Coal Development & Opportunity in Alberta
–in the Canadian Context
Prepared by
Gary WhiteDepartment of Energy Government of Alberta
for
Clean Coal Day in Japan 2015 International
Symposium
September 9, 2015
2
Sector Profile• Canada is a mid-sized
coal-producing country, ranked 13th in the world (2014)
• Annual production capacity 76 Million tonnes (Mt): 50-50% split between coking and thermal
• Canada is the world’s third largest seaborne coking coal supplier
• Canada has 20 coal mines (18 open-pit and 2 underground)
Source: Natural Resources Canada
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Role of Government
• Canada’s Constitution Mineral resources are provincially owned
• Provincial Responsibilities Mining regulations, permits, royalty regime, operations, labour,
health, safety, reclamation, environmental protection and assessment (shared)
• Federal Responsibilities International affairs, trade, investment, fiscal and monetary
policy, science and technology, environmental protection and assessment (shared) and Aboriginal affairs
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Environmental Policies• Two federal acts and provincial laws ensure protection of
the environment in mining operations & new mine projects
o Canadian Environmental Protection Act applies to current operations Producers must comply with laws and regulations Operations must minimize negative environmental effects Producers must reclaim and rehabilitate the mined site and be certified
by provincial authority
o Canadian Environmental Assessment Act focuses on new projects Proponents of new projects must conduct environmental impact
assessment Projects are assessed and approved by provincial and federal agencies
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Distribution of Coal in Canada
Source: Natural Resources Canada
Nu
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Coal Production (2005-2014)• In 2014, Canadian mines produced about 69 Mt of coal
• British Columbia (~ 29 Mt); Alberta (~ 29 Mt); Saskatchewan (~ 10.5 Mt); Nova Scotia (~ 0.5 Mt)
Source: Statistics Canada; NRCan; Provincial Publications
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Coal in Canada• Coal production value
Year 2008 2009 2010 2011 2012 2013 2014Production (billion C$) 5.0 4.42 5.54 7.47 5.88 4.89 3.91
• Coal shipped by rail
Year 2008 2009 2010 2011 2012 2013 2014Volume (Mt) 34.3 29.0 35.4 35.8 36.4 39.7 37.2
Source: Natural Resources Canada
• Coal shipped by water
Year 2008 2009 2010 2011 2012 2013 2014Volume (Mt) 50.2 40.5 51.9 49.3 50.3 54.9 50.3
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Canadian Coal Export Destinations (1990-2014)
Source: Statistics Canada, NRCan
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Operating Coal Mines in CanadaCoking (11)
Mine Mine Capacity
(Mt)
Plant Capacity
(Mt)
Product Location Owner
Fording River 8.5 9.5 Bituminous coking Elkford, BC Teck Resources Ltd.Elkview 7.0 7.0 Bituminous coking Sparwood, BC Teck Resources Ltd.Greenhills 5.2 5.2 Bituminous coking Elkford, BC Teck Resources Ltd.Coal Mountain 2.7 3.5 Bituminous coking Sparwood, BC Teck Resources Ltd.Line Creek 3.5 3.5 Bituminous coking Sparwood, BC Teck Resources Ltd.Cardinal River 2.0 3.0 Bituminous coking Hinton, AB Teck Resources Ltd.Wolverine 2.0 3.5 Bituminous coking Tumbler Ridge, BC Walter Energy Inc.Brule 1.8 2.0 Bituminous PCI Chetwynd, BC Walter Energy Inc.Willow Creek 1.3 2.0 Bituminous coking,
PCIChetwynd, BC Walter Energy Inc.
Trend 1.8 2.0 Bituminous coking Tumbler Ridge, BC Anglo American plcGrande Cache 2.5 2.5 Low- volatile
Bituminous cokingGrande Cache, AB Up Energy
Development Group Ltd.
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Operating Coal Mines in Canada Thermal (9)
Mine Mine Capacity
(Mt)
Plant Capacity
Product Location Owner
Coal Valley 4.0 4.0 Bituminous thermal
Edson, AB Westmoreland Coal Co.
Quinsam 0.5 0.5 Bituminous thermal
Campbell River, BC
Vitol Group
Paintearth 3.0 n.a. Subbituminous Forestburg, AB Westmoreland Coal Co.Sheerness 3.7 n.a. Subbituminous Hana, AB Westmoreland Coal Co.Highvale 13.0 n.a. Subbituminous Seba Beach, AB TransAlta Corp.Estevan 6.4 n.a. Lignite Estevan, SK Westmoreland Coal Co.Poplar River 4.0 n.a. Lignite Coronach, SK Westmoreland Coal Co.Genesee 5.6 n.a. Subbituminous Warburg, AB Westmoreland Coal Co.
& Capital Power Corp.Stellarton 0.5 n.a. Bituminous
thermalStellarton, NS Pioneer Coal Ltd.
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Railways, Ports/Coal Terminals
• Railwayso Canadian National Railways (CN)o Canadian Pacific Railways (CP)
• Coal Terminals1. Westshore Terminals (Vancouver)2. Neptune Terminals (Vancouver)3. Ridley Terminals (Prince Rupert)4. Thunder Bay Terminals (Thunder Bay)5. International Coal Pier at Sydney coal imports only
1,2
4
3
5
CN
CP
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West Coast Port Capacity
Terminal 2011 2012 2013 2014 2015 PlannedWestshore 29 33 33 33 36 36Neptune 17 20 24 25 25 31Ridley 12 12 18 18 18 25Total 58 65 75 76 79 92
Source: NRCan, Company Websites, Personal Communication
(throughput Mt/y
Ridley Terminal, Prince Rupert
Westshore Terminal, Vancouver
Neptune Terminal, Vancouver
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Canada’s GHG Emissions
Source: Environment Canada
• Greenhouse Gas (GHG) emissions between 1990 & 2013 was driven by increased emissions from the fossil fuel industries and transport
• Emission reductions from 2005 to 2013 were driven by reduced emissions from the public electricity and heat production sectors
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Canada’s Emissions – Current State • Coal-fired generating units are responsible for close to three quarters of the
Greenhouse Gas (GHG) emissions from Canada’s electricity sector, and about 10% of Canada’s total GHG emissions
• Federal regulations to reduce GHG emissions took effect July 1, 2015
• The new regulations require generators to reduce their emissions to ‘clean as gas’ (420 kilograms of CO2 e per megawatt hour) or retire when they reach roughly 45 to 50 years of operation
• Regulations have provisions to ease transition for industry
• Expected to result in a reduction in GHG emissions of about 219 million tonnes and cumulative health benefits of C$4.2 billion nationally in the first 20 years ($2.7 billion of total avoided health outcomes to Alberta)
• For information regarding compliance dates and emission performance standard go to: www.ec.gc.ca/lcpe-cepa/eng/reglations/detailReg.cfm?=209
Source: Environment Canada; Canada Gazette Vol 146 (2012)
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Alberta’s Emissions – Current State • The electricity sector
contributed 17% (45MT) of Alberta's GHG emissions in 2013 (coal-fired electricityproduced about 85% of these emissions)
• Existing facilities that emit morethan 100,000 tonnes of GHG have to cap their emissions intensity at 12% below their average for 2003-2005
• The Alberta government is currently conducting a public review of its Climate Change Strategy
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Alberta’s Emissions – Current State
• Facilities built in the last 15 years can phase in the cap over eight years
• Emitters pay a penalty of C$15 for every tonne over their limit
• Emitters can purchase credits to offset emissions from those who have already reached their targets
• Twelve units, representing 60% of Alberta’s remaining coal fleet’s capacity will reach compliance by 2030. This equates to about 28 MT CO2e/annum emissions In the absence of any technological improvement
• Six units, representing 40% will remain post 2030 accounting for about 16 MT CO2e/annum emission In the absence of any technological improvement
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Carbon Capture Storage (CCS)
Boundary Dam Power Station
Emission Change Pre-CCS Post-CCS Reduction
CO2 1094 120 90%
SO2 11 0 100%
NO 1.5 1.1 27%
PM10 0.2 0.02 90%
PM2.5 0.1 0.03 70%
* Source: SaskPower/CCS Network
• The Canadian CCS Network was created in 2008 http://ccs101.ca/about_us
• Federal/provincial/territorial government officials work collaboratively to address CCS issues of common interest across Canada
• Example is the Boundary Dam Power Station in Saskatchewan*
• While not funding new CCS projects, the Alberta Government does encourage new CCS proposals if there is evidence to support their ability to reduce GHG
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Alberta’s Coal Sector
• Population – 4 million• Province has:o Excellent infrastructureo Access to ocean ports by rail
and road• Ranked favorably in mining policy • Welcomes investment
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Provincial Responsibilities
Alberta Energy• Manages development of Alberta’s non-renewable resources• Grants the right to explore for and develop energy & mineral resources• Administers royalty systems• Administers coal lease applications, issues coal permits & leases
Alberta Environment & Parks• Responsible for the stewardship of Alberta’s lands, forests, fish and wildlife
Alberta Energy Regulator• Makes decisions on applications for energy development, monitoring for
compliance assurance, decommissioning of developments• Issues coal exploration and development approvals for coal• Regulates Alberta’s mines and coal processing plants
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Coal Reserves/Resource - Alberta
• Coal underlies almost half the province
• Reserves estimated at 33.3 billion tonnes (Gt) Underground mining – 23 Gt Surface mining – 10 Gt
• Nine mines currently produce 29 Mt 23 Mt subbituminous coal 6 Mt bituminous coal for export
Source: Alberta Energy Regulator ST-98 (2015)
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Alberta’s Coal Exports
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Alberta’s Coal Royalty Regime • Subbituminous Coal
o Subbituminous coal royalty is C$2.00 x Coal Royalty Adjustment Factor (CRAF)
o Since 1992 the CRAF has been set at 0.275 for an effective royalty rate of C$0.55 per tonne. Royalty is only collected on Crown-owned coal resources
• Bituminous Coalo Bituminous coal royalty is a two tier systemo Mines that have not paid out their initial capital cost are
considered “Tier 1” and pay 1% of their gross revenueo Mines that have paid out all of their initial capital expenses are
considered “Tier 2” and pay Tier 1 royalty plus 13% of their net revenue
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Tenure Rights in Alberta
A Couple of Important Points• Alberta Energy manages the tenure rights for Crown owned minerals:• Approximately 81% Crown owned
19% Freehold owned
• To hold any agreement in Alberta, a Corporation must be registered in Alberta under the Business Corporation Act
Key Acts & Regulations www.qp.alberta.ca Mines and Minerals Act Coal Conservation Act Coal Conservation Regulation Coal Royalty Regulation A Coal Policy for Alberta (1976)
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Where is the Coal? • Two ranks of coal are produced in
Alberta: subbituminous and bituminous coal
• All ranks of coal are found within the province
• There is a gradation: o from peat and lignite (dark green
region to the northeast) o to subbituminous coal (yellow
region in central band) o bituminous coal (red region in the
foothills and mountains) and rarely anthracite
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Where is Coal Produced?
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Alberta Coal Production
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Producing Coal Mines in Alberta Mine Owner Location
2014 Production (Mt)
Mountain regionLow- to medium-volatile bituminous (metallurgical) coal
Cardinal River (Cheviot) Teck Resources Ltd. Hinton 1.76Grande Cache* Grande Cache Coal Corp. Grande Cache 1.59Subtotal 3.35
Foothills regionHigh-volatile bituminous (thermal) coal
Coal Valley Westmoreland Coal Co. Hinton 2.84Obed Mountain** Westmoreland Coal Co. Hinton 0.99Subtotal 3.83
Plains regionSubbituminous coal
Genesee Capital Power GP Holdings Inc. Warburg 4.67Sheerness Westmoreland Coal Co. Hanna 2.32Paintearth Westmoreland Coal Co. Forestburg 1.59Highvale TransAlta Corporation Wabamun 13.38Burtonsville Island Keephills Aggregate Co. Ltd. Wabamun 0.23Subtotal 22.19
Total Production 29.37* Underground mining operation ** Not operating in 2015.
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Projects with Regulatory ApprovalAdvanced Projects
Company Type of Coal Potential Production
(Mt)
Reserves(Mt)
Reserve Life (years)
Vista Cline Group High-volatile bituminousthermal
12 313 26.1
Summit (M14)
Maxim Power Low-mid volatile metallurgical
1.3 18.9 15
Vista Project(West Central Alberta)
Artists impression – Summit (M14) mine (West Central Alberta)
Source: Company Websites
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Blackstone Black Eagle Mining Inc. Rocky Mountain House Measured & indicated: 339 Mt Elan Altitude Resources Inc. Crows Nest Pass area Measured & indicated 62 Mt;
Inferred 84 MtGrassy Mountain Riversdale Resources Crowsnest Pass area Measured: 38.5 Mt
Indicated: 101.8 MtPalisades Property Altitude Resources Inc. Hinton area Measured & indicated 10.1 Mt;
Inferred: 4.9 MtAries Project Ram River Coal Corp. West central Alberta Measured & indicated 392 Mt;
Inferred 105 Mt
Advanced Exploration Projects
Low-medium-volatile bituminous (metallurgical coal)
Property Owner Location Reserves
Source: Company Websites, Reports
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Rail Transportation
CN• Coal is transported
by rail on the CN line to Prince Rupert.
• CP rail offers an alternative transportation route to ports in Vancouver for new prospects in South West Alberta
Coal Mine (Export)
Coal Exploration Projects
CP
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Shipping - Distance to Markets
Ridley Terminal to: Japan = 6878 Km
Vancouver Terminals to:Japan = 6920 KmS. Korea = 7402 KmChina = 8207 KmTaiwan = 9012 Km
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Summary
• Coal is abundant and widely distributed resource in Canada
• About 70 per cent of Canada’s coal resource is in Alberta
• Current proved coal reserves could support more than 100 years of production
• With sustainable mining practices and clean technology development, coal will continue to play an important role in Canada’s and Alberta’s energy supply
• Alberta has the ability to continue to be an important supplier of coking and thermal coals to global markets
