If you recall, the last time I had the privilege to speak before you, we had just completed our technology report, “Technologies for Viable Salmon Aquaculture”. I encourage you to perhaps reread it. If you haven't and if you're new to the committee, I encourage you to perhaps consider reading it.
Since that time, we have also done a very preliminary comparison of the greenhouse gas emissions from closed containment and open ocean net-pen aquaculture procedures. Again, we would encourage you, in your own time, to read that.
Today I'm going to give you a synopsis of where we've come from, where we are, and where we're going. It draws upon the work in those two reports, as well as our work with the 'Namgis First Nation in Port McNeill, which is actually building the first RAS system in British Columbia.
I'm now turning to page 3 and some RAS design foundations.
For those who did read the report, you'll recall that as a foundation we were concerned primarily with the ecology of the environment, first and foremost, so we examined all technologies for salmon aquaculture--net pens, in-ocean technologies, and land-based technologies--from an array of two broad parameters: husbandry requirements of the fish and biological security requirements.
From that heuristic overview, we very quickly drilled into the fact that land-based full recirculation was the technology of choice for addressing our concerns. I press upon you to consider that the biosecurity issues that we were very concerned about have become truly pressing, because biosecurity truly equates to economic security for rural communities. That was graphically illustrated with the ISA outbreak in Chile, in which the entire workforce was laid off the moment the herds of fish were culled. That today seems very prevalent, particularly when you realize that closed containment, with each site being bio-isolated, ensures that your industry--plus your employment of the citizenry--is truly secure, because there is no vector by which disease can go from farm site to farm site. They are bio-isolated.
Moving on to page 4, where are we today? We've embarked with the 'Namgis nation and the SOS Marine Conservation Foundation upon building a farm—it is under the working partnership of K'udas—and we've looked at two things for you today that are of key importance.
The capital and the civil costs to build this system are coming in at between $6 million and $7 million. These are based on engineering drawings as we go into the construction phase, with PR Aqua being our design team. They have built fish farms all over the world.
The farm that we're building will produce approximately 400 tonnes of live-weight fish at 75 kilograms per m3 densities, and the system is designed with headroom to reach 500 tonnes of production per annum. That puts you, if you do a little bit of back-of-the-envelope math, at 1,000 tonnes of production every two years.
So 2,000 tonnes of production every two years would put you at a cost of about $14 million, which is very close to the $12 million we had estimated in the 2009-10 timeframe and substantially lower than the $22 million estimated by DFO. These now are hard estimates, which we're going to use going into production or into construction. It is also appropriate to note that of that $6 million to $7 million, the civil costs are actually disproportionately large, because we are developing the entire site to be able to rapidly expand with more production modules.
Our operating costs are also important to focus upon. Labour is currently our least well-defined utilization, because we simply haven't built and operated a farm. But energy was the key driver in many of the discussions. Our energy costs were initially estimated at nine kilowatt hours per kilogram of each fish produced. That estimate has fallen by exactly 50%.
We still have some way to go, because Atlantic Sapphire is a 1,000-metric-tonne, land-based salmon closed-containment system in Denmark that has just come on line, and they're reporting power consumptions of just two kilowatt hours per kilogram of fish produced. Although our current estimates are substantially smaller than what we initially estimated, they are still bigger than the best in class in the world.
Nonetheless, it's important to remember that at nine kilowatt hours, profitability was previously assured in our analysis. We are truly in a position where we can see, with scale, that the operating expenses can be truly commensurate with those of net-pen.
I will turn to page 5. I want to illuminate where some of those operating costs come from. This is a very busy chart, but standard, off-the-shelf RAS design is pretty much equivalent to thinking about a bathtub with the plug undone: you're pouring warm water into it to keep the fish there at a healthy culture temperature, and you're running a heater to heat that cold water as it comes in. The cost to do that would be literally $2 million a year by burning propane for 1,000 metric tonnes of production. This is what the industry today is assessing as being the non-viable break point.
It is the diagram at the bottom of the page that should be used and it is the diagram that we will use in our farm. As that warm effluent flows out--and it comes from two sources, the air that is blown through to strip CO2 and the warm water effluent--we extract, with passive heat exchangers, the bulk of that energy. Then, on the residual, we use active heat pumps to reclaim the remaining heat.
That pushes our energy costs down by literally a factor of 10. That is based on a very detailed analysis, assuming the full weather analysis from -2 degrees in the middle of the winter to +20 degrees in the summer. The work is being cross-checked by professional heat engineers from a company called GENIVAR. Lo and behold, Atlantic Sapphire, the company in Denmark that has built the first salmon RAS, is taking exactly the same approach.
That takes me to the next slide and the production of greenhouse gas emissions. This is preliminary work, and I want to stress the word “preliminary”. In that, I would like to solicit your help later in the discussion here.
We are seeing a large amount of discussion in the public forum about how RAS systems are power hogs and can't possibly be considered because of their huge GHG footprint. We took the analysis methodology by Peter Tyedmers, who's an expert in this area, and focused that methodology for the environment of British Columbia.
We did a comparative analysis where we assumed the impact of smolts and feed production was identical. We assumed that once the fish were taken to harvest, they were identical from that point forth. We simply compared the actual core production of fish in land-based production and fish in open-net production. On the next page, you'll see a dramatic analysis with two pie charts.
Open-net pen production has the potential to be substantially worse than land-based farms. The difference in the work is focused at two levels. The original work by Peter Tyedmers assumed electricity based on fossil fuels in central Canada and assumed what I would call an archaic RAS system design. If you strip those two, or account for those two variables, then land-based and ocean-based become equivalent in greenhouse gas production--with it slightly in the favour of land-based farms.
But what has not ever been accurately accounted for is the benthic fouling methane off-gassing. We assumed in this work, and it is a big assumption--and this speaks to the forthcoming ask--that when benthic fouling occurs, we monitor for a sulfate production in the anaerobic layer that forms on the base of the ocean floor. That layer also forms methane. To date, there has been no accurate accounting of that. If you assume that just 70% of that biomass rots in the appropriate manner, you have this huge disparity between land-based and ocean-farmed production.
So on our request, turning to page 8, is that the Department of Fisheries and Oceans are currently looking at a full—
