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NORTHWEST TERRITORIES
Growing demand for wood pellet fuel is heating interest in developing forest resources in the Northwest Territories.

Bob McLeod, Industry and Investment minister, said "there are several groups working hard at developing proposals" for a pellet mill but declined to identify them.

"There is a lot of interest; the benefits of wood pellets is there," McLeod said. "A few things need to be worked out, but demand is continuing to increase."

A recent study found that pellet fuel consumption in the Northwest Territories is approaching 18,000 tonnes a year - still well short of the estimated 30,000 tonnes needed to support a pellet mill, but Yellowknife's plan for a district heating system could fill the gap.

As described in the business case, Yellowknife's heating system would require 12,000 tonnes of pellets a year, but that demand might be halved if it taps into geothermal heat from the former Con Mine.

However, other users could take up the slack. The territorial government plans to convert as many of its buildings to pellet heat as is practicable, and NPR Limited Partnership (formerly Northern Property REIT) is taking the same course, which will further boost demand.

According to a report by Arctic Energy Alliance, if every public building within Yellowknife was heated by wood pellets, the demand would be 200,000 tonnes per year. Government officials indicated that a further 1.5 million litres of heating oil could be displaced annually in government buildings managed by the GNWT throughout the NWT.

Forintek, a forestry consulting group in Vancouver, estimated in a study prepared for the territorial government, that it would cost $3 million to establish a pellet mill and another $2 million a year to operate it.

The Dehcho and South Slave regions both have the forestry resources needed for the mill, and although Fort Providence is closer to Yellowknife, Hay River has access to less expensive hydro-electricity.

Current demand for pellets in the territory is met by mills in La Crete, Alta., more than 800 km from Yellowknife, and northern British Colombia, where the forest industry is harvesting trees destroyed by an infestation of the Mountain Pine Beetle.

The NWT Biomass Energy Strategy released two years ago aims to "work with the private sector and aboriginal development corporations to identify viable business models to produce pellets and/or woodchips in the NWT."

Producing wood pellets at a competitive price would help stabilize the territory's supply of pellets, said Jim Sparling, manager of climate change programs for the GNWT's department of Environment and Natural Resources.

"If you're buying in bulk from La Crete, you can get them delivered in Yellowknife for about the equivalent of 60 cents a litre for heating oil right now. But there's some concerns about the long-term sustainability of that," said Sparling.

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