Business in Vancouver August 21-27, 2007; issue 930

Wind gains market momentum in B.C.

Calgary’s AltaGas Income Trust plans major power generation project near Dawson Creek

Krisendra Bisett 

One of Canada’s largest integrated energy infrastructure organizations aims to spin B.C.’s first commercial wind turbines as it gears up to break ground on a $200 million project as early as the fall.

Calgary-based AltaGas Income Trust (TSX:ALA.UN) has taken full ownership of a planned 120-megawatt Bear Mountain wind project near Dawson Creek. It bought out a partnership stake from Victoria-based Aeolis Wind Power Corp. and a local investment group that had a 3% stake in the venture.

On August 2, the two exchanged their equity interests in the partnership for a royalty agreement.

Wind power is a first for AltaGas. The company’s primary businesses is gathering, processing, extracting and transporting natural gas and electrical power.

But James Bracken, its newly appointed senior vice-president for major projects, said the trust also wants to expand its portfolio with more wind opportunities in B.C. as well as run-of-river and natural gas-fired power plants.

AltaGas is also pumping $90 million into building a new natural gas pipeline to bring 90 million cubic feet a day of natural gas from B.C.’s Noel region to its Pouce Coupe gas processing facility in northwest Alberta. The money will also be used to expand the facility.

Last week, Bracken visited the Bear Mountain site, which is 15 kilometres outside of Dawson Creek. He said AltaGas is set to start construction on the project.

The trust expects to get its regulatory approvals for the project, which is underpinned by a 25-year electricity purchase agreement with BC Hydro, by the end of August.

The project’s first phase would make the site accessible by road, and AltaGas is seeking one or more partners, likely large banks, to finance the rest of the construction. AltaGas plans to keep a major ownership interest in the wind park after it goes into service in late 2009.

It has already placed an order for 60 two-megawatt wind turbines from German manufacturer Enercon GmbH.

AltaGas announced the acquisition of 14.4 megawatts of power generation capacity in its recent quarter, which increases its gas-fired generation by more than 55% to 39.4 megawatts. Bracken said the company’s plans for gas-fired plants in B.C., as well as run-of-river and small hydro power plants “fit with our corporate strategy … and British Columbia is certainly a good place in which to do them.”

Wind is also a good strategy for AltaGas as it seeks to diversify its portfolio and fuel type, said Chris Bolton, an income trust analyst with BMO Capital Markets in Calgary.

While Bolton pointed out that wind as a power source is sporadic, he added that “if you have some in B.C., some in southern Alberta – they’re also talking about Manitoba and North Dakota – if you’re diversified, it’s a little bit better.”

Bear Mountain was one of three wind projects awarded purchase agreements in BC Hydro’s 2006 call for power.

The other two were:

• Victoria-based Earth First Energy’s $500 million, 200-turbine Dokie wind energy project near Chetwynd; and

• a $50 million, 14-turbine, 25.2-megawatt wind farm on Kaien Island, overlooking the city of Prince Rupert.

The latter project is being planned by the Mount Hays Wind Farm Limited Partnership, which has as a partner Katabatic Power Corp., an energy company based both in Richmond, B.C., and San Francisco.

Vancouver-based NaiKun Wind Energy Group Inc. (TSX-V:NKW), meanwhile, is proposing a five-phase offshore wind energy project in Hecate Strait between Haida Gwaii in the Queen Charlotte Islands and Prince Rupert. At 1,750 megawatts, the wind farm would have the capacity to power approximately 600,000 homes.

Construction on the 320-megawatt first phase is expected to start in 2009.

Last week, NaiKun closed a $35.1 million private placement led by Cormark Securities Inc., with the syndicate participation by Canaccord Adams and Northern Securities Inc. The company sold 7.5 million common shares at $3.35 each and 2.6 million flow-through shares at $3.85 per share.•

kbisetty@telus.net