Churchill port sees new opportunities for shipping in a melting — and rapidly developing — Arctic
The thawing of the Arctic is a chilling environmental prospect, but Port of Churchill proponents say it heralds a new era for Canada’s long-neglected and underutilized northern deepwater port.
Since the port was built 70 years ago, the focus has been on grain shipments, but it’s now shifting to supplying the fast-growing communities in Nunavut as well as gigantic mine projects being planned for the far north.
However, the most exciting development is the potential for shipping oil, OmniTRAX Canada president Brad Chase said at the recent Hudson Bay Route Association annual general meeting.
“This is our most significant activity right now without question,” said Chase, whose Denver-based parent company owns the Hudson Bay Railway and the Port of Churchill.
The North Sea oilfields — which produces the benchmark Brent crude and supplies European refineries — are in steep decline even as the spread between Brent and West Texas Intermediate grows. In addition, light sweet crude from Alberta and the North Dakota Bakken formation faces a further discount off the WTI benchmark due to a lack of pipeline capacity to get it to foreign markets, said Chase.
“Right now it’s about $12, but it has been as high as over $20,” he said.
That’s prompted the port to upgrade its existing Cold War era, 216,000-barrel tank farm to include a short pipeline for loading crude onto tankers, he said. Along with Europe, refineries along Canadian and American eastern coast would be target markets.
So far the end of the Canadian Wheat Board’s single desk hasn’t been felt yet, said Chase, who noted that last year’s shipping season saw 432,000 tonnes of wheat move through the port.
Other opportunities for Churchill include shipping potash from new mines being proposed in Saskatchewan that unlike Canpotex, don’t already have coastal facilities, and a rail car fleet for moving the dry, bulk commodity to foreign markets.
Supplying liquified natural gas (LNG) as a substitute for northern communities that rely on diesel generators for their power needs is also being looked at.
“The hamlets in Nunavut are using over $250 million in diesel. LNG could replace that,” said Chase, adding northern mines are also in need of a cleaner energy source.
Chase has pitched the port’s potential to investors in Hong Kong, Shanghai and Beijing, and has hosted two delegations from China as well as Normandy and France, in the past year.
And while the melting of the Arctic ice cap has extended the Hudson Bay shipping season by an extra month, port officials still need to convince shipping insurers such as Lloyd’s of London to cover vessels using the port and Transport Canada to provide additional coast guard support as well as port upgrades.
The evidence is there, said University of Manitoba research scientist David Barber, who recently submitted a proposal to the federal government for a study that would collect data proving the shipping season is growing longer.
“We can produce a scientific case for what is actually happening in Hudson Bay,” said Barber.
During the past 30 years, the average temperature in the region has increased 1.5 C and it’s likely to rise a further 8° to 12° by the end of this century, he said.
While this would extend the shipping season even further, it would not be good news for the planet, said Barber, who also spoke about “polar amplification.” The Arctic permafrost contains vast quantities of methane — a greenhouse gas 100 times more potent than carbon dioxide — and its release could see the rate of global warming increase exponentially in as little as a decade, he said.
“This is an experiment that we should not be conducting because the consequences for our habitat — for us — would be enormous,” said Barber.
“We’re playing with the climate of our entire planet.”