(Photo Supplied: The proposed route of the Alberta to Alaska railway. VAN HORNE INSTITUTE / WEB)
While controversy continues to swirl over proposed pipelines a Calgary-based think tank is proposing that a rail line between Fort McMurray and Alaska could help get bitumen to tidewater and increase market access.
The Van Horne Institute released a feasibility study outlining the potential for a railway line to carry up to 1.5 million barrels of bitumen per day.
The line would run from Fort McMurray to the terminus of the Alaska Railroad at Delta Junction where the bitumen would then be transferred to tidewater at the Port of Valdez, Alaska.
“Capacity of existing pipelines serving Alberta is constrained and proposed new pipelines face long delays due to significant opposition that has impacted their regulatory approval and implementation,” noted the feasibility study. “The lack of transportation capacity and limited access to coastal refineries and overseas markets also results in a considerable price discount on Western Canada crude oil relative to world oil prices.”
According to the study the line would comprise of 2,440 kilometres of single track including a railway operations centre, loading/unloading, maintenance and refuelling facilities at both the Fort McMurray and western terminus.
The project is pegged to cost anywhere from $28 billion to $34 billion while operating costs could reach as high as $3.5 billion per year.
A cost per barrel analysis found that to fully recover the costs of the project a charge as high as $18.01 per barrel would be needed if the pipeline is transporting at its full capacity of 1.5 million barrels daily.
“The Alberta to Alaska Railway and tidewater access project will clearly be challenging to build,” notes the study. “However, projects similar to this, although not exactly the same in magnitude and scope, have been completed in other areas.”
If built it would be one of the largest infrastructure projects in Canadian history and could also carry other commodities such as minerals, construction supplies and other materials.
You can view the report here.
