Alberta crude may soon be shipped through Churchill

Improve revenue | Securing oil exports could mean an extended season, which could benefit the grain sector

DAUPHIN, Man. — With proposed pipelines to the south and west in jeopardy, Alberta crude could soon be moving through the Port of Churchill, says a spokesperson for the port.


Brad Chase, president of OmniTRAX Canada, which operates the port and a rail line from The Pas, Man., to Churchill, said his firm has been working with oil companies for nearly a year, and a shipping agreement may be imminent.


“We have a number of companies that are very interested,” Chase said at the annual meeting of the Hudson Bay Route Association, held in Dauphin April 3. 


“The companies … are producers, mid marketers ,who trade the product, and refiners…. We’ve been in conversation with all (of them) and have some that, right now, are very close to transaction to move through Churchill.” 


Sinclair Harrison, Hudson Bay Route Association president and a board member of the Churchill Gateway Development Corp., is also confident oil will be exported through the port.


“I think there’s a better than 50 percent chance that oil will start moving,” he said.


“If not this year, then next year.”


Adding oil to the commodities shipped out of Churchill should support the goals of the association, which advocates for increased use of the port and extension of the shipping season in Hudson Bay.


The shipping season now lasts about three months from the end of July to the end of October. 


Harrison said the power of the oil industry might convince Transport Canada and shipping industry insurers to extend the season another month.


“It’s difficult to get new crop grain harvested, into the system, up to Churchill and out by the end of October. If we could extend it that extra month, that would make a huge difference,” he said.


Oil shipments could also help secure the port’s long-term financial prospects.


Chase said Churchill represents a convenient route to water and a path to the international oil market, considering the $12 to $20 per barrel price gap between West Texas Intermediate (WTI) and Brent crude over the last year and a discount on Alberta crude below the WTI price. 


European refineries should want to buy Alberta oil shipped out of Churchill to take advantage of a discount relative to Brent crude, he added.


“If you’re in Rotterdam and you have a refinery, you’re paying Brent (prices).”


OmniTRAX also considered shipping North Dakota oil from the Bakken deposit by train to Churchill, but it realized that Alberta oil made more sense because the company has a working relationship with Canadian National Railway, which has seven day a week service out of Fort Sask-atchewan, Alta. 


OmniTRAX operates its railway on former CN track between The Pas and Churchill.


“Anything (CN oil) that is coming out (of Alberta) is going right by our door to go back down to the Gulf or is going to the East Coast to find a refinery,” he said. 


“So to get to Churchill, we actually (offer) a very nice logistics (fit) to get that oil to tidal water.”


Shipping oil through the polar bear capital of the world could certainly provoke an environmental backlash, Chase conceded. 


However, he said diesel has been shipped through the port to Inuit communities north of Churchill since 1950.


“It (oil) is going all over North America by rail. We’re just another place that it can potentially go to.”


Chase said OmniTRAX is talking to Alberta companies about shipping light sweet crude and not oilsands bitumen.