e n t r a t e on r e f i n i n g e x i s t i n g data and a n a l y s e s , and on m o n i t o r i n g p e r i p h e r a l i n f l u e n c e s , such as metal p r i c e t r e n d s , which are important from the s t a n d p o i n t of o v e r a l l p r o j e c t v i a b i l i t y . 231 CHAPTER SEVEN CONCLUSIONS The c e n t r a l o b j e c t i v e of t h i s study has been to develop and t e s t a methodology capable of r e c o n n a i s s a n c e l e v e l e v a l u a t i o n of energy supply a l t e r n a t i v e s f o r f u t u r e medium-scale m i n e r a l development i n B r i t i s h Columbia's northwest. The p r i n c i p a l c o n c l u s i o n s which emerge from t h i s study are as f o l l o w s : (1) Northwest B r i t i s h Columbia c o n t a i n s a d i v e r s i t y of n a t u r a l r e s o u r c e s which are g e n e r a l l y u n d e r u t i l i z e d , undeveloped or p o o r l y documented. P u b l i c p r e f e r e n c e s p e r t a i n i n g to the use, a l l o c a t i o n , and management of these r e s o u r c e s range from those who d e s i r e a c a u t i o u s , e n v i r o n m e n t a l l y sound, slow pace of economic development i n order to p r e s e r v e a q u a l i t y w i l d e r n e s s l i f e s t y l e and g i v e time to r e s o l u t i o n of a b o r i g i n a l l a n d c l a i m s , to those who view an enhanced pace of economic development p r i m a r i l y through d i v e r s i f i e d mining, f o r e s t r y and energy a c t i v i t i e s as p r o v i d i n g the c o r n e r s t o n e of f u t u r e r e g i o n a l p r o s p e r i t y and s t a b i l i t y . Resource management d e c i s i o n s made today must take i n t o account u n c e r t a i n knowledge about r e s o u r c e d i s t r i b u t i o n and d i s p a r a t e p u b l i c p o l i c y o b j e c t i v e s . (2) M i n e r a l r e s o u r c e s i n the study area present the most immediate p o t e n t i a l f o r l a r g e - s c a l e , r e g i o n a l , i n d u s t r i a l development. However, t h i s development i s p r e s e n t l y c o n s t r a i n e d by weak metal p r i c e s , i n s u f f i c i e n t t r a n s p o r t a t i o n 232 and community f a c i l i t i e s and lack of low-cost e l e c t r i c a l power. (3) Energy supply for mining remains an unresolved issue despite several recent government studies of the problem. Given the wide range of p o t e n t i a l mining scales, timing and impact, and the e x i s t i n g regulatory parameters governing new energy projects as s p e c i f i e d by the p r o v i n c i a l U t i l i t i e s  Commission Act, i t i s concluded that the most e f f e c t i v e reduction of uncertainty for t h i s issue i s achieved through the development of a s t r a t e g i c a n a l y t i c a l framework. This a n a l y t i c a l framework would s p e c i f i c a l l y focus on assessing power options for i n d i v i d u a l medium-scale po t e n t i a l mines. (4) A s t r a t e g i c a n a l y t i c a l framework which addresses the issues of t h i s study can be derived from commonly advocated p r i n c i p l e s of normative decision-making, s t r a t e g i c analysis, and m u l t i - a t t r i b u t e decision-making procedures, i n conjunction with energy project evaluation approaches r e f l e c t i n g the objective functions of various i n t e r e s t groups. (5) The methodology permits the e f f e c t i v e analysis of energy supply options for a deposit to be conducted i n three stages: ( i ) a Core Information Environment focuses the problem environment and establishes a perspective for the subsequent analysis; ( i i ) a Basic Evaluation Environment i d e n t i f i e s , evaluates and ranks f e a s i b l e a l t e r n a t i v e s for problem r e s o l u t i o n ; and ( i i i ) a Peripheral Evaluation Environment i d e n t i f i e s and examines the influence of areas of uncertainty which may a l t e r the outcome of the analysis but are external to the decision-maker's c o n t r o l . 233 ( 6 ) I t i s concluded from the mine pl a n n e r s p o i n t of view, t h a t f o r RED-CHRIS copper-gold d e p o s i t , the most f e a s i b l e energy supply o p t i o n s at t h i s time a r e : s m a l l h y d r o e l e c t r i c power g e n e r a t i o n , b i o m a s s - f i r e d power g e n e r a t i o n , and c o a l - f i r e d power g e n e r a t i o n . D i e s e l - e l e c t r i c g e n e r a t i o n may be more or l e s s f a v o u r a b l e than c o a l o r biomass depending on p r i c e assumptions, but i s c l e a r l y l e s s f a v o u r a b l e than s m a l l h y d r o e l e c t r i c . ( 7 ) The case-study a n a l y s i s was c a r r i e d out from the mine pla n n e r s p e r s p e c t i v e and i s t h e r e f o r e i n f l u e n c e d by t h a t i n t e r e s t group's v a l u e s . I t i s a n t i c i p a t e d t h a t i f the a n a l y s i s were to be conducted from a d i f f e r e n t i n t e r e s t group's p e r s p e c t i v e , the r e s u l t s may w e l l d i f f e r . T h i s dilemma, and r e a l i t y , of p u b l i c p o l i c y a n a l y s i s i l l u s t r a t e s why the methodology i s s t r u c t u r e d to be a d a p t a b l e , yet r e q u i r e s an e x p l i c i t e n u n c i a t i o n and a c c o u n t i n g of competing i n t e r e s t group o b j e c t i v e and p r i o r i t y e v a l u a t i o n c r i t e r i a . I t i s t h e r e f o r e recommended t h a t the degree of value s e n s i t i v i t y of the methodology be t e s t e d by a p p l y i n g i t from more than one p e r s p e c t i v e to the same m i n e r a l d e p o s i t . ( 8 ) I t i s concluded t h a t the methodology i s s u f f i c i e n t l y comprehensive and robust to be adapted to other m i n e r a l d e p o s i t s i n the r e g i o n . Such an a p p l i c a t i o n w i l l be able to b e n e f i t from the RED-CHRIS case study because of s i m i l a r i t i e s i n i n t e r e s t group o b j e c t i v e s , t e c h n i c a l and economic as p e c t s of energy supply a l t e r n a t i v e b a s i c i n f o r m a t i o n , and analogous p e r i p h e r a l e v a l u a t i o n i n f o r m a t i o n p e r t a i n i n g to metal p r i c e 234 trends and government po l i c y for example. The i t e r a t i v e nature of information processing, promoted by implementing the methodology, can be used to improve the e f f i c i e n c y of subsequent applications to other deposits. (9) The u t i l i t y of the methodology may be diminished where cl u s t e r s of mineral deposits occur, suggesting d i f f e r e n t l e v e l s of resource information and development timing. 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