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Consultant rates Alaska-Canada rail link as economically “frail”
Gary Park
The “business case” for building a parallel rail link and gas pipeline from Alaska through Canada to the Lower 48 has been rated “frail” in a report to the Canadian government.
Consulting firm IBI Group, in a 26-page report to Transport Canada, said it is cheaper to use existing transportation alternatives, making it doubtful a rail link cost up to C$3.6 billion could ever be viable.
But Yukon Economic Development Minister Scott Kent said the study is purely the opinion of the IBI Group, not the federal government, which he noted has so far failed to comment on the report, which is dated Aug. 20, 2001.
Jeannette James, R-North Pole, Majority Leader in the Alaska House, speaking at a Yukon Geoscience Forum in Whitehorse Nov. 20, appealed for more visionary thinking on the railway proposal.
She said a rail link would promote development of sought-after northern resources and could offset a southward drift of labor from Alaska and the Yukon.
James said a railway would facilitate pipeline construction, save the highway network from the punishment it would experience if heavy pipe was moved entirely by road and improve the attractiveness of developing and transporting renewable and non-renewable resources.
The notion of a rail link has been revived along with talk of a natural gas pipeline following the Alaska Highway route and got a fresh lift a year ago when the U.S. government set side $2 million a year for three years for the U.S. to participate in a joint Canada-U.S. feasibility study, although Canada has not yet been invited to participate in the study.
Transportation alternatives exist The IBI study said that in almost all cases of shipping petroleum products, coal, minerals and forest products from Alaska to the Lower 48 “transportation alternatives exist today at market rates lower than the level required to sustain a newly built rail line.
“In our opinion, it is unlikely that the Alaska-Canada rail link would ever achieve financial self-sufficiency, even with the very aggressive revenue assumptions that are being advanced in its favor.”
It said current pipelines rule out shipping large amounts of petroleum products by rail, arguing that using railways to ship natural gas over such long distances “has not been proven to be economic,” while Alaska coal is easier to deliver by ship.
That leaves only minerals and forest products as likely commodities for shipment by rail and even in those cases transportation costs and the convenience of truck traffic make the use of rail unlikely, the study said.
It said that even if mining volumes grew beyond the capacity of existing road systems, the White Pass and Yukon railway between Whitehorse and Skagway could be restored to service offering a “more efficient and effective alternative for southbound movement of minerals, ores and concentrates.”
Yukon well served now In conclusion, IBI said the Yukon is well served now and for the foreseeable future with its existing transportation network and planned additions.
Kent took issue with IBI’s case that a railway would not give a boost to the mining industry.
He said a number of major mining companies have told him they won’t invest in exploiting Yukon deposits because they are not within 120 miles of shipping routes or a heavy-duty rail link.
Kent estimated the Yukon alone has C$70 billion worth of copper, lead and zinc that is not being touched due to the absence of adequate transportation.
Larry Bagnell, who represents the Yukon in the federal parliament, described the IBI findings as a “preliminary” report that did not deal with the economics of linking a rail line with a gas pipeline or fiber-optic cables along a shared right of way.
He said he will present Transport Canada with other evidence in support of a railway to ensure the government can fairly weigh all sides of the debate.
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