http://www.alaskadispatch.com/article/20130430/alaska-watches-canada-considers-shipping-tar-sands-oil-across-arctic-ocean
Alaska watches as Canada considers shipping tar sands oil across Arctic
Ocean
Jill Burke
April 30, 2013
Is Alaska nearing the day when large oil tankers will sail by its Arctic
shoreline, carrying Canadian tar sands oil to foreign markets? The
provincial government of Alberta is toying with the idea, sinking money
into a study to find out if an Arctic shipping plan makes more sense
than moving its oil through the proposed Keystone XL pipeline to the
Lower 48, or pipelines west or east through Canada.
Contemplating such Arctic voyages harkens back to the oil boom of
Alaska's North Slope.
Shortly after wildcatters struck it big at Prudhoe Bay, Humble Oil, the
predecessor to Exxon Corp., tested an Arctic shipping route in 1969.
Dubbed the Manhattan project, as the vessel was named the Manhattan, the
mission was in part to see whether transporting crude in tanker vessels
from Alaska's Arctic oil fields was feasible, rather than building the
800-mile trans-Alaska pipeline to ship the oil to the ice-free port of
Valdez.
The test run proved it wasn't possible to do so year-round, but 44 years
later climate change is transforming the Far North, with new shipping
lanes opening up and Arctic dreamers betting on a boom.
The Canadian pipeline would run from Alberta's tar sands, north through
the Mackenzie River Valley, to the Arctic coastal town of Tuktoyaktuk,
where the oil would be shipped on tanker vessels to Asia or Europe,
according to the CBC News. The proposal, still very much in its infancy,
is being considered while regulatory approval for the Keystone XL
pipeline to the U.S. Gulf Coast remains in limbo and other proposed
pipelines heading to British Columbia or toward Quebec face their own
obstacles.
The sea-faring alternative would be a nightmarish specter for
environmentalists who have long argued the Arctic is too fragile, too
valuable, to risk a major industry mishap.
Royal Dutch Shell executives know better than anybody the immense -- and
costly -- challenges to controversial oil operations in the Arctic. From
lawsuits to regulatory red tape to the grounding of its Kulluk drillship
earlier this year, the Netherlands-based oil giant has encountered a
plethora of obstacles in its more than $5 billion quest to tap offshore
oil in the Beaufort and Chukchi seas above Alaska.
But Alberta is already facing its own hurdles as regulations and critics
have stalled the Keystone XL pipeline project. Building a pipeline
through the sparsely populated lands north of Alberta and shipping from
the Arctic could be a solution to bringing the controversial tar sands
oil to foreign markets.
“It's not a surprise. Arctic energy shipments are very obvious
possibilities because of the ice receding and technology improvements,"
said Alaska Lt. Gov. Mead Treadwell, a former chairman of the U.S.
Arctic Research Commission.
Ironically, as Alberta contemplates shipping oil through the Arctic,
Alaska is subsidizing an effort to build another 800-mile pipeline to
move natural gas to the south. Just as the oil is moved from the North
Slope via the trans-Alaska pipeline, Alaska wants to see a pipeline
carrying natural gas to Valdez or another Southcentral port, where it
would be liquefied and shipped on tanker vessels. The project, funded
with up to $500 million in state subsidies, is estimated to cost $45
billion to $65 billion.
So why isn't Alaska looking to ship its natural gas on vessels across
the Arctic Ocean, rather than building a giant, expensive pipeline?
Such an approach is challenging because near Alaska the Beaufort and
Chukchi seas are fairly shallow, Treadwell said. Also, the companies
backing the natural gas pipeline project -- Exxon Mobil, ConocoPhillips,
BP and TransCanada Corp. -- haven't shown interest publicly in
transporting LNG via the Arctic Ocean, he added.
"We don't have the water depth anywhere near Prudhoe Bay or Port
Thompson like the Canadians or Russians do,” Treadwell said, adding that
if one of Alaska's oil producers were to propose Arctic shipping, he's
sure "the state would be cooperative.”
Oil and gas companies operating in Russia's Arctic are looking at
shipping LNG on ice-breaking equipped tankers. And Korea Gas Co. has
shown interest in recent years of shipping LNG on the Arctic Ocean from
Canada's Mackenzie River Valley, a natural-gas rich area.
"Geo-strategically, I think every one of the five Arctic coastal states,
plus Iceland, all have oil and gas potential," Treadwell said.
If some of these proposals come to fruition, Alaska could find itself
helplessly watching large tankers loaded with oil and gas pass by its
shores. With little spill-response infrastructure in Alaska's Arctic --
no deepwater port exists, for instance -- the state is sitting
vulnerable, Treadwell said.
"If somebody is seriously talking about building an oil pipeline that
would put oil on the water to go through Alaska waters," he said, "I
believe we would have the time through diplomatic negotiation to be able
to meet the challenge."
A vision from the past
In many ways, what Alberta is studying is a repeat of an experiment from
nearly a half-century ago. Back when Prudhoe Bay was on the cusp of a
boom, Humble Oil commissioned the first-ever commercial transit of the
Northwest Passage.
The mission was designed to test whether Arctic Ocean travel made more
sense than one of two proposed pipelines. The pipelines under
consideration included what is now known as the trans-Alaska pipeline
and a second option traveling across Canada to America's East Coast.
In August 1969, the 1,005-foot-long S.S. Manhattan launched from the
Delaware River, headed north and cut its way west via the Northwest
Passage. It made its way to Prudhoe Bay, where it picked up a ceremonial
barrel of crude and returned home. The trip, which included Canadian and
U.S. Coast Guard escorts, was a success, but winter travel later proved
impossible. Environmental concerns further compromised the concept of
shipping oil across the Arctic Ocean.
Alaska has already begun to study the need for deepwater ports in the
Arctic to accommodate needs of both the U.S. Coast Guard and the
shipping industry. Ports in the Arctic would allow the Coast Guard to
have a more sustained and nimble presence. Last week, Coast Guard
Commandant Adm. Robert Papp testified before a U.S. Senate committee
that increased traffic in the Bering Sea was contributing to a growing
potential for disaster in the Arctic. He told the committee that
maritime governance is needed in the Arctic, according to a report on
his remarks published in the E&E Reporter.
State and national leaders have talked for years about building ports in
Alaska's Arctic, analyzing which sites above and below the Bering Strait
would make sense, from the islands of St. Paul to St. Lawrence Island
near the Bering Strait to Nome or nearby Port Clarence to Kotzebue,
which sits above the strait. But like much of the discussion on how to
get Alaska's natural gas to market, talk about ports is so far only that
-- thinking, planning and studying at the moment.
Treadwell said that's not necessarily a bad thing: “We have a much
better idea of what we want than we did even a year ago."
Meantime, marine safety, whether it's from traffic coming through the
Bering Strait or further south in the Aleutian Islands, should be the
number one priority for Alaska, Treadwell said. In May, the eight Arctic
nations will sign a mutual aid oil spill agreement, building on similar
cooperation already in place for search and rescue needs. Ice breaker
design, port design and vessel traffic tracking programs are also all
moving forward, Treadwell said.
“It's obviously in our interest to know what's coming,” he said.
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