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Guards stand near one of the megaloads March 8 parked at the Lolo weigh station on Highway 93 between Missoula and Lolo. Photo By Kurt Wilson/Missoulian

What's a multinational oil and gas corporation to do?

As oil prices escalate and production costs decline, the tar sands of northern Alberta are ripe for the mining. There's an estimated 170 billion recoverable barrels up there, worth close to $16 trillion at today's prices. It'll take decades, and dozens of highly capitalized companies, to recover them.

"No self-respecting oil major has let a position in the tar sands pass by," noted a January article in The Economist, which called Alberta "the flag-bearer of a new oil age."

Development rolls on despite fierce protests over the environmental devastation wrought by the extraction and transportation of the bitumen to refineries.

But there's a fly in the gooey ointment even before that.

For economic reasons not entirely clear to laymen and detractors, at least some of the equipment needed to tap the tar sands is best produced in Asia. It must then be shipped thousands of miles, in the form of massive modules, some of them 30 feet high.

Western Montanans know our role in the saga. A couple of years ago, one Canadian company, ExxonMobil's Imperial Oil, chose a land route through the Rocky Mountains of Idaho and Montana. It's along two-lane highways free of the type of too-low overpasses that characterize the U.S. interstate system.

But those same highways tend to be eye-poppingly beautiful, magnets to tourists and recreation enthusiasts. One stretch of U.S. Highway 12 in Idaho is a federally designated scenic byway and runs through the Clearwater and Lochsa Wild and Scenic river corridors.

Noting all that and more, locals in both states have led movements that currently block the first Canada-bound megaloads on the route. Protests are playing out in the legal systems in both states, and will be for the foreseeable future.

Decisions from a contested case hearing in Boise in April and a preliminary injunction hearing in Missoula in May are expected in the next couple of weeks. But no one believes that will be the end of the legal wranglings.

Meanwhile, Idaho Rivers United has sued the U.S. Forest Service for failing to step in to protect the wild and scenic values of that state's rivers, and last week expanded the scope of its complaint to include the Federal Highway Administration.

That same Federal Highway Administration has directed its Helena office to investigate the Montana Department of Transportation's environmental assessment of the Kearl Module Transportation Project.

It has now become a federal issue.

Imperial/Exxon wanted to start trucking its loads from the Port of Lewiston, Idaho, last October. Nearly nine months later, it's changing its production sequence in Alberta and making costly alterations to reduce the height of modules already arrived in Lewiston.

The will is there. Is there a better way?


"I think the nature of the challenge they've had in getting the megaloads through on Highway 12 has been a game-changer," a consultant for one transportation company said.

Oil sands developers are examining their options.

"Of course, what's going on with Imperial, we're watching that. We know that there are some court decisions coming, so we are waiting to see the impact of those," said Kari Sawatzky, a spokeswoman at Harvest Operations.

The Canadian company expects to be producing oil from its BlackGold Oil Sands Project by 2013. Harvest representatives met with Idaho transportation officials last year to discuss a shipping plan along Highway 12 in June 2011. The company has yet to apply for oversized-load permits from either Idaho or Montana.

"One of the things we've considered is reducing the size of the modules, and we're looking at some alternative plans," Sawatzky said. "But we really have nothing finalized at this point."

At least some companies are revisiting the idea of shipping through the Panama Canal and avoiding the mountain obstacles altogether. They're receiving come-hither looks from two ports on Lake Superior, at the top of the St. Lawrence Seaway and Great Lakes chain, and another on Hudson Bay.

The latter is being promoted aggressively by Denver-based OmniTrax, one of the largest private railroad and transportation management companies in North America.

"We feel that there's a route that needs to be considered as the volumes continue to come from Asia to support the oil sands," says Gary Long, president and chief executive officer of OmniTrax.

Long's pitch: Ship the megaloads through the canal, up the Eastern seaboard, around Labrador and Quebec and into Hudson Bay. There, on the far west shore in Manitoba, OmniTrax will facilitate the off-load of the modules at the Port of Churchill, which it owns, and onto the Hudson Bay Railroad, which it also owns.

After a 586-mile train ride across Manitoba, the loads could be put on trucks for a haul of not more than 750 miles across lightly populated Saskatchewan to Fort McMurray, Alberta, and the Athabasca Oil Sands area.

It's a roundabout route, for sure, with an estimated 40 days by ship. But Long said it could be worth all the extra sea miles, given the difficulties Imperial/Exxon has encountered in the Western mountains and the longer, more expensive drive through the U.S. Midwest from the Gulf of Mexico.

"Ocean transportation is usually the first gradation of transport cost," he said. "Next would be rail, then truck, then air. So while it would be longer than the West Coast route, it's shorter and less circuitous in relation to the land route via rail and truck."

The proposed land route is roughly 300 miles shorter than the one Imperial/Exxon has in mind out West. Here, the loads still have 700 miles to go when they leave Montana at the Port of Sweetgrass.

"We think what's interesting about this is it's an all-Canada route for a Canadian project. It avoids the continental United States," said Stephen Keating, a consultant for OmniTrax.

OmniTrax says the ocean route can be executed in 40 days, which seems a drop in the bucket when considered alongside the court proceedings in the U.S. Come Monday, it will be eight weeks and counting since the contested hearing in Idaho began. Montana District Judge Ray Dayton first heard a request in Missoula to stop construction on the Kearl route 10 days later.


As a logistics expert at the University of Manitoba in Winnipeg, Barry Prentice is well-versed on the challenges oil-sands operators face in getting their equipment from the Far East to far northern Canada.

"There are few options to consider, given the physical barriers of the Rocky Mountains and the Arctic Ocean," Prentice said. "Of course, at ‘any cost,' almost anything can be achieved."

Imperial/Exxon figures it'll ultimately dump $23 billion into its Kearl fields, nearly half in an initial phase that it expects to set production in motion by the end of 2012.

"These companies will use whatever methods they can, such as the Port of Churchill, which no one would even think about under normal circumstances," Prentice said. "But these aren't normal circumstances.

"You have huge loads of equipment to move around, and you're trying to get them into areas that have very little infrastructure. Those two things make them extraordinary. That's why we look at alternate routes."

One such proposed route is through the Arctic Ocean to the north. A representative of a Canadian transportation company visited South Korean manufacturers in December, wooing them with a mostly water route to the oil sands above Alaska, then up the Mackenzie and Hay rivers. The final leg would be a road that has yet to be built.

The port at Thunder Bay, Ontario, is attempting to stamp itself as the "marine gateway to the West." The CN Railroad, in partnership with the port, has spent millions widening bridges and removed protruding rock faces on a 1,500-mile rail link to Fort McMurray, in the heart of the oil sands.

The Port of Duluth, also on Lake Superior, offers relatively direct rail access to the oil sands, and has for years. Its carrying capacity was demonstrated in 2005 when the the Minnesota port received a "cracker" weighing 1.5 million pounds. It was hauled to an oil sands project at Long Lake, Alberta, on a 36-axle rail car, the largest in the world.

Long admitted OmniTrax hasn't carefully studied the highway legs that the route from the Port of Churchill could entail.

"We would not be the ones to do that, but we would help facilitate it," he said.

OmniTrax stands ready to expand its port quickly to be able to handle more volume. The Port of Churchill is free of ice for five months, from June until November. By providing sufficient "laydown" area at the port, Long said, "we can (store) the modules during the long-term shipping season and meter them into the oil sands as the oil companies needed them to supplement their production."

The key to the OmniTrax proposal and others past and present is to get mining companies to buy in.

"If we can get a firmer commitment, we're willing to invest with our own capital," Long said. "We've had discussion with the province of Manitoba and they're willing to expedite the project to allow us to move forward."

Reporter Kim Briggeman can be reached at 523-5266 or at kbriggeman


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