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OmniTrax suspends plan to ship crude oil through Port of Churchill

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About 700,000 tonnes of grain are expected to be shipped through the Port of Churchill this year, offering Omnitrax an alternative to hauling oil along its rail line.

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About 700,000 tonnes of grain are expected to be shipped through the Port of Churchill this year, offering Omnitrax an alternative to hauling oil along its rail line.

A controversial plan to ship crude oil through the Port of Churchill has been suspended indefinitely while OmniTrax Canada focuses on moving grain and other commodities through the northern freshwater port.

OmniTrax president Merv Tweed said in an interview Thursday that OmniTrax expects to ship about 700,000 tonnes of grain through the port during the current shipping season, which got underway earlier this month and will hopefully last until early November.

He said there’s also been "a real jump this year" in shipments of supplies destined for Nunavut — things like housing and construction materials, dry goods, and motor vehicles.

"Having reviewed all of our opportunities and the things we’d like to do, we decided it wasn’t necessary or in our best interests to pursue this (oil shipments) any further," he added.

Tweed wouldn’t rule out the oil plan being revived if there was suddenly no longer enough other types of goods moving through the port to ensure its long-term viability. "I think you always have to have these options available to you," he said. "But that (focussing on other products) is definitely the route I would like to go."

OmniTrax revealed late last summer it was planning to start transporting light crude oil from The Pas to Churchill on its Hudson Bay Railway, and then move it out by ship to markets in eastern North America and western Europe. It said it needed to do that because it wasn’t transporting enough grain and other products to sustain its business.

The plan met with stiff opposition from environmental groups, northern First Nation communities and the provincial government, who feared a train derailment and oil spill would cause irreparable damage to the fragile northern environment.

And those fears were only heightened this past June when a train carrying grain derailed and overturned, halting all freight shipments for two weeks and passenger traffic for even longer while OmniTrax crews scrambled to repair tracks that had been damaged by the long, harsh winter and quick spring thaw.

But by then the need to ship oil had already become moot, thanks to a bumper crop last fall that created a huge backlog of grain waiting to be moved through the more traditional grain-handling ports of Vancouver and Thunder Bay.

Tweed said more grain exporters began looking at the Port of Churchill as a viable alternative, especially after OmniTrax successfully moved 640,000 tonnes of grain through the port during last fall’s shipping season.

He said if OmniTrax can continue to successfully move larger and larger quantities of grain and other products though the ports, hopefully other exporters will also opt to try it out.

"I’m convinced that within the next couple of years we’ll hit the million-tonne mark," he added.

Tweed said five to seven shippers will be using the port this year, compared to four in 2013. Most will be shipping wheat.

But OmniTrax also has been receiving inquiries about moving canola, flaxseed, lentils and soybeans through the port. And it is exploring opportunities for also handling things like animal feed, wood pellets and potash, although those would be possibilities for next year and beyond.

In addition to pursuing new shipping opportunities, Tweed said OmniTrax is also developing a long-term sustainability strategy for the Bay line and port, and will be making some policy recommendations to the federal and provincial governments.

It will also be identifying critical infrastructure investments required to continue the development of the Northern Gateway trade corridor, he added.

As reported earlier this month, this could be a record-breaking year for the Port of Churchill, thanks in part to the earliest start to the shipping season in more than 20 years.

The first grain ship left the port during the first week in August, and Tweed said there are two more ships now being loaded, two more waiting in the bay, and three more "on the very near horizon."

"We’re going to have a near-record August," he added.

murray.mcneill@freepress.mb.ca

History

Updated on Friday, August 15, 2014 at 9:36 AM CDT: adds photo

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