March 14, 2016

Report proposes Alberta-to-Alaska rail link to move bitumen into world markets

Innovative Van Horne Institute study emphasizes safety, First Nations involvement

A rail link between Fort McMurray and Alaska would provide a new option to move more of Alberta’s oilsands bitumen offshore and potentially unlock billions of dollars worth of mineral wealth in the north, says a new report.

The proposed 2,440-km railway would carry 1 million to 1.5 million barrels a day from Fort McMurray to a pipeline in Alaska that would transport the bitumen on a final short leg to a marine terminal in Valdez.

“We keep talking about more access and all the routes we are looking at are by pipeline,” says Peter Wallis, CEO of the University of Calgary-supported Van Horne Institute, which published the Alberta to Alaska Railway Pre-Feasibility Study.

“This is completely different,” says Wallis. He cites the project’s emphasis on safety, First Nations involvement and potential to access valuable minerals that would otherwise never be mined.

Proposed railway would be one of the largest infrastructure projects in Canadian history

The study, funded by Alberta Energy, took more than two years to complete. Project partners included Shirocca Consulting, engineering giant AECOM, and G7G, an entrepreneurial group that focuses on initiatives with long-term benefits to First Nations. The University of Alaska and the Michigan Technical Research Institute assessed the mineral volumes and transport revenue potential along the route.

With an estimated “realistic” timeline of nine years for approval and construction, this rail link would be one of the largest infrastructure projects in Canadian history.

According to the study, the estimated price tag of $28 to $34 billion involves “substantial risk,” but that could be mitigated by the potential of up to $659 billion worth of minerals along the route that could be harvested and transported over a 30-year period.

Although the railway would face regulatory, environmental and political hurdles similar to those currently stalling pipeline projects, it has several factors working in its favour, says Wallis.

Safety and First Nations involvement essential to success of project 

Safety is of utmost importance. He says, “It is purpose-built to operate as a very safe railway.” 

The heavy gauge track would have a maximum one-per-cent grade along its route. Specially built, double-hulled tanker cars would carry the bitumen along the line without the addition of diluent, greatly reducing the impact of a potential derailment and almost eliminating the risk of explosion.

First Nations involvement is also essential to the success of the project. During the study, team partner G7G made contact with the leaders of the 25 affected indigenous communities along the corridor. Their aim was to inform First Nations groups about the project, get feedback and talk to them about the economic opportunities. These include jobs, but also longer term gains possible from potential mining opportunities.

Project offers opportunity to move bitumen offshore into world markets

“This project is an opportunity to move our bitumen product offshore into world markets,” says Wallis. “It’s kind of audacious, it is large and it is designed to be safe and to exploit otherwise locked-in ore bodies, plus create opportunities for First Nations for jobs and equity involvement. These are factors that command a serious look.”

The next step will be for interested parties to conduct a more intensive feasibility study, he says.

“You always have to quantify the risks. The financial risks are real; it’s an expensive project, but if you are looking over the 30 or 40 years this will operate and you realize the value of the minerals, bitumen and oil which are going to be carried … it’s probably a pretty good bet for the future.”