SOMBA K'E/YELLOWKNIFE - City administration will present their case to city council at the end of December for a project that will draw warmth from the depths of the earth through Con Mine - and use it to heat the downtown core.

Mark Henry, energy co-ordinator for the City of Yellowknife, stands by Con Mine on April 28. Henry is working on a business case to utilize warmth generated naturally in the earth to heat the city's downtown core with a geothermal plant at the mine. - Tim Edwards/NNSL photo

A feasibility study was conducted last year that showed the project "in the ballpark of feasibility," according to Mark Henry, the energy co-ordinator for the city. Administration is now developing a case which will hammer out the details of the project - start-up costs, including costs of operation, and projected revenue.

Administration will spend the next seven months figuring out costs, who will buy, conducting tests, and developing a business model, according to Henry.

"When you're making a large capital investment, you want to have a high level of confidence," said Henry.

Henry said the feasibility study foresaw the project costing about $32 million, but that cost could be higher or lower once the business case is complete.

The federal government is providing between and $10 million and $20 million for the project. Henry said the exact amount has been settled, but is not public information yet as an agreement of how the money will be spent is being worked out. Henry said he expects the number to come out in the next three months.

Taxpayers will not bear the brunt of this project's price tag, according to Henry.

"This is different than, say, a traditional government infrastructure project," said Henry.

"This will be a stand-alone business that has to be able to fend for itself. It has to have more revenue than expenses," said Henry.

The project would use the mining tunnels of Con Mine, which run just over 6,000 feet into the ground. The city estimates temperatures to be between 33 C and 71 C at the mine's deepest point, which is filled with water.

The hot water would be pulled out of the depths, and the heat would be turned into thermal energy. That energy would be boosted by, possibly, a wood-pellet boiler, and then piped into the city.

"Over half of the heat would be coming from, essentially, a free source," said Henry, speaking of the natural heat in the lower chambers of the mine. Residential housing will not be tapping into the heat.

"They're expensive to hook up, and not much revenue brought in," said Henry.

According to Henry, the idea is to pipe the heat into areas where there are clusters of large buildings. Some areas being considered are the downtown core, where there are several large buildings, and the area around Fraser Arms where there are many apartment buildings. Henry said the project hopes to shield its customers from escalating oil prices.

"Most business owners are interested or supportive of this. Their number one question is 'how much is it going to cost me?'" said Henry.

Henry said the heat will probably have to be competitive with oil prices - equal or lower in price - but said the vision is not for cheap energy, per se, but dependable, efficient, and clean energy.

"The efficiency of the heat production process is more efficient with a large system than individual," said Henry, because a large system loses less heat.

Jim Sparling, manager of climate change programs for the GNWT, called the project an "innovative use of renewable energy."

"It has great potential to reduce the greenhouse gas emissions from the city of Yellowknife," said Sparling. He added the project, if it goes through, will serve as an example for the rest of the NWT on how to set up a district heating plant - how it's set up, how it's paid for, and who owns and operates it.

Henry said there are many possibilities for ownership and operation of the plant. It could be operated by the city, or it could become a privately owned utility such as Northland Utilities.

"Right now the city is examining the viability of developing and operating it themselves," said Henry.

If council OKs the project, Henry said a detailed design must be completed by the end of 2011, and construction initiated in 2012 and finished by March 21, 2014, as funds must be spent by that date according to the terms of the federal grant.