Tuesday, July 08, 2008

Slurry pipeline Stewart bound

Fortune Minerals has weighed its options and determined that the cost of constructing a coal slurry pipeline makes more financial sense if it ends up in Stewart over Prince Rupert.

The Mineral company commissioned a study last year to look into the costing of the project and when the numbers got crunched, Rupert was squeezed out of the picture.

Working against the Rupert option was the inhospitable nature of laying a pipeline along the Skeena River, it's that terrain that sent Enbridge Energy to Kimitat last year with plans for a Natural Gas pipeline to run from Kitimat to Alberta, just one of a number of pipeline options being touted for the Kitimat area.

The Monday Daily News featured details of the Fortune project and what factors contributed to the Stewart option.

Coal slurry pipe will not head for Prince Rupert
The Daily News
Monday, July 07, 2008

Page one

A company looking to pipe coal from a mine for export through a Northwestern port has chosen Stewart over Prince Rupert.

In 2007, Fortune Minerals commissioned a study to explore the cost of piping coal in slurry form from its Mount Klappan mine to either the ports of Stewart or Prince Rupert.
In a study released early this year, the company determined its cheapest option was to pipe to Stewart or Hazelton and the company is now looking at those options in more detail.

"Fortune continues its commitment to aggressively manage the costs and profitability of developing our huge Mount Klappan asset, at the same time we are determined to minimize the impact it has on our environment," said Robin Goad, president and CEO of Fortune.

"We are pleased to have this independent engineering review that gives us some options that may allow Fortune to meet all of these objectives."

The coal slurry pipeline, which would be the first of its kind in Northern B.C., is being proposed to help the company deal withrising fuel costs.

According to the scoping study report, such a pipeline may reduce operating costs by as much as 34 per cent. For example, the study estimates operating costs of $23.89 per tonne for truck transportation to the port of Stewart compared with $15.75 per tonne using a slurry pipeline to the same destination.

The study determined that piping to Prince Rupert would end up costing about $3.75 more per tonne than piping it to Stewart.

The cost of running a pipeline along the Skeena has been prohibitive for other projects in the Northwest, including the Gateway Initiative proposed by Enbridge.

Enbridge is planning twin pipelines to an oil terminal from the Alberta Oilsands to Kitimat. It chose Kitimat as its destination in 2007 because of the added cost of running the pipeline to Prince Rupert.

In the meantime, Fortune has also recently retained CIBC World Markets Inc. to act as Fortune's financial advisor in pursuing strategic alternatives for the advancement of the Mount Klappan anthracite coal project.

The Mount Klappan anthracite coal project is located in Northwest British Columbia and straddles the B.C. Railway right-of-way 150 km northeast of the port of Stewart and 330 km northeast of the port of Prince Rupert. An engineering company, Marston, is currently updating the scenario for a three-million tonne per year mine and wash plant to produce a premium ultra-low volatile pulverized coal injection (PCI) product for truck haulage to the port of Stewart and export to overseas steel customers. This feasibility study update is expected to be completed this month.

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