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Alaska watches as Canada considers shipping tar sands oil across Arctic Ocean

Jill Burke
The town of Barrow, Alaska, just beyond the U.S. Coast Guard vessel Sycamore during an oil spill recovery exercise in July 2012. Possible spills would be a concern if tankers carrying tar sands oil began sailing in the Arctic Ocean. USCG / Kelly Parker

Is Alaska nearing the day when large oil tankers will sail by its Arctic shoreline, carrying Canadian tar sands oil to foreign markets? The provincial government of Alberta is toying with the idea, sinking money into a study to find out if an Arctic shipping plan makes more sense than moving its oil through the proposed Keystone XL pipeline to the Lower 48, or pipelines west or east through Canada.

Contemplating such Arctic voyages harkens back to the oil boom of Alaska's North Slope.

Shortly after wildcatters struck it big at Prudhoe Bay, Humble Oil, the predecessor to Exxon Corp., tested an Arctic shipping route in 1969. Dubbed the Manhattan project, as the vessel was named the Manhattan, the mission was in part to see whether transporting crude in tanker vessels from Alaska's Arctic oil fields was feasible, rather than building the 800-mile trans-Alaska pipeline to ship the oil to the ice-free port of Valdez.

The test run proved it wasn't possible to do so year-round, but 44 years later climate change is transforming the Far North, with new shipping lanes opening up and Arctic dreamers betting on a boom.

The Canadian pipeline would run from Alberta's tar sands, north through the Mackenzie River Valley, to the Arctic coastal town of Tuktoyaktuk, where the oil would be shipped on tanker vessels to Asia or Europe, according to the CBC News. The proposal, still very much in its infancy, is being considered while regulatory approval for the Keystone XL pipeline to the U.S. Gulf Coast remains in limbo and other proposed pipelines heading to British Columbia or toward Quebec face their own obstacles.

The sea-faring alternative would be a nightmarish specter for environmentalists who have long argued the Arctic is too fragile, too valuable, to risk a major industry mishap.

Royal Dutch Shell executives know better than anybody the immense -- and costly -- challenges to controversial oil operations in the Arctic. From lawsuits to regulatory red tape to the grounding of its Kulluk drillship earlier this year, the Netherlands-based oil giant has encountered a plethora of obstacles in its more than $5 billion quest to tap offshore oil in the Beaufort and Chukchi seas above Alaska.

But Alberta is already facing its own hurdles as regulations and critics have stalled the Keystone XL pipeline project. Building a pipeline through the sparsely populated lands north of Alberta and shipping from the Arctic could be a solution to bringing the controversial tar sands oil to foreign markets.

“It's not a surprise. Arctic energy shipments are very obvious possibilities because of the ice receding and technology improvements," said Alaska Lt. Gov. Mead Treadwell, a former chairman of the U.S. Arctic Research Commission.

Ironically, as Alberta contemplates shipping oil through the Arctic, Alaska is subsidizing an effort to build another 800-mile pipeline to move natural gas to the south. Just as the oil is moved from the North Slope via the trans-Alaska pipeline, Alaska wants to see a pipeline carrying natural gas to Valdez or another Southcentral port, where it would be liquefied and shipped on tanker vessels. The project, funded with up to $500 million in state subsidies, is estimated to cost $45 billion to $65 billion.

So why isn't Alaska looking to ship its natural gas on vessels across the Arctic Ocean, rather than building a giant, expensive pipeline?

Such an approach is challenging because near Alaska the Beaufort and Chukchi seas are fairly shallow, Treadwell said. Also, the companies backing the natural gas pipeline project -- Exxon Mobil, ConocoPhillips, BP and TransCanada Corp. -- haven't shown interest publicly in transporting LNG via the Arctic Ocean, he added.

"We don't have the water depth anywhere near Prudhoe Bay or Port Thompson like the Canadians or Russians do,” Treadwell said, adding that if one of Alaska's oil producers were to propose Arctic shipping, he's sure "the state would be cooperative.”

Oil and gas companies operating in Russia's Arctic are looking at shipping LNG on ice-breaking equipped tankers. And Korea Gas Co. has shown interest in recent years of shipping LNG on the Arctic Ocean from Canada's Mackenzie River Valley, a natural-gas rich area.

"Geo-strategically, I think every one of the five Arctic coastal states, plus Iceland, all have oil and gas potential," Treadwell said.

If some of these proposals come to fruition, Alaska could find itself helplessly watching large tankers loaded with oil and gas pass by its shores. With little spill-response infrastructure in Alaska's Arctic -- no deepwater port exists, for instance -- the state is sitting vulnerable, Treadwell said.

"If somebody is seriously talking about building an oil pipeline that would put oil on the water to go through Alaska waters," he said, "I believe we would have the time through diplomatic negotiation to be able to meet the challenge."

A vision from the past

In many ways, what Alberta is studying is a repeat of an experiment from nearly a half-century ago. Back when Prudhoe Bay was on the cusp of a boom, Humble Oil commissioned the first-ever commercial transit of the Northwest Passage.

The mission was designed to test whether Arctic Ocean travel made more sense than one of two proposed pipelines. The pipelines under consideration included what is now known as the trans-Alaska pipeline and a second option traveling across Canada to America's East Coast.

In August 1969, the 1,005-foot-long S.S. Manhattan launched from the Delaware River, headed north and cut its way west via the Northwest Passage. It made its way to Prudhoe Bay, where it picked up a ceremonial barrel of crude and returned home. The trip, which included Canadian and U.S. Coast Guard escorts, was a success, but winter travel later proved impossible. Environmental concerns further compromised the concept of shipping oil across the Arctic Ocean.

Alaska has already begun to study the need for deepwater ports in the Arctic to accommodate needs of both the U.S. Coast Guard and the shipping industry. Ports in the Arctic would allow the Coast Guard to have a more sustained and nimble presence. Last week, Coast Guard Commandant Adm. Robert Papp testified before a U.S. Senate committee that increased traffic in the Bering Sea was contributing to a growing potential for disaster in the Arctic. He told the committee that maritime governance is needed in the Arctic, according to a report on his remarks published in the E&E Reporter.

State and national leaders have talked for years about building ports in Alaska's Arctic, analyzing which sites above and below the Bering Strait would make sense, from the islands of St. Paul to St. Lawrence Island near the Bering Strait to Nome or nearby Port Clarence to Kotzebue, which sits above the strait. But like much of the discussion on how to get Alaska's natural gas to market, talk about ports is so far only that -- thinking, planning and studying at the moment.

Treadwell said that's not necessarily a bad thing: “We have a much better idea of what we want than we did even a year ago."

Meantime, marine safety, whether it's from traffic coming through the Bering Strait or further south in the Aleutian Islands, should be the number one priority for Alaska, Treadwell said. In May, the eight Arctic nations will sign a mutual aid oil spill agreement, building on similar cooperation already in place for search and rescue needs. Ice breaker design, port design and vessel traffic tracking programs are also all moving forward, Treadwell said.

“It's obviously in our interest to know what's coming,” he said.

Contact Jill Burke at jill(at)alaskadispatch.com