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Shipments of crude oil on tap

Fall start in plans for Port of Churchill

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OMNITRAX Canada could begin shipping crude oil through the northern Manitoba Port of Churchill as early as this fall, a senior company official said Monday.

Darcy Brede, president and chief operating officer for Omnitrax's Denver-based parent company, Omnitrax Inc., said negotiations are underway with about 25 Alberta oil companies that are interested in shipping oil through the port to refineries on either the east coast of Canada or in Europe.

But before prospective customers are willing to commit to anything long term, they want to conduct a trial run, Brede said. So if all goes well, a tanker carrying about 330,000 barrels of oil will leave the port on a test run in October.

Before that can happen, the port has to complete about $2 million in upgrades to its oil-handling system, Brede said. The upgrades, which should be completed by the end of next month, will boost the port's oil-pumping capacity to about 3,000 gallons per minute from the current 800 to 900 gallons per minute.

He said Omnitrax officials hope to know in "a month or two" if they have a deal that would allow the test run to proceed.

Brede said shipping oil through the port on a regular basis would help ensure the long-term viability of the port, which is used primarily to ship grain to export markets.

"I think it's a game-changer" he said, "although I think grain is still going to be our anchor."

Brede made the comments during a Winnipeg news conference to announce the appointment of outgoing Conservative MP Merv Tweed as the new president of Omnitrax's Winnipeg-based Canadian subsidiary -- Omnitrax Canada. Hours earlier, Tweed, the MP for Brandon-Souris, said he would resign his seat at the end of the month.

Brede told reporters this is shaping up to be an above-average year for grain shipments through Churchill, with about 600,000 tonnes already committed. In an average year, the port handles about 500,000 tonnes during its shortened shipping season, which ends in late October or early November.

Brede and Tweed both said Omnitrax continues to aggressively pursue opportunities for growing the volume of goods shipped through the port. The crude oil would be brought to the port on the Hudson Bay Railway, which Omnitrax also owns and operates.

Some groups may have concerns about oil being shipped through the port because of the devastation an oil spill could have on the pristine northern environment and on Churchill's vital tourism industry. But Churchill Mayor Mike Spence and Merv Gunter, owner of polar-bear-tour operator Frontiers North Adventures Inc., said the port has been handling oil and fuel shipments destined for Nunavut for decades without incident.

"So, it's nothing new," Gunter added.

"Because of (the deadly derailment) in Quebec, there will be concerns," Spence said. "But there are ways to transport petroleum products safely."

Gunter said he's prepared to give Omnitrax officials "the leeway to explore this option" provided they keep community stakeholders, including tourism businesses and First Nations communities, abreast of what they're doing to ensure adequate safety measures are in place.

Brede said Omnitrax officials are also in negotiations with a Russian company about moving more farm fertilizer through Churchill into Western Canada. The fertilizer would arrive by ship in October, be stored over the winter at the port, and then shipped out by rail in the spring to Prairie customers.

He said the port has handled some inbound fertilizer shipments in the past, but it would have to upgrade its handling and storage systems if it were to expand that business.

But like oil, fertilizer shipments have the potential to generate significant new revenue for the port and help ensure its long-term viability and growth, he added.

murray.mcneill@freepress.mb.ca

Are you concerned that Omnitrax plans to ship crude oil by rail to the port of Churchill and destinations beyond, in the wake of the devastation caused by the Lac-Mégantic derailment? Join the conversation in the comments below.

Republished from the Winnipeg Free Press print edition August 13, 2013 A3

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Updated on Tuesday, August 13, 2013 at 7:06 AM CDT: Replaces photo, adds question for discussion

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