The battle over the Keystone Pipeline was mired in politics, but the reality is that three times' more oil than the pipeline would have transported is now traveling through existing pipelines. But another even more audacious export scheme has been proposed by Native Americans in Alaska and First Nations in Canada -- to build an oil railway that could carry between 1.5 million barrels a day and 5 million barrels a day to Valdez Alaska for export to Asian markets.
Unlike pipelines, railway transport requires no permits or lengthy hearings in Washington that environmentalists can lobby.
But this scheme is unique because its developer, G Seven Generations in Vancouver, first obtained a "social permit" from bands along the entire 2,400-mile route. As a result, the Alaska, Yukon and eventually Alberta governments will give the project the nod.
Canada's oil sands is threatened with being stranded -- despite being the second biggest storehouse of petroleum in the world -- because of politics. But rail transport, only 30% more expensive per barrel than pipelines -- is filling the gap.
Alaska's gigantic oil fields in the North Slope have been dramatically declining after several decades of huge production. The result is that the Valdez shipping terminal is threatened with eventual closure unless new volumes are brought to its port facilities for loading onto ocean-going vessels around the world.
Interesting, the port has a competitive advantage over other ports on the west coast because, due to the curvature of the earth, the distance to Japan is two days shorter than from Seattle or Vancouver.
The railway would be a 50-50 partnership with aboriginal groups. It would require loan guarantees, from the federal, Alberta and Alaska governments, and private sector equity partners.
Early estimates were that the railway with a single track would cost US$8.4-billion and carry 1.5 million barrels per day. A twin-tracked railway would cost US$10.4-billion and transport up to five million barrels daily. In addition, the line would provide an alternative transportation route for commodities and equipment going to and from landlocked western provinces plus spark development along the route.
(Unlike Keystone, rail transport of oil does not require any permit.)
This is an "exciting project", said communications from the Assembly of First Nations in Canada that represents the country's 624 bands who have, ironically, often fought pipelines across their territories.
The difference here is that in the Canadian portion of the route, the First Nations are getting 50% ownership in return for their permission to allow the railway to be built through their lands.
Alaska's legislature enthusiastically supported the scheme and financed a feasibility study two years ago that showed its viability.