Canadian group pushes rail line from oil sands to Alaska

Juneau EmpireFebruary 3, 2014 

— Could a $15 billion railroad project reduce the cost of living in Alaska overnight? Matt Vickers, a lead member in the startup group G7G Railway Corp., thinks it can.

Vickers' Vancouver-based group is proposing a 1,600-mile railroad from Fort McMurray, Alberta, into Alaska. About 240 miles of the rail would be laid in the state. The railroad would primarily transport bitumen from Alberta's tar sands to Delta Junction, where the project's creators hope to tap into TAPS, the Trans-Alaska Pipeline System.

That version of the project would depend on the Alaska Railroad Corporation extending its rail line 80 miles from North Pole to Delta Junction. Vickers thinks it could inject up to a million barrels a day through the pipeline down to Valdez.

Is it too good to be true? Well, there are some major safety concerns when transporting oil by rail that weren't covered in Vickers' presentation to the Senate and House Transportation Committees, although he did say that the rail was being designed using the best technology available.

"That is the beauty of what we're able to do because it's purpose built," Vickers said. "We get to use all the technology; we don't have to chase from behind to catch up. It's the best available, including safer rail cars we're designing ourselves, different types of fuel that we can burn and everything that's available to us."

The project is still awaiting a "pre-feasibility study." Once completed, G7G hopes to be able to raise $40 million to complete a full feasibility study. Vickers said researchers at the University of Alaska Fairbanks and the University of Michigan are investigating the potential for the railroad to transport minerals from Yukon mines.

AECOM Canada, a technology company, has already said it wants 10 percent equity in the project, according to Vickers' presentation. First Nations tribes and the six tribes between the border and Delta Junction would hold a 50 percent stake in a so-called Aboriginal Alliance Trust. The trust would disseminate dividends among the tribes. The remaining 50 percent would be held by G7G.

The idea of shipping a million barrels of sticky bitumen a day via a rail line is unprecedented. Jean-Francois Arsenault, of the Ottawa-based infrastructure development firm, told the Edmonton Journal last January that G7G's single-track version of the project would require 10 trains a day, each pulling 200 cars, to transport 1.5 million barrels. Breaking that down even further, he said it would require unloading 200 freight trains every 45 minutes.

"You would have to have at least three or four loading docks," Arsenault told the Journal. "Is it feasible? Yes. Is anything like this done anywhere else? No. That's why pipelines exist."

But a pipeline from Fort McMurray, ground zero for Alberta's controversial tar sands, to a port or refinery does not exist and plans for one still face intense scrutiny and opposition from environmentalists.

President Barack Obama rejected the application for the Keystone XL Pipeline, which would take tar sands from Alberta and crude oil from the Bakken region down to refineries in Texas. A State Department environmental report released Friday says the pipeline wouldn't have a major impact on carbon emissions, however.

In the meanwhile, Vickers said proposed pipeline projects like Keystone, Enbridge and Kinder Morgan can't do what a railroad can do.

"A pipeline can ship one commodity and a rail line can do every commodity," Vickers said. "Hence, the potash, grain, lumber, tourism, freight. (Think about) what that'll do for the cost of living in the Yukon and Alaska overnight with respect to general freight as well."

Vickers said "if all those pipelines went ahead, they'd be filled to capacity within 15 years and still need extra." Alberta's Energy Resources Conservation Board predicts tar sands will make up 88 percent of the province's predicted oil production of 3.4 million barrels per day.

TransCanada CEO Russ Girling recently told the Obama administration that if it doesn't approve Keystone, his company will consider building rail terminals, despite pipelines being "by far a safer alternative."

There is some oil being transported out of Alberta by rail, but U.S. and Canadian authorities recently warned that the practice is unsafe. The U.S. National Transportation Safety Board and the Transportation Safety Board of Canada issued a series of recommendations to address safety risks involved in transporting oil by rail. Crude oil shipments by rail have increased over 400 percent since 2005, according to the Association of American Railroad's Annual Report of Hazardous Materials. Several explosive rail accidents have been reported.

"The large-scale shipment of crude oil by rail simply didn't exist ten years ago, and our safety regulations need to catch up with this new reality," NTSB Chairman Deborah A.P. Hersman said in a statement. "While this energy boom is good for business, the people and the environment along rail corridors must be protected from harm."

Vickers fielded several questions from transportation committee members, but a comment from Rep. Eric Feige, R-Chickaloon, might have caught him off guard when Feige said that the Legislature is presented with a lot of "schemes."(backslash)

"I don't know if anybody in that study has talked to the owners of the Trans-Alaska Pipeline. They would obviously have a great deal to say about what gets put into their pipeline," Feige said. "... A million barrels of bitumen a day will not go into TAPS. Technically, you don't have the capability to do that."

Feige suggested they consider running a rail line directly to Valdez or do some prerefining to get it closer to the consistency of crude oil, which the TAPS could handle.

"Those kind of early discussions have happened, otherwise our plan wouldn't have gotten this far, but I really appreciate the information and that was part of this trip to touch base," Vickers responded.

Despite some of the lesser developed details, the presentation struck a chord with Sen. Click Bishop, R-Fairbanks.

"You guys think big; that's what I love about Canadians," Bishop said. "There's no hill too steep, no ditch too deep. If there's a hole in the ground around the world, there's a Canadian standing in the middle of it ... I wish you the best of luck and thanks for the presentation."

 

Information from: Juneau (Alaska) Empire, http://www.juneauempire.com

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