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Decision time for rails {Alaska-Alberta proposal ready to launch feasibility study, needs C$40M}
Petroleum News ^ | Week of January 13, 2013 | Gary Park

Posted on 01/13/2013 3:33:52 PM PST by thackney

Two ventures aiming to break the logjam facing Western Canadian producers seeking new markets for their crude oil face crucial tests in January.

Vancouver-based Generating for Seven Generations, or G7G, is expecting to know whether it will get C$40 million in financing to study the feasibility of its plan to build a rail line from Alberta to Alaska to connect with the Valdez Marine Terminal, while a coalition of railroads and producers is scheduled to decide whether it will conduct an experimental shipment of 2 million barrels of crude this summer through the Hudson Bay port at Churchill, Manitoba, to either the North American Atlantic Seaboard or Europe.

G7G Director Matt Vickers said his company’s plan involves a 1,600-mile rail line from the Alberta oil sands to Delta Junction, Alaska, where it would feed into the Trans Alaska Pipeline System to Valdez.

The grand objective for the proponents is to eventually carry up to 5 million barrels per day on a twin-track system that would allow 12 trains per day to deliver crude to super tankers at Valdez, with each train of 240 cars carrying about 153,000 barrels.

Vickers said G7G has been in discussions over the past two years with governments in Alberta, British Columbia, the Yukon and Alaska to outline its proposal and has met with the Alberta Energy Department’s strategic initiatives team.

He said the overriding impetus behind the G7G plan is to “keep supertanker traffic off Canada’s pristine West Coast.”

Pressure for new markets

Alberta, faced with a possible budget deficit of C$3 billion in the current fiscal year, and the industry are under pressure to open up new markets beyond North America to receive Brent-based pricing for their product and overcome entrenched opposition from First Nations, environmentalists and landowners to the plans for new pipelines from Alberta to the U.S. Gulf Coast, eastern Canada and the U.S. and tanker ports at Kitimat, Prince Rupert and Vancouver on the British Columbia coast. Alberta Energy Minister Ken Hughes has ranked the effort to secure new markets as one of the most important challenges facing his province.

“The strategic imperative is that we get our products to the ocean so that we can obtain global prices,” he said.

“The solutions are additional pipelines to the West Coast, to the East Coast and to the Gulf Coast and also train-car delivery of bitumen and oil products to the coast.”

Century-old dream

The bid for the G7G rail link is a revival of a century-old dream and studies commissioned in 2005 and 2007 by the Alaska and Yukon governments to build a resource-based line tying Alaska with Canada and the Lower 48 to import and export a variety of goods. That work concluded the idea could succeed based on the movement of containers and trains carrying products such as iron ore, coal, base metals, grains and fertilizer, making remote resource exploration and development more feasible.

Vickers said the “whole reason for our (crude oil) project is to keep super tanker traffic off Canada’s pristine West Coast.”

He said studies have “demonstrated that a rail link to Alaska is a viable alternative to the oil pipelines currently being planned across British Columbia … and will avoid many of the environmental risks associated with current pipeline proposals.”

“Diversifying markets for Canadian oil is an important challenge, but we need to achieve this goal in the most environmentally and socially responsible way possible,” Vickers said.

C$10.4 billion estimate

He noted that the preliminary cost estimate of C$10.4 billion for a double-track Alberta-Alaska rail link (C$8.4 billion for a single track to handle 1.5 million bpd) compares more than favorably with the price tags of C$5.5 billion for Enbridge’s 525,000 bpd Northern Gateway project and the C$4.1 billion to add 450,000 bpd to Kinder Morgan’s existing 300,000 bpd Trans Mountain pipeline — both seeking to open new markets for oil sands bitumen in Asia. Vickers said that if the feasibility study provides the groundwork for filing a regulatory application, the proposal would likely involve a twin-track system, with the rail service provided by an existing or a new company.

G7G estimates that producers would pay C$6-C$8 per barrel to ship by rail, compared with the C$5 Northern Gateway proposes to charge.

Vickers also noted that Alaska tribes and Canadian First Nations affected by the rail plan have given their full support to the feasibility study, but emphasized he did not presume to translate that into aboriginal support for the project until a rail route has been selected.

He said that would come only if the feasibility study clears the way for G7G to proceed with “two years of full-blown community consultation.”

First Nations support concept

Following several months of negotiations, Simon Mervyn, chief of British Columbia’s Na-cho Nyak Dun, said in a statement First Nations “fully support the concept because, in reality, if we don’t take the initiative, somebody else will.” Vickers said there has been only limited contact so far with oil producers, including a brief meeting with officials at Suncor Energy, the largest oil sands producer.

He said Suncor indicated its position on the use of rail has changed over the last six to 12 months since the rapid expansion of rail shipments out of the Bakken region.

Simon Dyer, policy director at the Alberta-based Pembina Institute, told the Edmonton Journal that moving bitumen by rail comes with risks that will need to be evaluated.

“Transporting dangerous goods by rail has a higher frequency of incidents than pipeline, (thought) pipeline spills tend to be of a larger magnitude,” he said.

G7G has selected the global engineering firm Aecon Canada, which participated in the 2005 and 2007 studies and helped prepare a scoping document, after holding discussions with firms such as SNC-Lavalin, Siemens and Worley Parsons.

Churchill a possibility

Meanwhile, the prospect of using Manitoba’s grain terminal at Churchill for a trial oil shipment, offers a “competitive cost advantage to deliver oil to multiple destinations for a short period of time each year,” said Jeff McEachern, executive director of the Churchill Gateway Development Corp., which has probed the idea with industry leaders in Calgary over the past six months. “It is not a full solution, but it has an economic advantage. It’s being looked at seriously because producers want optionality in how they transport their product to refineries and ease congestion in pipelines or rail service,” McEachern said.

Churchill, which has been used to export Western Canadian grain since 1929, is also experiencing a longer ice-free season that could be extended with the use of icebreakers.

The idea has progressed to a feasibility study involving a range of companies, including Hudson Bay Railway and its partner Canadian National Railway, and oil producers in Alberta, Saskatchewan and Manitoba.


TOPICS: Canada; News/Current Events; US: Alaska
KEYWORDS: energy; oil; pipeline; rail

1 posted on 01/13/2013 3:34:07 PM PST by thackney
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Previous discussion thread on the topic

Group wants to move bitumen by rail to Alaska
http://www.freerepublic.com/focus/f-news/2974202/posts
Posted on 1/2/2013


2 posted on 01/13/2013 3:35:54 PM PST by thackney (life is fragile, handle with prayer)
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To: thackney

as long as those asking for it can pay for it, who cares.


3 posted on 01/13/2013 3:38:51 PM PST by GeronL (http://asspos.blogspot.com)
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To: thackney

A short time ago rail was thought to be too expensive for oil shipment. Now minds have changed especially with the current administration. For months now long trains have been passing a block from my house, coming from Bakken down to the existing pipeline terminal in St. James Parish. Life always finds a way.


4 posted on 01/13/2013 4:01:54 PM PST by HChampagne
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To: thackney

So it’s OK with them to ship their oil to the pristine Alaska coast but not the pristine Canadian coast? At one time the entire continent was pristine. What the hell is so special about the Canadian west coast, or the Canadian East coast or the Canadian North coast?


5 posted on 01/13/2013 4:12:21 PM PST by Flavious_Maximus
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To: thackney
With the US under present management, Canada should focus on transportation options that do not involve Obama’s US. Obama could use any US transshipment point to leverage Canadian support for his Marxist agenda.
6 posted on 01/13/2013 4:13:51 PM PST by Truth29
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To: thackney

Twelve 240 car trains per day. Those trains will also have to go back again. It seems like it will be a train every hour or so that will take 10 minutes to go by. A pipeline would be a whole lot quieter.


7 posted on 01/13/2013 4:18:58 PM PST by glorgau
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To: glorgau
240 car trains

Over 3 miles long.

8 posted on 01/13/2013 4:22:12 PM PST by thackney (life is fragile, handle with prayer)
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To: glorgau
The grand objective for the proponents is to eventually carry up to 5 million barrels per day on a twin-track system that would allow 12 trains per day to deliver crude to super tankers at Valdez, with each train of 240 cars carrying about 153,000 barrels.

If they were to reach the 5MMPBD, it would be 32 trains a day that size. 12 trains are 1.8MMBPD.

9 posted on 01/13/2013 4:25:46 PM PST by thackney (life is fragile, handle with prayer)
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To: thackney; Clive; exg; Alberta's Child; albertabound; AntiKev; backhoe; Byron_the_Aussie; ...
To all- please ping me to Canadian topics.

Canada Ping!

10 posted on 01/13/2013 4:32:05 PM PST by Squawk 8888 (True North- Strong Leader, Strong Dollar, Strong and Free!)
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To: glorgau

I doubt the 240 car train....passing sidings probably can’t handle them...


11 posted on 01/13/2013 4:35:19 PM PST by wny
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To: HChampagne
A short time ago rail was thought to be too expensive for oil shipment.... Life always finds a way.

It is 3 or more times as expensive as a pipeline. But when you have more oil than pipeline capacity, the choices get rather limited. It does mean those producing/owning the oil get less for it, or spend more money taking it to market.

12 posted on 01/13/2013 4:36:07 PM PST by thackney (life is fragile, handle with prayer)
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To: thackney

Alberta to Valdez for C6 dollars to C8 dollars/bbl ?


13 posted on 01/13/2013 4:43:15 PM PST by Eric in the Ozarks (In the game of life, there are no betting limits)
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To: wny
...passing sidings probably can’t handle them...

Hence the double track.

14 posted on 01/13/2013 4:50:42 PM PST by glorgau
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To: glorgau

Is the entire line double track? I’m not completely familiar with it...


15 posted on 01/13/2013 4:58:14 PM PST by wny
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To: Flavious_Maximus

The “Canadian North coast”? Do you know where that is?

We’ve got it, and it has to go somewhere.
By moving it overland to Alaska, we’ll be avoiding O’bummer’s EPA’s dire crisis of oil ever moving anywhere within the continental U.S.A.


16 posted on 01/13/2013 5:02:16 PM PST by Dartman
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To: Eric in the Ozarks

As I understand it, the proposal is rail to Delta, then the existing pipeline to Valdez.

Then a tanker ship to the L48 West Coast.

It is not clear to me is the C$ includes the pipeline Tarriff.


17 posted on 01/13/2013 5:07:14 PM PST by thackney (life is fragile, handle with prayer)
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18 posted on 01/13/2013 5:28:55 PM PST by RedMDer (Those that believe in gun free zones should wear GUN FREE ZONE T-SHIRTS.)
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To: Dartman
By moving it overland to Alaska, we’ll be avoiding O’bummer’s EPA’s dire crisis of oil ever moving anywhere within the continental U.S.A.

If you think Alaska gets a free pass from the EPA:

EPA issues Shell notices of air pollution coming from its Arctic drilling operation
http://www.washingtonpost.com/business/epa-issues-shell-notices-of-air-pollution-coming-from-its-arctic-drilling-operation/2013/01/11/b6563dba-5c24-11e2-b8b2-0d18a64c8dfa_story.html
Jany 11, 2013

The federal agency announced Thursday that it issued Shell notices of air quality violations coming from its drill rig and drill ship during what was a shortened Arctic drilling season of about two months. Shell’s drill rig Kulluk and drill ship Noble Discoverer emitted excessive amounts of nitrogen oxide. There were multiple violations for each ship, the agency said.

19 posted on 01/13/2013 5:48:19 PM PST by thackney (life is fragile, handle with prayer)
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To: Flavious_Maximus

Western Canada is so pristine that Victoria pumps its sewage into the Straits of Juan de Fuca. B.C. seems to be like the California of Canada. A lot of NIMBY type attitudes and opposition to everything man-made.


20 posted on 01/13/2013 6:35:32 PM PST by USNBandit (sarcasm engaged at all times)
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To: thackney; All

Wonder how Churchill is feasible...as it is only usable 3-4 months out of the year, and, would have to be expanded to handle petro shipments. Also, the town is small, and probably not enough workers...some will have to be brought in at cost

More reason for Keystone


21 posted on 01/13/2013 6:46:56 PM PST by SeminoleCounty (The only automatic weapon is the one Obama uses to take your paycheck)
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To: thackney
This would be a boon for Alaska. There is no rail service into the state, all freight comes by ship or rail. To build a connector from this line to connect with Alaska RR at Fairbanks would be a no-brainer.

Great thing for both countries.

22 posted on 01/13/2013 7:00:48 PM PST by diogenes ghost
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To: diogenes ghost

“There is no rail service into the state, all freight comes by ship or rail. “

????


23 posted on 01/13/2013 7:12:58 PM PST by Rebelbase
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To: Rebelbase
"????"

Correct statement.

AND their freight that arrives via ship from, say Japan, must arrive on a US flagged ship with US crew. This requires LOTS of extra handling and costs go way up.

The railroad would indeed be a GREAT thing for them.

24 posted on 01/13/2013 7:36:02 PM PST by diogenes ghost
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To: thackney

More power to them, just as long as Tax Cheat Warren Buffoon and his toy railroad doesn’t somehow get to worm his way in and get to transport one drop of crude!


25 posted on 01/13/2013 8:04:19 PM PST by Tucker39
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To: thackney; Ernest_at_the_Beach; Grampa Dave; tubebender; ElkGroveDan; ScottinSacto; BOBTHENAILER

I can dig it!!! Let’s Roll!!!


26 posted on 01/13/2013 9:52:34 PM PST by SierraWasp (Mark Twain said: "It's easier to fool someone than to convince them they've been fooled!!!)
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To: diogenes ghost; Rebelbase

I am a former cargo ship owner.....several break bulk and roro

Any flagged ship unless barred can deliver goods from a foreign port to US

And with any crew they want

They only need US flag to go between US ports unless waivered in emergencies like relief efforts


27 posted on 01/13/2013 10:14:04 PM PST by wardaddy (wanna know how my kin felt during Reconstruction in Mississippi, you fixin to find out firsthand)
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To: diogenes ghost
This would be a boon for Alaska. There is no rail service into the state, all freight comes by ship or rail.

The rail-barge-rail shipments from Washington to South-Central are pretty effective now. I don't see this making much change for Alaska, just oil for the pipeline.


28 posted on 01/14/2013 3:18:10 AM PST by thackney (life is fragile, handle with prayer)
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To: diogenes ghost
AND their freight that arrives via ship from, say Japan, must arrive on a US flagged ship

I used to live in Alaska. The majority of stuff comes up from Washington.

29 posted on 01/14/2013 3:23:34 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

The Jones Act applies only in the case of US port to US port.


30 posted on 01/14/2013 6:26:51 AM PST by Eric in the Ozarks (In the game of life, there are no betting limits)
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To: thackney

As long as the oil finds its way onto the global market we will all benefit from it.


31 posted on 01/14/2013 6:47:23 AM PST by ElkGroveDan (My tagline is in the shop.)
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To: thackney
the idea could succeed based on the movement of containers and trains carrying products such as iron ore, coal, base metals, grains and fertilizer, making remote resource exploration and development more feasible.

"Ay? I don't like that idea."


32 posted on 01/14/2013 6:53:12 AM PST by ElkGroveDan (My tagline is in the shop.)
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To: ElkGroveDan
As long as the oil finds its way onto the global market we will all benefit from it.

True that is, but this proposal would take Canadian Oil to the L48 West Coast.

33 posted on 01/14/2013 6:54:44 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney
True that is, but this proposal would take Canadian Oil to the L48 West Coast.

And thus it becomes part of the global market.

34 posted on 01/14/2013 6:57:30 AM PST by ElkGroveDan (My tagline is in the shop.)
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To: wny
I doubt the 240 car train....passing sidings probably can’t handle them...

Which is why they're planning a double-track line.

35 posted on 01/14/2013 7:23:13 AM PST by okie01 (The Mainstream Media: IGNORANCE ON PARADE)
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To: wardaddy; Rebelbase
"Any flagged ship unless barred can deliver goods from a foreign port to US."

Then explain why.....

In January '12 a waiver was granted to the Russian icebreaking tanker 'Renda" for emergency shipment of gasoline from N. Japan to Nome. Nome was iced in at the time and could not get normal intrastate barge shipments.

36 posted on 01/14/2013 5:03:54 PM PST by diogenes ghost
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To: diogenes ghost; Travis McGee
The Russian vessel M/V Renda picked up 400,000 gallons of gasoline in Dutch Harbor Alaska to take in ice bound emergency to Nome Alaska along with the diesel fuel it had already picked up in South Korea

It needed the Jones Act waiver to carry from US port to US port.

But not from a foreign port to the US.

I think they tried but failed to do so after Sandy due to unions and Democrats protesting of foreign flagged non union crewed ships ferrying supplies to NJ and NY harbours from southern US relief sites.

think for a second, why would you ever think only US flagged vessels with US (Merchant Marine) crews can ply US ports...there are nowadays only 191 US flagged cargo vessels worldwide, in 1955 there were 1200. ...there are over 200 cargo ships and tankers in US Gulf ports right now as we speak is my guess...I'm sure there is some port traffic site I could find...there are not enough and they are way too costly to compete...in my shipping days I only saw US flagged ships as relief vessels, research and Jones Act vessels...never intercontinental anymore

have you seen merchant marine union scale....whew...it's 10 times Filipino I can promise you and of course replete with hours regs which will mean double crew and so forth...no thanks

here is a site synopsis of the Renda situation:

JONES ACT WAIVER ALLOWS RENDA TO DELIVER EMERGENCY FUEL SUPPLY TO NOME, ALASKA By Lysander Johnson posted in Recent Maritime News on Wednesday, January 18, 2012

Russian-flagged 371-foot tanker RENDA, escorted through over 300 miles of ice-covered seas by U.S. Coast Guard icebreaker HEALY, reached Nome, Alaska on Saturday, January 14, with 1.3 million gallons of unleaded gasoline and diesel fuel. Pumping the fuel into the town pipeline began safely during the few daylight hours on Monday. Normally, Nome residents would have received their full winter fuel supply by barge months ago, but a November storm made their final barge delivery impossible. Nome faced running out of fuel supplies before March or April if not for RENDA coming through with the first winter sea delivery ever to Nome. One solution was a very expensive fuel delivery by air, and that's exactly what might have been the only solution if it were not for a Jones Act waiver allowing the Russian vessel to operate in both Dutch Harbor to take on 400,000 of gasoline, and in Nome to deliver that gasoline as well as the diesel that RENDA had first loaded in South Korea.

37 posted on 01/14/2013 10:04:46 PM PST by wardaddy (wanna know how my kin felt during Reconstruction in Mississippi, you fixin to find out firsthand)
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