Embattled oil producers quietly eye rail option – by Nathan Vanderklippe (Globe and Mail – December 14, 2012)

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

CALGARY — On a clear day, the waters that roll into Prince Rupert’s industrial port offer a clear view to open seas that stretch to the other side of the world. Only steps from those waters lie train tracks that connect this distant northern port with the heart of North America, including the oil sands.

Those tracks offer exporters a more direct connection to Asia than any other place in North America outside Alaska. It’s an advantage of proximity that has already brought coal, grain and containers to these shores. Now, some believe Canada’s energy industry should do the same, arguing that rail may have a clearer route to Pacific oil exports than Northern Gateway, the $6-billion Enbridge Inc. project that has been embroiled in controversy.

After all, trains elsewhere in North America are now moving hundreds of thousands of barrels a day, including to refineries on the West Coast. There is little reason crude from those same trains could not be loaded onto ships. Canadian rail lines have examined the idea; in the U.S., at least two Pacific terminals are developing plans to export oil brought west by rail.

“Pipelines can’t touch the capacity of the railway,” said Alf Nunweiler, a former B.C. northern affairs minister who spent 42 years working for CN. The CN rail line into Prince Rupert is 75 per cent empty, according to the local port authority. And it’s already built, unlike a pipeline that would have to travel through northern British Columbia’s challenging terrain.

Mr. Nunweiler used an argument from history, pointing to the role railroads played in developing the Canadian west, to make the case for moving oil by trains. “The railway is what was required then, and it is required now,” he said.

From the earliest days of its “pipeline on rails,” CN has discussed the possibility of Pacific exports; as recently as last year, a CN spokesman told the Vancouver Sun that the West Coast exports are “currently identified as an opportunity.” In northern British Columbia, however, anger over Northern Gateway has made oil such a poisonous subject that few will now discuss it. In an e-mailed statement, spokesman Mark Hallman said “CN policy is not to engage in speculative discussions.”

He added: “CN is not moving crude oil to Canada’s west coast ports; there are no terminals in place at those ports to unload crude oil from rail cars to ocean vessels for export.”

Environmental groups, however, have begun raising an alarm, accusing the Prince Rupert port of asking local residents what they might make of oil shipments.

For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/embattled-oil-producers-quietly-eye-rail-option/article6338051/?ord=1