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LNG to Power Proposed Diamond Mine in Quebec

A company planning to build a diamond mine in north central Quebec said it will generate electric power and heat for its operations onsite with liquefied natural gas (LNG). The option of trucked-in LNG won out over a diesel-fueled power plant and a proposal to connect to the grid via a long distance power transmission line.

Stornoway Diamond Corp. announced Monday that a feasibility study found the company could save $8 million to $10 million over an 11-year period with an LNG power plant at its Renard Diamond Project, a mine planned near the Otish Mountains. An incremental capital cost of $2.6 million over the company's original plan to use a diesel generator-set option would be incurred.

The study, which was conducted by SNC-Lavalin Inc. and AMEC America Ltd., also determined that using LNG instead of diesel would reduce greenhouse gas emissions by 43%, and would significantly reduce emissions of nitrogen dioxide and sulfur dioxide.

"The LNG option now provides us with a much more attractive way forward, with off-the-shelf technology, a positive long-term supply outlook, a much smaller environmental footprint and immediate economic benefits for the project through substantially reduced operating costs," Stornoway CEO Matt Manson said. "This option is made possible to us because, with an all-season road, we are able to receive regular shipments of liquefied gas from the existing commercial distribution network in Quebec, without the need for expensive high-capacity on-site storage facilities."

Quebec's Ministry of Transport has completed the first 143 kilometers (88.9 miles) of a 240-kilometer (149.1-mile) project to extend Route 167 from its current terminus in Temiscamie to the Renard mine. The road is scheduled to be completed in October.

"The LNG study has been completed in time to have it incorporated into the final project execution plan prior to the planned commencement of project construction in 2014," Manson said. The mine is scheduled to begin commercial production by June 2016.

Manson added that a Hydro-Quebec feasibility study from July 2012 found "only a marginal economic benefit" from using grid power because of the high cost of power line construction.

According to Stornoway, the proposed LNG power plant at the Renard mine would have seven 2.1 MW gas generator-sets, providing enough power to meet the normal daily operating requirements of 9.5 MW. There will be enough onsite gas storage to fuel 10 days of operation, with daily deliveries by cryogenic tanker trucks from the Gaz Metro Liquefaction plant and distribution center in Montreal.

LNG will also be used to heat buildings at the site and the underground mine itself, thereby eliminating the need for propane.

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