Oil sands fuel a St. Lawrence Seaway renaissance

A marketing campaign aimed at bitumen belt companies begins to pay off

November 01, 2010

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Tanker ships slip silently by Bruce Hodgson’s office window in southwestern Ontario. From his desk, the director of market development for the St. Lawrence Seaway Corporation looks over the Welland Canal, through which ships laden with grain, iron ore and coal transit on their way to distant ports.

The waterway cuts across the Niagara Peninsula between Lake Ontario and Lake Erie and forms the backbone of the half-century old shipping network. Constructed over a period of 20 years and first opened in 1932, the canal’s locks raise ships some 300 feet across roughly 40 kilometers of farmland.

On some days, Hodgson might see the unmistakable white prongs of wind turbines destined for Western Canada sticking out above cargo holds. Increasingly, he sees hulking mechanical components bound for northern Alberta’s bitumen belt. “There’s been a big jump in that business,” he says in an Alberta Oil interview.

Before the widespread construction of pipelines beginning in the 1950s, the seaway was a mainstay for shipping crude oil between the Great Lakes. Today, shipments are more likely to contain pipeline components than black gold. The system handled upwards of 160,000 tonnes of oil sands-related industrial materials before the financial and energy-price contraction of 2008-09 temporarily put the brakes on megaprojects north of Fort McMurray. As growth in the oil sands resumes, seaway shipments bound for the bitumen belt had by mid-summer of 2010 surpassed levels associated with the bygone boom.

The bulk cargo includes reactors and giant 580-tonne vessels or containers used by oil sands firms to extract sticky bitumen from raw ore. “We see a lot of that business returning now that the price of oil is starting to come back and the oil sands are starting to rebound,” Hodgson says.

The spike in traffic comes amid a public relations and marketing campaign that bills the canal system as a viable and environmentally friendlier alternative to transport by road and rail. The pitch is partly aimed at oil sands companies. “The advantage we have is we’ve got accessible rail,” says Hodgson. From Thunder Bay on the west side of Lake Superior, “You’re dealing with one rail line all the way into the oil sands, as opposed to multiple switches, which as you know presents some challenges.”

An alternative route – overland on western highways from the Pacific coast – highlights the daunting logistics of shipping by truck that can test even the largest companies. Imperial Oil Ltd. last month began using the road route to transport the first of 207 “modules” used for processing bitumen to the site of its $8-billion Kearl mega-mine, located 70 kilometers north of Fort McMurray.

Units weighing anywhere from 81,193 to 149,685 kilograms (179,000 to 330,000 pounds) start their journey in South Korea, where they are manufactured. Ocean-going ships carry the mammoth cargo across the Pacific to the Port of Vancouver, Washington. The units are moved inland as far as they can go by barge up the Columbia and Snake Rivers to Lewiston, Idaho. Specialized trucks then transport the pre-assembled modules along interstate highways through Montana north to the Canada-U.S. border.

3,700 km of canals and lakes stand between the Gulf of St. Lawrence and Thunder Bay

The units – the largest of which are 24 feet (7.2 meters) wide, 30 feet (nine meters) high and 210 feet (63 meters) in length – will be moved at night over the course of a year at a rate of two to three per week. To facilitate safe passage, Imperial is spending $22 million to bury utility lines at 572 locations, $12 million to build 53 new highway off-ramps, plus another $1.5 million to trim trees and modify traffic lights and signs along the route. Obtaining permits for the job will cost $1.6 million alone. Imperial spokesman Pius Rolheiser describes the road hauling as far from easy. “Certainly the size of the modules presents some transportation challenges,” he says.

The scope of the work has been a point of contention for environmentalists, who worry about the cumulative effects of creating an unfettered corridor for heavy industry through the Big Sky state. The added hassle and costs of overland shipping to oil sands project locations from competing ports in Houston and New Orleans has not gone unnoticed.

Tim Heney is the president and chief executive officer of the Thunder Bay Port Authority. He views Western Canada’s energy sector, particularly the oil sands, as a lifeline for the former pulp-and-paper town. “We have a lot of tradesmen in Thunder Bay who are working in Alberta right now,” he points out. “We’d like to repatriate some of them and provide some new economic activity back in the town.”

Partnerships with shipping companies and direct access to a Fort McMurray-bound CN Rail line could be the ticket. Moving Asian-made, oversized oil sands plant components from the Pacific to Thunder Bay on ships involves a six-week voyage of 12,000 nautical miles (21,600 kilometers) through the Panama Canal then up the eastern seaboard to the Gulf of St. Lawrence. The distance includes 3,700 kilometers of canals and lakes from the mouth of the seaway system to the northwestern tip of Lake Superior. What the trip lacks in speed – by comparison, Imperial estimates a two-week travel time from Lewiston to the Kearl site – it makes up for in simplicity, Heney suggests. “When you go through U.S. routes you’re always interchanging with various roads,” he says. “You’ve got all these clearance issues and equipment and all kinds of things. This is much simpler.”

A 150-acre (60-hectare) staging area awaits cargo off-loaded in Thunder Bay. Because of their immense weight, oil sands vessels and reactors are unloaded with specially designed cranes mounted on the cargo ships. The cranes are run by remote-control from the dock, while a computerized ballast system keeps the ship from turning over as the big gear is hoisted onto waiting railcars. “It’s done so easily that the forces that are at play are almost invisible,” Heney marvels. “It’s a very critical point when you bring that thing over the side of the ship. There’s so much at stake. If anything goes wrong with that system, your ship can turn over.”

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