All aboard for the oil patch

If a Vancouver-based firm gets its way, a railway to haul bitumen from the Alberta oil patch could be heading to the Yukon. The rail line would link Fort McMurray with the port at Valdez, Alaska.

If a Vancouver-based firm gets its way, a railway to haul bitumen from the Alberta oil patch could be heading to the Yukon.

The rail line would link Fort McMurray with the port at Valdez, Alaska. It’s the brainchild of G Seven Generations, which is touting the project as a way of “keeping the supertankers off our pristine northwest coast,” said CEO Matt Vickers.

The rail proposal has been in the works for five years, but it was only recently announced.

The idea was to get all the municipalities and First Nation communities on board first before making it public, said Vickers.

“We looked at it and I said, if we’re truly going to look at this, then the First Nations, of course, have to be true partners in some way,” he said.

Vickers has spent the past three years making presentations to First Nation communities and municipalities along the proposed route, from Alaska to Alberta.

Right now the project is still in the early planning stage, but Vickers has received letters of support to go ahead with a feasibility study from many affected parties, including the Council of Yukon First Nations and the territorial government.

The Liard First Nation hasn’t sent a letter of support, but Chief Liard McMillan was cautiously optimistic about the project.

“I think any kind of project that will help to increase or improve economic development in the territory is potentially a good thing,” he said. However, he remained concerned about what the potential social, environmental and economic impacts of such a large industrial project could be.

“We haven’t seen much in the way of concrete data,” he said. “I think for the project to be successful the company that’s doing this will have to take into account the local First Nations interest and make sure that those interests are recognized and respected.”

That’s exactly what the company is trying to do, said Vickers.

“We want to ensure that we can cover off the issues and concerns that are out there,” he said.

That approach has won a lot of support, at least for the feasibility study. In contrast, Enbridge’s proposed Northern Gateway pipeline has been inundated with opposition from many First Nations communities and municipalities along the route.

It probably doesn’t hurt that G Seven Generations is offering First Nations a 50 per cent cut of the profits, far above anything proposed by Enbridge.

But Vickers isn’t out to sling mud.

“We’re not pipeline bashers,” he said “We’re just saying we want to create permanent jobs and we believe this is going to be a safer manner.”

And he hopes greener, too.

One of the firm’s ideas is to electrify the track with power generated by wind turbines, rather than running the trains on diesel.

The 2,400-km railway doesn’t come cheap. A single-track line will cost about $8 billion, while the price tag for a double track is an estimated $12 billion, said Vickers.

While the Northern Gateway pipeline to Kitimat, B.C., would cost $5.5-billion and move a little more than 500,000 barrels per day, a rail link could transport up to five million barrels a day.

It may be more expensive to ship oil by rail than through a pipeline, but rail could be used to move other commodities as well.

“We can ship anything and everything,” said Vickers. “Potash, grain, lumber.”

There’s even potential to use is as a passenger line for tourism, he added.

And it doesn’t just move one way. There’s potential to move equipment and much-needed water from the coast to the oil patch, said Vickers.

“As you start talking back-haul, these numbers easily become comparable to per barrel transport with the pipeline industry,” he said.

To proceed, G Seven Generations needs to complete a feasibility study, and that doesn’t come cheap. The year-long study of the project will cost about $40 million.

So far, all the funding has come from private Canadian investors, but the firm still needs another $4.5 million before it can start.

Provincial, territorial and state governments have – with the exception of Alberta – sent letters of support for the study but no money yet.

The firm hasn’t gotten any money from industry either, said Vickers. But he said he’d be open to contributions from both.

G Seven Generations only recently started talking with oil companies about the project.

Vickers is scheduled to present the project at the Oil Sands Symposium in Calgary next week.

“Industry will be fully aware at that time,” he said.

It’s not the first time that a rail link through the Yukon and Alaska has been contemplated.

In 2005, the Yukon and Alaska governments completed a feasibility study of their own. That rail link was looking to connect Alaska through the Yukon to south.

“It said it was feasible, but you would need a very large anchor tenant to take over in order to make it viable,” said Terry Hayden the Yukon’s assistant deputy minister for economic development. “It would take a very large mining project, for instance, or very large oil development in order for it to be practical.”

With proven reserves of 170.8 billion barrels in Alberta, it doesn’t get much bigger.

Contact Josh Kerr at joshk@yukon-news.com