State of Industry in the Yukon August 2017
STATE OF INDUSTRY IN THE YUKON
If you’re like us in the YCS Office, your head is spinning when it comes to the mining, and oil and gas industries in the Yukon – big news is breaking regularly and project developments are coming fast and furious. To help you keep track, we’ve summarized the status of projects currently in the news. Give us a call at the YCS office – 668-5678 – if you want to learn more! We also encourage you to get to know our new government – connect with Ministers and their departments if you have questions or concerns about these projects.
Oil and Gas (read more here)
Kotaneelee – EFLO, Apache and Yukon Government
Located in the extreme south east of the territory, the Kotaneelee site is where the only commercially viable petroleum (gas) was ever produced in Yukon – the site opened in 1977 and ceased production in 2012.
Kotaneelee sits on top part of the Liard Basin, one of the largest shale gas resources in the world.
In 2015, the company in charge of the site, Houston-based EFLO Energy Inc. became insolvent and licenses for three of the four wells were turned over to another company, Apache. The fourth well become the property and financial responsibility of Yukon Government’s Energy, Mines and Resources (EMR) oil and gas branch. Both Apache and EMR then filed applications with the Yukon Environmental and Socio-economic Assessment Board (YESAB) to have the wells abandoned.
Well abandonment involves filling the well with cement and capping the pipe below ground, and removing associated infrastructure; experience has shown that it is not uncommon for well abandonment to fail and the well will need to be re-abandoned.
News emerged last month that the estimated cost of abandonment for the one well under YG ownership is $2.4 million. The original owner, EFLO Energy Inc., left a security deposit for $625,000 with the government of Yukon, which leaves Yukon taxpayers on the hook for $1.8 million.
Apache has recently sold all its Canadian assets. The new owners, Paramount, will be responsible for care and maintenance – at least until ownership transfers again.
YCS’s main concerns: security deposits are not adequate to cover the cost of abandonment; if public money is used to heavily subsidize closure, there is an incentive for companies to walk away from wells.
Eagle Plain - Northern Cross Yukon
Eagle Plain in north central Yukon lies within the North Yukon land use planning region.
Thirty three wells were drilled in the Eagle Plain basin between 1958 and 1985, one was drilled in 2005 and four wells were drilled in 2012-2013. Currently there are eight inactive (suspended) wells at Eagle Plain; the others have been abandoned. One had to be re-abandoned in 2015.
In 2014, Northern Cross Yukon (NCY) submitted a proposal to the Yukon Environmental and Socio-economic Assessment Board (YESAB) to drill and conduct flow tests on up to 20 exploratory oil and gas wells in the Eagle Plains region. NCY is a small Calgary-based outfit; its only backer, the Chinese Overseas Oil Company (CNOOC) recently sold all of its shares in the company.
YESAB referred the project to an Executive Committee review due to unresolved questions about the impacts of the project on the Porcupine Caribou Herd. NCY then sought a judicial review of the referral and the case was heard by the Federal court in Whitehorse in April 2017. The ruling was released in late June: the Federal Court dismissed Northern Cross’s application for a judicial review and the project will be reviewed by the YESAB Executive Committee.
News broke in April that NCY is suing Yukon Government for up to $2.2 billion dollars, claiming the government put a moratorium on hydraulic fracturing in 2015. The company is seeking reimbursement for rentals, capital expenditures, and the oil and gas revenues they won’t be able to cash in on because of the moratorium. Yukon Government has not yet filed their statement in response.
In July, Northern Cross dissolved and was re-named Chance Oil after NCY’s then CEO withdrew from the company.
YCS’s main concerns: a large public payout for a private company that never had a viable business plan to develop oil and gas resources; the security deposit at Eagle Plain to cover abandonment is only $1.1M, grossly inadequate to cover abandonment of eight wells; precedent that a local government cannot make decisions to care for the land without industry demanding steep compensation for potential “lost profits” (similar to the concerns about foreign trade deals preventing local governments from regulating activities on their land).
Mining (read more here)
Coffee Gold Project – Goldcorp
The Coffee Gold project is located approximately 130 kilometres south of the City of Dawson. The project is proposed as an open pit, heap leach; no development has taken place to date, the project is scheduled to begin production sometime in 2021.
In 2016, Goldcorp, one of the world's largest gold producers, agreed to purchase the project from Kaminak Gold Corporation, a junior mining company.
Goldcorp filed its proposal to the Yukon Environmental and Socio-economic Assessment Board (YESAB) at the end of March 2017. Since then, the Tr'ondëk Hwëch'in has filed documents presenting its concerns with Goldcorp, citing aggressive timelines and inadequate responses to questions and First Nation concerns with the project. Selkirk First Nation has filed documents with YESAB outlining lack of appropriate consultation. The White River First Nation has also filed documents with YESAB expressing concerns about how YESAB addresses issues regarding a First Nation with an unsettled land claim as compared with those that do.
YESAB has discontinued its assessment process on this project until such time as adequate consultation has occurred between Goldcorp and Tr'ondëk Hwëch'in, Selkirk First Nation, and Na-Cho Nyäk Dun First Nation.
YCS’s main concerns: an extensive, government subsidized all season road running south from the Dawson region to the project area would open up a region of the Yukon that does not have a land use plan; increased hunting and wildlife impacts; powered with fossil fuels; water treatment and final reclamation plan; financial security deposit.
Kudz Ze Kayah project – BMC Minerals
In March 2017, BMC Minerals, a private company in London, England submitted a project proposal to YESAB for a new mine located approximately 115 km southwest of Ross River. The proposed Kudz Ze Kayah mine would be an open pit and underground copper, lead, zinc, silver and gold mine and would begin commercial production in 2022.
The project is currently being assessed by the Yukon Environmental and Socio-economic Assessment Board (YESAB); YESAB recently filed a 94 page information request to the company. The company has responded, and a number of review bodies have asked for further information from the company regarding the response.
YCS’s main concerns: on-site water treatment issues and the amount of financial security that will be asked of the company.
Eagle (Victoria) Gold project - StrataGold
A proposed open pit gold mine located between Mayo and Keno; cyanide heap leaching techniques would be used to extract gold.
The Yukon Environmental and Socio-economic Assessment Board (YESAB) completed an environmental and socio-economic assessment in 2010. The Government of Yukon, Natural Resources Canada, Department of Fisheries and Oceans, and Transport Canada, as the four Decision Bodies, issued their decision documents to ‘accept’ the recommendation of the YESAB Executive Committee to allow the project to proceed subject to mitigative terms and conditions. A water licence was issued by the Yukon Water Board. The Eagle Gold Project has signed a Comprehensive Cooperation and Benefits Agreement with the local First Nation of Na-Cho Nyäk Dun.
In May 2017, the Yukon Water Board contacted StrataGold regarding its Project Reclamation and Closure Plan (RCP), identifying “significant deficiencies in the RCP that need to be addressed.” These include the presence of irrelevant and incorrect information, unaddressed questions regarding water treatment, security estimate deficiencies and significant calculation errors in the costing of certain aspects of mine closure.
YCS’s main concerns: (at least) $64.5 million public investment to upgrade the electricity transmission line between Stewart Crossing and Keno in order to provide grid power to Eagle Gold Mine; connecting this mine to the grid will likely result in more fossil fuels being burned to generate electricity, which will result in higher greenhouse gas emissions and also higher electricity rates.
Faro Mine – Federal and Territorial Governments
Located 15 km from the town for Faro, the Faro mine was once the world’s largest open-pit zinc mine. The mine was abandoned in 1998 and its owner went bankrupt, leaving the mine for the Federal government to take ownership of and responsibility for.
At least $250-million has already been spent maintaining the mine site and yet not even a handful of dirt has been cleaned up. The government is spending $40-million annually to run pumps to prevent the toxic tailings from breaching the dams. The cleanup itself could cost a further $1-billion, and will most likely end in a scenario where water treatment will have to occur on site in perpetuity.
The Federal government has just announced a series of community meetings over the month of June to get public input on the closure and reclamation plan for the Faro mine.
YCS’s main concerns: water treatment. Water testing results are slowly being released by the Faro Mine Remediation Project team.
Casino Mine – Western Copper and Gold
This huge project is currently ‘on hold’ while the proponent provides more information to the YESAB Panel Review. The company has until Dec 31st, 2017 to provide a lot of information that YESAB has requested.
YCS’s main concerns: access road north-west of Carmacks goes through the grounds of the Klaza Caribou Herd; the amount of fossil fuels consumed on site would double the Yukon’s greenhouse gas emissions; proposed wet tailings dam (at 286 metres high) would be an environmental catastrophe in the making.
Placer mining – Dawson region goldfields
Several placer mining operations (and reality TV stars) have recently been fined for infractions of Yukon's Environment, Lands, and Waters Act. Infractions have included allowing sediments to flow directly into a stream and depositing waste into a waste management system without reporting.
In 2016 a proposal to placer mine in the Indian River wetlands south of Dawson City resulted in a recommendation from the Yukon Environmental and Socio-economic Assessment Board (YESAB) that the wetlands be avoided. The decision body, Yukon Government, rejected the YESAB recommendation and approved the project. The Yukon Water Board (YWB) then issued a licence with conditions that supported YESAB’s recommendation to avoid the wetlands, but the Board was ultimately forced to withdraw this licence for legal reasons (under Final Agreements, the YWB cannot issue conditions contrary to a decision document).
The YWB is holding a public hearing in Fall 2017 on another water license, for reality TV show associated company Tamarack which has applied for a water license to mine more of the Indian River wetlands.
Discussions about wetland reclamation are currently being undertaken between Tr'ondëk Hwëch'in and Yukon Government.
YCS’s main concerns: Yukon does not have a Wetland Protection Act
Tiger Gold Road – ATAC Resources
An all-season, 65 km road proposed to run north-east of Keno City to a region known as the Tiger gold deposit.
In March 2017, the Yukon Environmental and Socio-economic Assessment Board (YESAB) recommended the project proceed with conditions, including the development of a comprehensive access regime for all land users and harvester groups and avoidance of nesting peregrine falcons. Government of Yukon is currently reviewing the recommendation and consulting with the First Nation of Na-Cho Nyäk Dun. It is of note that the Yukon Government still has not released a Decision Document on the YESAB recommendation after two months. Usually Decision Documents are released within thirty days.
YCS’s main concerns: 46 permanent creek and river crossings; habitat fragmentation; increased access leading to wildlife impacts; no regional land use plan in place to help fully understand all the values and impacts.
Roads to Resources/Yukon Resource Gateway Project – Yukon and Federal Governments
In 2016, news broke that the Yukon Government had made a pitch to the Federal Government asking them to pay $250 million toward road upgrades that would benefit three possible major mines in the territory - Coffee, Selwyn and Casino. The mining road application, called the Yukon Resource Gateway Project, would see the Yukon government contribute $112 million and industry contribute another $109 million toward roadwork in the Dawson and Nahanni ranges.
YCS’s main concerns: landscape transforming decisions in the absence of a regional land use plan; no public consultation.