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Shipping crude oil through Churchill
Aug 15, 2013
Churchill, Manitoba, is Canada’s only deepwater Arctic seaport. On the other hand, Russia possesses 16 such ports, making it the major northern player in the global warming sweepstakes associated with ships traversing a growing ice-free Arctic region. With Arctic ice leaving earlier in the spring and later in the fall, the prediction is that Churchill’s shipping season could be extended by 40 days from the present 110 days. The problem is that the port loads just 15 vessels each shipping season, making it a small player in the global warming sweepstakes when compared to Russia. And the port’s viability is dictated at the present by the Harper government’s subsidy to encourage grain companies to use the port. 
The subsidy became necessary when Bill C-18 deregulated the Canadian Wheat Board’s (CWB) role as the single marketer for Western Canadian wheat. Without the subsidy, which is only in effect until 2015, private grain companies, such as Winnipeg-based Richardson International Ltd., would have little incentive to use Churchill. In fact, until the federal government came up with the Churchill Port Utilisation Program (CPUP) of $25 million in subsidies over five years and prior to the deregulation, the CWB was the primary grain shipper out of Churchill.
Churchill’s future survival as a deepwater Arctic port in a region of decreasing sea ice is tied to its ability to diversify by taking on other products besides grain to overseas markets and food, fuel and building supplies to Nunavut and other northern locations. In this direction, OmniTRAX Canada Inc. of Denver, which owns the Hudson Bay Railway and Hudson Bay Port Company, announced it could start shipping “unrefined petroleum products” through Churchill by the fall, which entails bringing crude oil by rail from the oilfields of Western Canada and likely North Dakota to the port at the edge of Hudson Bay.
For more than 50 years, fuel has been shipped through Churchill, although not in quantities now being discussed. The Churchill Fuel Terminal (CFT) “has provided reliable and timely fuel service to industry, governments, aviation and military businesses that are located in and travel through the region,” according to the company’s website. To obtain a share of the crude oil market, $2 million is being spent to upgrade the oil-pumping capacity of the port in anticipation of a test run in October.  
Shipping oil has become controversy in recent months. The Keystone XL and Northern Gateway pipeline proposals have been slammed by environmentalists and First Nations members, and the tanker car derailment that killed 47 people at Lac-Megantic in Quebec has thrown oil shipment by rail into disrepute. But train speeds entering Churchill and over the Hudson Bay line are relatively low, making a similar rail disaster as Lac-Megantic less likely. 
Still, Conservative Manitoba MP Mark Tweed, who has announced his resignation from the House of Commons to take over as president of OmniTRAX Canada, will have his work cut out to convince environmentalists and Manitoba First Nations that oil can be shipped safely to the “Polar Bear Capital of Canada.”
Shipping crude oil, with the assurance of a safe overland transit, has the potential to add significantly to the viability of the Port of Churchill and benefit northern residents, which is the message that should be emphasized by Tweed.
The Hudson Bay Railway (HBR) has always been the object of repeated emphasis on its potential with only a portion of this potential ever being realized.
According to Selkirk-Interlake MP James Bezan: “Since the 1880s, the Hudson Bay Railway has been a persistent part of Prairie Canadians’ vision of their place in the nation, its initiation, construction and operation have engaged the energy and imagination of Canadians for over a century.”
From its very beginning, the HBR was envisaged by Western Canadians as a tool to break the protectionist policies of the Canadian government that benefitted eastern manufacturers at the expense of prairie farmers, as well as providing a cheaper alternative to Great Lakes ports for shipping prairie wheat to the world.
By 1884, railway contractor Hugh Sutherland of the Winnipeg and Hudson Bay Railway Company had only managed to build a short stretch of track to Shoal Lake, Manitoba, in the direction of Hudson Bay, and no more track was laid for years. On March 10, 1896, the northern railway appeared to be another step closer to reality when Ottawa passed the Hudson’s Bay Railway Bill, but enthusiasm was shortlived as politics constantly interfered in the continuation of the tracks toward Churchill. 
Canadian Northern Railway (later merged into Canadian National Railway) built a track west from the Manitoba border to Prince Albert, Saskatchewan, and built a track along the Saskatchewan River to The Pas in Manitoba by 1910. A line between The Pas and Gillam became operation by the outbreak of the First World War, although the war effort limited maintenance and operation to mile 214 (Pitwiktonie) of the route by the spring of 1916.
Sir Donald Mann and Sir William Mackenzie of the Canadian Northern Railway (later merged into Canadian National), who had been instrumental in early efforts to bring the railway to Hudson Bay, both expressed the opinion that “incalculable wealth” awaited discovery in the north once the line was completed, which turned out to be the case in terms of minerals and foresty products
While the rail link was completed in 1929, it wasn’t until 1931 that the port facilities were finished and the Hudson Bay Railway was officially declared open. 
The irony is that farmers at first enjoyed lower grain shipping rates with the completion of the HBR, but insurance companies decided the route was too dangerous and raised their premiums to an amount equal to the freight costs to Montreal or Vancouver. Obtaining insurance for northern shipping through Churchill past the present shipping season still remains problematic.
“A half-century of tireless effort had finally produced a railway to the Bay, but it was all in vain,” wrote historian Ed Whitcomb in A Short History of Manitoba. “It should have been a major victory for the West, instead it accomplished almost nothing. Another farmers’ dream had died.”
OmniTRAX purchased the CNR line to Churchill in 1997 for $11 million, as well as the port facilities for a token $10, and continues to seek a positive outcome to the original “farmers’ dream.”
The number of tanker cars shipping oil across Canada has more than tripled to 14,217 cars as of April 2013, according to a report by energy and ocean transportation industry advisor, Poten & Partners. And the number of tankers cars is projected to steadily increase as the fate of proposed pipelines become unclear. The so-called “Plan B” of using the Port of Churchill to ship crude oil becomes more plausible in this context, which is why OmniTRAX made its announcement that the company is planning a test run over its tracks to the northern community in October.