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Railway picks up steam Canadian government ready to deal on Alaska-British Columbia rail link Gary Park Petroleum News Calgary Correspondent
Another piece is falling into place in the ambitious plans for an Alaska-British Columbia rail link — a project that holds special interest for the oil and gas industry.
Just a month after the Canadian government said it would cooperate with the United States to look at ways of moving the mega-project forward, Canadian National Railway, Canada’s largest railroad, has been cleared to take control of BC Rail by mid-July.
On July 2, Canada’s Competition Bureau approved a C$1 billion deal, first announced last November, for Canadian National to take over BC Rail’s freight operations.
Although not part of the deal involving BC Rail’s 1,500-mile network, the transaction puts a more positive spin on the Alaska-British Columbia talks.
A spokesman for BC Rail said in late May that the company had never found any evidence of sufficient freight volumes to support building a link to Alaska, but a spokesman for Canadian National said his company has weighed the project.
“If there is a strong business case we would be prepared to support it,” he told the Financial Post.
Tony Valeri, Canada’s federal transport minister before the June 28 election, said in a letter in May that he endorsed Canada proceeding with a design-development exercise for the Alaska-British Columbia project. Cost has stood in way of project Over many years, the case has been made for a rail tie from Alaska to the rest of North America to encourage resource development in Alaska, the Yukon and northern British Columbia.
Standing in the way has been the hefty cost, now roughly estimated at US$2 billion.
The outlook has taken a quantum leap forward in recent times, now that the U.S. Department of Defense has unveiled plans to locate much of the infrastructure for the Strategic Defense Initiative in Alaska and favors shipping the equipment and material by rail rather than by ship or truck.
This lends hope to those in Alaska and Canada’s northern regions who believe a northern railway would boost development of stranded oil and gas resources, by reducing the cost of moving equipment to and from isolated areas.
A rail right of way could also be combined with a route for shipping North Slope gas to Lower 48 markets, greatly shrinking the pipeline cost.
Railway proponents are also encouraged by the more positive response from Prime Minister Paul Martin, who has reportedly shown more interest in the scheme than his predecessor Jean Chrétien.
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