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Canadian Arctic Port Presses Forward on Oil Exports

Global warming has revived hopes amongst nations with Arctic coastline that thawing can lead to the development of previously unavailable hydrocarbon resources.

In Canada, U.S. rail company OmniTRAX Canada, which owns the railway line to Hudson’s Bay Churchill facility, Canada's only deepwater Arctic sea port, say they will "anchor" its future in the transport of crude oil.

While that’s good news for Ottawa’s balance of payments, it’s bad news for the region’s polar bear population, and a complicating factor is that the railway line will run across melting permafrost, resulting in twisted rails and an increased likelihood of spillage into a fragile ecosystem.

Related article: Who is to Blame if the US doesn’t Achieve Energy Independence?

No matter – OmniTRAX Canada said that it sees crude oil cargoes as the future of Arctic shipping, with OmniRAX Canada president Merv Tweed noting blithely, "Think of it as a shopping mall. Grain is one of our anchor tenants and we hope that oil will be another. "

OmniTRAX Canada’s project has significant legislative backing.  On 21 November legislation to create Churchill Arctic Port Canada Inc., a non-government agency, to develop economic opportunities, spur job creation and ensure Churchill’s viability was introduced in the Manitoba legislature. Tweed stated that he was pleased with the legislative initiative, remarking, “We look forward to working with the province and to providing our input through the legislative process to ensure that the new corporation continues to build on the joint success we’ve had over the last 16 years. This includes key infrastructure investments of over $110 million from OmniTRAX and $20 million each from the governments of Manitoba and Canada.”

OmniTRAX and Manitoba legislative optimism aside, what is increasingly apparent is that temperatures in the high north polar regions are increasing. According to a new study published in the journal “Nature Climate Change,” increasingly extreme weather means that "much of North America and Eurasia… billions of people will be affected.”  

This concern extends to Asia, where Chinese Academy of Sciences lead author Qiuhong Tang commented, "The study contributes to a growing body of evidence that... the melting Arctic has wide-ranging implications for people living in the middle latitudes." According to a recent U.N. report, last year Arctic sea ice shrank to a record low and a U.N. panel of scientists warned that if the trend continues, then the North Pole could lose its ice and snow cover by 2050, leading to severe climate change around the globe.

But where some see peril, others see opportunity, and how the issue will eventually be resolved is currently unclear.

For the moment, climatic conditions are impacting OmniTRAX Canada’s Arctic ambitions to transship oil through Hudson’s Bay have hit a snag, as an inspection, which uncovered weak piping at the Port of Churchill’s tank farm, has stimulated public opposition from local communities and indigenous First Nations who live near the railway, compelling OmniTRAX Canada to forestall plans to export 330,000 barrels of light crude oil this shipping season. Tweed noted simply, “We weren’t ready. We needed to do more outreach to communities and that is ongoing now.” It might be noted that Tweed, until September was the Conservative member of Parliament for Brandon-Souris in southern Manitoba.

Related article: Canada’s Indigenous First Nations Threaten $600 Billion in Energy Deals

Quite aside from climatic conditions, OmniTRAX Canada also has to brace for incipient reforms to Canadian federal rail safety regulations in the wake of the Lac-Megantic disaster, when on 6 July a Montreal, Maine & Atlantic train carrying 72 tank cars filled with oil exploded after its brakes apparently failed, sending it rolling into Lac-Megantic, where it derailed and subsequently exploded, igniting a conflagration that leveled the center of town and killed 47 people, as well as changes to federal marine spill rules sparked by anxieties of an potential oil spill off British Columbia’s Pacific coastline’s proposed hydrocarbon export facilities.

But given such an energy friendly administration in Ottawa under Conservative Prime Minister Stephen Harper, most analysts in Canada are predicting that OmniTRAX Canada’s ambitious plans for Churchill port will eventually be approved.

By. John C.K. Daly of Oilprice.com

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