ENERGY. Liquefied Natural Gas (LNG) Tomorrow's Energy Option is here Today in the Yukon. Shaping the Future - Michael Brandt, Vice President

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1 Shaping the Future - ENERGY Liquefied Natural Gas (LNG) Tomorrow's Energy Option is here Today in the Yukon Michael Brandt, Vice President October 27,

2 Yukon Grid & Energy Supply Mayo Hydro: 15 MW Aishihik Hydro: 37 MW Whitehorse Hydro: 41 MW 2

3 Capacity & Generation Profile 0.4% 99.6% Renewable Thermal 3

4 4 Where: Whitehorse Diesel Generating Facilities

5 Thermal Backup on an Isolated Grid Location Whitehorse Dawson City Mayo Faro TOTAL Thermal Capacity 23.0 MW 5.1 MW 2.5 MW 8.5 MW 39.1 MW 5

6 6 Thermal Utilization 2014

7 Whitehorse Natural Gas Conversion Project Thermal only viable option Thermal fuels considered: - Diesel - LNG 3 end-of-life Decision drivers: - Economics - Environmental performance 7

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11 LNG Supply Chain Update Dynamic, evolving marketplace Secure short term commissioning and inventory supply Closely monitor medium and long term options 11 Each $1/GJ saved in the LNG supply chain will translate into a savings of approximately $0.01/kWh for thermal power generation.

12 Economics Base Load 12 LNG Diesel Installed CAPEX $43M $28M OPEX ($/kwh): Fuel O&M Delivered Fuel Cost ($/dle) LCOE ($/kwh) Payback period vs Diesel Assumptions: 85% capacity factor Delivered LNG price $18/GJ 30 year asset life 2% Inflation 5.25% Cost of Capital LCOE calculated on real basis 3 years

13 13 Economics Backup/Peaking Service LNG Diesel Installed CAPEX $43M $28M OPEX ($/kwh): Fuel O&M Delivered Fuel Cost ($/dle) LCOE ($/kwh) Payback period vs Diesel Assumptions: 19% capacity factor Delivered LNG price $18/GJ 40 year asset life 2% Inflation 5.25% Cost of Capital LCOE calculated on real basis 11 years

14 Emissions (gram/kwh) Life Cycle Emissions Diesel LNG FortisBC LNG Alberta LNG Ft Nelson GHG Total GHG Burner Tip NOx SOx Particulate CO Source: D. O Connor; S&T2 Consultants;

15 Regulatory Challenges Regulator enforced design changes to LNG impoundment pit Yukon regulators unfamiliar with LNG as a fuel Mandated specifications in excess of typical code Mandated design change to LNG containment pit 2 month project delay $3.1M cost increase 15

16 First Nations Context First Nations support is critical for all YEC projects Whitehorse LNG project on traditional territory of: - Kwanlin Dun First Nation (KDFN) - Ta an Kwach an Council (TKC) KDFN land claims agreement provision granting right to invest in alternate energy projects Additional benefits accruing from: - Yukon Oil & Gas Act (YOGA) - Yukon Asset Construction Act (YACA) 16

17 First Nations Engagement Process Education on project & LNG fuel Identification of project benefit opportunities (e.g. contracting) Development of models for financial participation KDFN visit to Denwill Transport LNG fuel depot (Burnaby, BC) 17

18 First Nations Outcome KDFN & Yukon Government sign Investment Options Agreement First Nations support for project $1.5M contracts to FN contractors TKC signed cultural benefits agreement KDFN signs Investment Option Agreement (May 2014) 18

19 Social License Context Public Utility Social license it critical Experienced unique challenges with public acceptance: - Concerns with fugitive and lifecycle GHG emissions - Association of LNG fuel with hydraulic fracturing - Safety concerns Yukon has vocal and well organized environmental NGO s Significant public pressure during regulatory process 19

20 Public Perceptions Fracking LNG project associated with wider issue of fracking in Yukon Protest signs on LNG plant fence Confusion re environmental impacts of fracking: - Fugitive GHG emissions 20 Lack of accessible industry data

21 Public Perceptions Safety Lack of familiarity with LNG Concerns exploited by environmental opponents Difficulty for public to evaluate relative risks Significant public education required 21 Fake emergency warning poster in Whitehorse

22 LNG Supply Chain Current NT Energy Inuvik LNG Power Plant: Commissioned MW LNG-fueled base-load power 100,000 GJ/year total LNG consumption LNG Supply Chain (Ventures West): 1,250 GJ per truck 7,500 km round trip 4 trucks; 9 day round-trip FortisBC Tillbury LNG Plant: 1.7M GJ/year production capacity 653,000 GJ storage capacity 22

23 Future LNG Market Development Western Copper & Gold Casino: In permitting 130 MW on-site power (LNG) 8.8M GJ/year LNG-fueled mine vehicles? Wellgreen Platinum: PEA complete 69 MW on-site power (LNG) ~4M GJ/year Victoria Gold - Eagle Gold Project: Final stages of permitting 10 MW on-site power (LNG) 0.6M GJ/year Selwyn Chihong: In Pre-feasibility Study 98 MW on-site power (LNG) 6M GJ/year 23

24 LNG Supply Chain Future Options Future Yukon-Inuvik Demand: 0.1M GJ/year short term 20M GJ/year long term potential Additional North BC Supply: Ft Nelson Ft St John Production plants or rail distribution hubs Altagas Dawson Creek LNG: Start-up expected Q M GJ/year production 24 FortisBC Tillbury LNG Plant: 13.6M GJ/year production (after expansion)

25 25 LNG Supply Chain Emerging Options

26 26 LNG Supply Chain Evaluation Criteria

27 Truck Configurations are Integral to the Transportation Solution, plus: Fleet Size Supply Point / Cycle Time 27

28 King B Truck Configuration being Evaluated Updates to Design in October New Stability Test Pending Route Analysis required Submit to BC Highways for Regulatory Review 28

29 Load Growth & Project History Energy Generation (GWh) Growth Period: - Population growth - Economic activity - Some colder winters Recent decline: - Warmer weather - Population growth slowed

30 Load Growth & Project History Carmacks-Stewart Transmission Line I Carmacks-Stewart Transmission Line II Stewart-Keno Transmission Line Energy Generation (GWh) Aishihik 3rd turbine (7 MW) Mayo B Hydro (10 MW) LNG Backup (8.8 MW)