Power generation solution is a win-win: For the environment and the bottom line
Stornoway Diamond Corporation recently announced the production of one million carats of diamonds at its Renard Diamond Mine in Québec, Canada — an important milestone for a mine that began commercial production just over six months ago.
“The one million carat threshold comes, coincidentally, at the same time that the first polished diamonds from the mine have become available for sale in Montreal,” said Matt Manson, President and CEO.
The Renard mine has reached a number of milestones along the way to this achievement. Stornoway put together the largest-ever transaction for a publicly listed company on the way to opening Renard — the first diamond mine in Québec and one of only six in Canada. Mine construction began in 2014 after the development of a direct-to-mine road and an airport that made it possible to get people and materials to the remote location.
The mine faced another hurdle when it came to finding the best way to bring power to the site. This challenge was overcome with a unique solution — Liquefied Natural Gas (LNG) — which not only met the need for power but that also delivered additional benefits: lowering costs, improving safety and reducing the mine’s impact on the environment.
Finding a power solution
Early on in the development of the mine, Stornoway had determined that on-site power generation was a viable solution to meet the mine’s power needs. Stornoway worked with Caterpillar and Cat® dealer Hewitt Equipment Ltd. to specify Cat gas-powered generators for the power plant.
“Initially, the project was forecasted to have a diesel power plant, which was pretty straightforward and standard for this type of project,” recalls Patrick Godin, COO and Director. But the company continued to investigate alternatives in an effort not only to combat its exposure to fluctuating diesel prices, but also to reduce the mine’s environmental impact.
One potential solution — tapping into the Hydro- Québec power grid located just 160 kilometers (100 miles) south — would deliver economic benefits; however, those benefits would be largely offset by the high cost of powerline construction.
“While there could have been a connection to the utility power grid, that could have been a lengthy process, and a costly one, too,” explains Regis Drouin, a power generation expert at Hewitt.
“So the on-site power generation solution became one that needed to be examined further.”
The original power generation station, outfitted with Cat generators, turned out to be the right solution after all, with one exception: The generators would be powered by LNG rather than diesel.
A feasibility study demonstrated the substantial benefits to the project in terms of operating costs and environmental emissions compared to the diesel gen-set option:
- Annual operating cost reductions of between $8 million and $10 million over the initial 11-year mine life, representing a life-of-mine operating cost savings of $89 million.
- Incremental capital cost of only $2.6 million over the cost of diesel gen-sets, representing a net payback of FOUR months.
- An estimated reduction in greenhouse gas emissions of 43 percent, with significant reductions in nitrogen dioxide and sulfur dioxide.
- A stable LNG local supply market based on existing commercial distribution network within Québec.
The LNG option now allows the mine to use off-the-shelf technology and delivers “a positive long-term supply outlook, a much smaller environmental footprint and immediate economic benefits for the project through substantially reduced operating costs,” says Manson.
Taking advantage of an LNG resource
LNG is readily available in Québec, which has an existing commercial distribution network. The gas is liquefied in Montreal and transported to the mine site, which has a storage capacity of 10 days.
“With an all-season road, we are able to receive regular shipments, without the need for expensive high-capacity on-site storage facilities,” says Manson.
While the use of LNG was a new idea for the Renard project, using LNG to power generators is a proven process, explains Drouin. While calling Stornoway’s decision “visionary,” Drouin emphasizes that it uses a proven technology.
“Renard was innovative in the way they decided to use LNG — and it was groundbreaking in their industry,” says Drouin. “But they are relying on proven technology to do it. LNG is being used worldwide to power Cat gas engines.”
Reducing environmental impact
One of the most significant benefits of using LNG-powered generators is the reduction in environmental impact it provides — from lower emissions to safer transportation.
“We’re reducing our greenhouse gas emissions by 42 percent,” says Godin. “That’s huge. We’re talking about 23 thousand tons per year.”
About 27 percent of that reduction comes from the use of LNG in the gen-sets themselves. An additional 15 percent reduction comes from cogeneration – using the heat from power generation to heat the underground mine.
“Here, in winter, it’s minus 30, minus 40,” says Godin. “If we can recover this heat, compared to using propane or natural gas or diesel to heat the underground mine, it’s a huge advantage.”
It’s also better for the environment. “We recover the heat instead of discharging it into the air,” explains Hécine Ramoul, the mine’s power plant foreman.
An additional benefit is the safety of transporting LNG over diesel fuel. “In a leak, it will evaporate and won’t go into the water table,” says Manson. “So it reduces our impact and reduces the risk to our stakeholders.”
Ensuring reliable power
The power generation plant at Renard mine is the first gas power plant in Canada, and a first to operate on LNG. It is made up of seven Cat G3520C generators, each producing 2 megawatts (2682 horsepower) of electric power. The mine’s normal operating specification of 9.5 megawatts (12,740 horsepower) represents five of the generator sets operating at a planned 92 percent efficiency.
The plant also includes the heat recuperation equipment used to capture the heat from the engines. The station is entirely fed with the natural gas produced on site with the LNG from cryogenic storage tanks on site.
Drouin stresses how Stornoway has ensured reliability of the power on site. “They can count on a permanent gas power station, but there is also a standby temporary peaking station comprised of three generator sets that can produce up to 6 megawatts of standby power,” he says. “This provides emergency power for all of the facilities on site. Essential services are also backed by distributed standby sets, like the airport and water treatment plant. It’s a three-tier level of security as far as the power level on site.”
Maintenance of the generators will be performed primarily by Renard’s team of about 10 trained technicians, with support from an on-site team provided by Hewitt. “Our maintenance plan is in accordance with Caterpillar instructions,” says Ramoul. “We follow it scrupulously.”
Ramoul is one of just two people certified in Québec to operate an LNG plant. The other is a technician who works at the plant where the natural gas is liquefied. “This certification permits us to actually install, design, maintain and repair the generators. That’s the law of the government of Québec. It’s very rigid.” Ramoul is now sharing his knowledge to certify the technicians on site at Renard.
After working with Cat generators on other sites around the world, from Africa and Asia to the Caribbean and now Québec, Ramoul says he is confident in their quality.
Hewitt’s Drouin agrees. “The G3520C has a very long life,” he says. “It will certainly be there for the mine life. We know our customer will be taking very close care of these engines. And with the help of our support team, we have overhaul programs and preventive maintenance programs that are in place to make sure that they make the mine life — and beyond.”
Godin calls the power generation solution a success — for the mine, for the environment, and for the people who live in the community.
“You need buy-in from all the stakeholders,” he says. “The fact that we found the best technology that can be better for the environment and improve the balance sheet — that’s a win-win deal.”