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Northern energy hub?

Pipeline to Churchill explored -- deepwater port ice-free longer

A report touts economic-development ideas for the deepwater Port of Churchill, including oil shipments via a pipeline from the Alberta oilsands.

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A report touts economic-development ideas for the deepwater Port of Churchill, including oil shipments via a pipeline from the Alberta oilsands.

Shipping oil by rail across northern Manitoba could be just the beginning. A government report suggests exporting liquified natural gas (LNG) from the Port of Churchill and eventually building a pipeline for Alberta bitumen.

The report, posted on the Manitoba government website last fall, studied ways to bolster Churchill's economy and diversify the commodities shipped from its deepwater port, which is ice-free longer each year. In the wake of international and domestic opposition to oil pipelines and fears about dangerous goods shipped by rail, the report contains significant recommendations.

The joint federal-provincial task force said, during the next five years, it makes sense to ship sweet light crude by rail to Churchill, subject to fully addressing potential environmental risks. That's the plan unveiled last summer by Omnitrax Canada, the company that operates both the Hudson Bay Railway and the Port of Churchill. Omnitrax, whose Canadian president is former Manitoba Conservative MP Merv Tweed, hopes to ship up to 3.3 million barrels of oil per year through the port via the railway. A test shipment slated for last fall was postponed until this summer.

Also during the next five years, the task force suggested feasibility studies be done to determine whether the port could supply liquified natural gas to Nunavut and European markets.

Nunavut's towns and its booming mining sector typically use diesel to produce electricity, which is expensive and tough on the environment. The territory may be looking to shift to natural gas in the future, the report said.

The report said Omnitrax was working with a consultant to explore the possibilities of liquified natural gas shipments, but a statement by the company Tuesday said LNG is not a commodity it is pursuing currently. Tweed was not available Tuesday.

Liquified natural gas is widely considered less environmentally damaging than crude oil in the event of a spill. And, helping to wean Nunavut off diesel fuel could also shrink emissions.

But, shipping LNG through Churchill does represent another investment in the fossil fuels that cause climate change, said Eric Reder, the Manitoba campaign director with the Wilderness Committee. His group, and other environmental activists, are strongly opposed to crude shipments through the north.

The task force report, dated January 2013, was posted online Sept. 5. It received virtually no attention. It was authored by two senior civil servants in the federal and provincial governments -- the deputy minister of Western Economic Development Canada and Manitoba's deputy minister for strategic partnerships. The task force, which was asked by Prime Minister Stephen Harper to "maintain a low public profile and consultation approach," was directed to look at commercially viable economic-development options for the port that don't involve public funds.

The federal and provincial governments have spent or committed nearly $200 million since 1997 on the rail line, the port, grain-shipping incentives and other investments in housing, recreation and roads in Churchill.

Over the longer term, the report said, a pipeline could be built from Alberta's oilsands to Churchill.

Consultation with aboriginals and partnerships with one or more indigenous groups would likely be involved.

The Alberta-Churchill pipeline idea has also been floated by the Alberta government in the last year, as well as touted in national financial journals. But Reder said the same problems that plague the Hudson Bay Railway, such as unstable permafrost, would also affect a pipeline, making it an environmental disaster and an engineering nightmare.

The province said the task-force report is not binding and instead was meant to speculate on options. The notion of a pipeline was secondary to other, more viable development opportunities such as potash exports and eco-tourism.

The Manitoba government has opposed Omnitrax's plan to ship crude oil to Churchill. Transportation Minister Steve Ashton said the government would be wary of any pipeline proposal, too.

"In my mind, the same standard would apply, which is rail safety being paramount, protection of the environment being paramount," he said.

It's not clear whether Manitoba can stop future crude oil and natural gas shipments from the port or any construction of a pipeline. Interprovincial pipelines, rail and marine shipping are federally regulated.

The province is exploring its regulatory role under the Dangerous Goods Handling and Transportation Act that could boost requirements for spill protocols and other emergency responses. The province hopes to convince Omnitrax to pursue other commodities besides crude oil.

"Any jurisdiction we have, we'll use it, but we're appealing directly to Omnitrax," said Ashton.

In a speech last November, Finance Minister Jim Flaherty touted three options for shipping oil to port -- north to the Port of Churchill by rail, west through the proposed Northern Gateway pipeline, and east to New Brunswick by pipeline. "I think we should do them all, personally." he said.

maryagnes.welch@freepress.mb.ca

History

Updated on Wednesday, January 8, 2014 at 9:50 AM CST:
Replaces photo, formats fact box

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