Oil Sands Truth: Shut Down the Tar Sands

Arctic seen as possible shipping route for massive industrial components

Arctic seen as possible shipping route for massive industrial components
CALGARY— Globe and Mail Update
Published Sunday, Nov. 14, 2010

As protesters clog a new corridor built to transport the massive building blocks of a new oil sands mine, a small Northwest Territories company has suddenly found itself showered with interest by Asian companies looking for an alternative.

It remains early days, and the realities of Arctic ice could well keep the plan from succeeding. But their goal is simple. They want to transform the Arctic into a new thoroughfare for the industrialization of Western Canada – and turn the Mackenzie River into a kind of Mississippi for the oil sands.

Though sailors have long discussed the possibility of Arctic transportation, thinning sea ice and oil sands companies’ growing use of overseas manufacturers for major components are suddenly conspiring to make it a far more attractive possibility.

In the past two months, Northern Transportation Co. Ltd., a Hay River-based barge company owned by northern Inuit, has received numerous inquiries from foreign freight and logistics experts who want to know if they can ship huge industrial components to Fort McMurray by way of the Far North.

“In one day this month, we had six people say how much would it cost to bring these modules down? Once we gave them the pricing, they said, ‘oh could you do twice that amount?’” said Martin Landry, the company’s Calgary-based manager of business development.

“To me, it sounds like a no-brainer.”

NTCL has had so many inquiries that Mr. Landry has planned a trip to Seoul to meet with South Korean manufacturing and transportation companies in early December. The interest comes from companies working to supply both the oil sands and non-petroleum projects in Western Canada.

The northern alternative is emerging as Imperial Oil Ltd. struggles with a southern option it chose to move the huge items of freight for its $8-billion Kearl oil sands project, which is currently under construction.

Imperial plans to move 207 components to the West Coast and up the Columbia and Snake Rivers, where they would be loaded onto trucks to travel by highway to Fort McMurray. Many of those modules are manufactured in South Korea. But the planned route – which is also the pathway for several large items for a ConocoPhillips refinery in Montana – has sparked a backlash among local residents, who have sought to halt the road-dominating loads from travelling a secondary highway through the mountains.

Earlier this month, Idaho State Supreme Court lifted a court order blocking those movements, but the Idaho Transportation Department has mandated a “contested case disposition” before it allows the trucks to move. Imperial already has 16 modules stacked up at the river port of Lewiston, Idaho, where they are awaiting shipment. The company hopes to bring in 35 modules before the Columbia River locks are closed to shipments for the winter.

Despite the troubles with the southern route, Imperial continues to believe it is the best option. Company planners studied a number of alternatives – including transport through the North – but opted for the Idaho corridor because of its “combination of safety, quality cost and schedule,” spokesman Pius Rolheiser said.

“That very much remains our preferred option, and we’re committed to seeing through the process,” he said.

NTCL has 76 years of experience in hauling freight up and down the Mackenzie, and has enough spare tug and barge capacity that it could bring 27 barges – each carrying multiple components – using its existing fleet, Mr. Landry said. The company also has a massive dock in Hay River, NWT, that it has built in anticipation of a Mackenzie Valley natural gas pipeline that has yet to be built, and has recent experience in trans-loading major pieces of equipment from ocean-going ships to barges.

But the northern option has several downsides. At least seven bridges on the 1,300-kilometre road from Hay River to Fort McMurray would need to be assessed by engineers to ensure they could accept the heavy loads. And, more importantly, Arctic ice would limit the season to just August and September, a window so narrow it could prove difficult to use for oil sands projects intent on speeding construction.

“If a project misses the last sailing, you’re basically stuck for a year. And the nature of these projects is that once someone gives the green light, they don’t want anything delayed. So a restriction on the shipping season – they would bypass that pretty quickly if they could,” said Rob Eskens, director of sales for Manitoulin Transport.

He called the NTCL idea “a little optimistic.”

And NTCL has struggled in other attempts to profit from the oil sands. It brought a hovercraft to Fort McMurray in 2008 and 2009 to test whether it could move workers on the Athabasca River, an idea that was abandoned when the recession hit. And last year, it completed a study of a possible route that would bring super-sized cargo from the Arctic all the way to Lake Athabasca, within 100 kilometres of the Fort McMurray area road system. The study found that such a route would require river dredging and the construction of a road that would cost $1-million per kilometre to build. The idea has now gone “dormant,” Mr. Landry said.

Still, those with long memories recall that northern waterways were long ago the main transportation arteries in Northern Canada – and say it makes sense for them to serve that role once again.

The Mackenzie route “is an interesting concept. History is on their side,” said Don Thompson, president of the Oil Sands Developers Group. “But will it work today? Who knows.”


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