IRC receives $100M federal loan for new gas plant

The Canada Infrastructure Bank is backing a compressed natural gas project being developed by the Inuvialuit Regional Corporation with a loan worth $100 million.

The loan was announced on Thursday morning. It covers just over a third of the project’s expected $293-million budget.

The Canada Infrastructure Bank, a Crown corporation also known as the CIB, exists to help major projects like this find financial backing.

The IRC is developing the previously discovered M-18 natural gas well on the Tuktoyaktuk Peninsula while building a gas plant south of Tuktoyaktuk.

Named the Inuvialuit Energy Security Project, the well and plant are expected by the IRC to provide more than half a century of fuel, replacing deliveries of liquefied natural gas and propane that currently arrive by truck from the south.

In a press release on Thursday, IRC Chair Duane Ningaqsiq Smith said the project will offer “a long-term, stable energy source for the region, strengthening energy security while delivering lasting benefits that will support Inuvialuit culture, education, wellness and healthy communities, all while investing in a bright future for our children.”

An IRC spokesperson declined an interview request on Smith’s behalf, saying he is involved in board meetings this week.

Hillary Thatcher, who leads the CIB’s Indigenous and northern infrastructure investments team, told Cabin Radio the IRC first contacted the CIB about the project in 2021.

“It’s the perfect fit for the CIB given the impact it’s going to have on the six Inuit communities that will benefit from it,” Thatcher said from Yellowknife Airport on Wednesday as she flew to Inuvik for the announcement.

“It’s going to provide a more affordable and reliable supply of power and heat to these remote Inuit communities. That’s critical. It reduces greenhouse gas emissions, because no longer is fuel going to have to be trucked from Alberta up to the North on sometimes-dangerous roads in not such great conditions,” Thatcher continued.

“And it creates energy reliability, because there’s a local supply of fuel to meet the needs of the region.”

Thatcher said the project will create construction jobs and about 20 full-time skilled positions once operational.

The CIB expects the IRC to earn significant returns on the project for many years – enough to invest in its communities while also paying back the loan, which the CIB said has a decades-long term and an interest rate pegged below the market rate.

A construction timeline posted online by the IRC envisages building of the plant commencing this year and gas production beginning at the end of 2026.

Gas deliveries from the south have been a necessity for the past decade after the previous Ikhil well, in the Mackenzie Delta, stopped being a major gas source.

Ikhil is still used as a backup gas source during freeze-up and break-up, when the region loses road access.

Mayor of Inuvik Peter Clarkson welcomed the news of the CIB’s investment.

“From the very beginning, the Inuvialuit have said they can provide gas to Inuvik at a more affordable cost. Anything that can be done to reduce the cost of living in the North is good news for everybody,” Clarkson told CBC North’s Trailbreaker.

“We probably pay more than anybody else in the world for natural gas. If, through this project, that price can come down and Inuvik and Tuk are more affordable places to live, that’s all good news.”

CIB discussing other NWT projects

Thatcher said Thursday’s announcement marks the CIB’s first investment with an Inuit government and its first investment of this size in Canada’s territories.

“We hope to do a lot more like this and meet other needs for all three territories in the coming time,” she said.

The Canada Infrastructure Bank has faced criticism in the past. The New Democrats likened it to a “corporate slush fund” in 2022, arguing at the time that the CIB had a poor record of seeing projects through to completion or backing development in the North. The CIB, defending itself, said the nature of large-scale projects meant they need time.

Ottawa has repeatedly cited the CIB as a likely funding source for major projects the NWT government hopes to advance, like the Mackenzie Valley Highway, Taltson hydro expansion and Slave Geological Province road.

In 2023, for example, then-infrastructure minister Dominic LeBlanc told Cabin Radio the CIB was “the most obvious and immediate partner” to get the Taltson hydro expansion built – a project set to require more than $1 billion to link a large South Slave hydro plant to Yellowknife and beyond, using a transmission line across or around Great Slave Lake.

Asked if the CIB was in discussions with the territorial government about those projects, Thatcher said: “We are.”

“A lot of these big, large-scale projects – as you mentioned, $1 billion-plus – they take a lot of time,” she said.

“We are in ongoing discussions, and we look forward to making investments in some of those.”