Arctic pipeline a true pipedream

On EDGE: Opinion

About the only thing that’s certain about the territorial government’s latest pipedream is the few who take the idea of exporting Alberta bitumen from a port on the Arctic coast seriously are happy a proposed pilot demonstration wasn’t tried this year.

Not that next year promises to be better. Low water and truncated shipping seasons have been the norm on the Mackenzie in the decade since the Coast Guard stopped dredging the big river – a detail that evidently escaped Canatec Associates International.

The Calgary-based consulting shop was hired last year to draft the Arctic Energy Gateway Proposal after the Government of the Northwest Territories shopped the idea of a northern pipeline to the Alberta government.

The report cost $50,000 and the Alberta government got what it paid for – a barebones, blue-sky daydream that its authors acknowledge would require considerably more research to merit serious consideration by potential investors.

To stoke interest in the idea, Canatec proposed  “sending dilbit (diluted bitumen) to Hay River by rail for transfer to barges, which would unload at Tuktoyaktuk. The dilbit would be separated and the barges return it to Hay River. Bitumen would be stored on land or tanker somewhere in the Delta region and loaded using a temporary offshore loading terminal, to open water tankers operating in summer. A standby icebreaker escort would assist vessels to transit possible choke points along the route at season start and end.”

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“Only minor construction of new equipment would be required, principally, port/loading facilities for barge transport, and double-hulled barges to reduce environmental risk. Constructing purpose-designed barges would also allow for the possibility of heating the dilbit, reducing or eliminating the diluent content, and transferring directly to tankers at sea.”

Canatec didn’t cost the pilot project, which it suggested could move as much as 1.2 million barrels of diluted bitumen in a good year to markets in Asia or Europe (via Russia’s Arctic sea lanes), but the new barges, onshore storage facilities, dredging, temporary terminal and ice breaker would not come cheap.

Anticipating headaches and delays from local resistance and regulatory reviews of the “environmental risks associated with bulk transportation of a petroleum product through relatively unverified and hazardous routes,” Canatec proposed an immediate cut to the chase.

“A pipeline is probably the best solution to transport large volumes to the Arctic coast. Given the expected positive uncertainties about reduction in Arctic ice cover, it might be considered useful to gain more experience with terminals and tanker routes before committing to full scale design/construction, while still expanding the pilot shipment levels,” Canatec said.

“The pipeline might be a single line. It (dilbit) would be produced all year and offloaded to tankers in summer, spring and fall. In winter, product is stored, either on land or using tankers as well. The loading terminal is to be removed for winter. Icebreakers and ice class tankers complement open water vessels to allow for extended season shipping in fall and spring as well as summer.”

Again, no costs were included, possibly because the number might frighten potential players, but the price would be in excess of $20 billion, the last estimated cost for the moribund Mackenzie Valley Pipeline. Add in port facilities, ice breakers and dredging and the total rises to $25 billion and beyond.

In the meantime, Canatec urged the interested parties to talk up the idea with governments and “northern indigenous peoples’ organizations to ensure relationships are productive from the outset” and begin discussions “with the major oil sands industry stakeholders to assist them in realizing this is possibly not only a viable alternative for export, but possibly a far better option than what they have considered to date.”

Premier Bob McLeod and Dave Ramsay, Minister of Industry Tourism and Investment, have been promoting the idea far and wide without getting anything more than ink in the business press. But it’s early days, as the GNWT is fond of saying about these things. If nothing else, McLeod and Ramsay may have hit on a reason to keep the lights on at the Mackenzie Valley Petroleum Planning Office in Hay River.

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