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Ambitious Alberta-Alaska rail link proposed

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Posted: Wednesday, January 2, 2013 11:42 pm

FAIRBANKS — A Canadian business group is proposing a railway link between Alberta and Alaska as a possible route for bringing landlocked oil to market, but some of the details have been met with skepticism by trans-Alaska oil pipeline officials.

The proposal, being pushed by a business consortium called G Seven Generations, would connect Fort McMurray, Alberta, and Delta Junction with a rail line. G7G is seeking $10 million from the Alberta government to help fund a $40 million feasibility study, according to an article in Wednesday’s Edmonton Journal.

If the rail connection were made, its backers envision that products from Alberta’s vast oil sands could be inserted into the trans-Alaska oil pipeline near Delta. The rail plan is an alternative to controversial efforts to establish a port for oil tankers in British Columbia.

Oil sands producers believe they can fetch a higher price for their product by delivering it to a port, which would make it available to a global market. According to a G7G summary, the project would be a collaboration between G7G and First Nations tribes along the proposed route, with construction starting as early as 2015.

G7G CEO Matt Vickers said in the Journal article that a single-track rail line would cost an estimated $8.4 billion, while a double track would cost $10.4 billion. A single track could carry as many as 1.5 million barrels of oil per day, while a double-track operation could deliver 5 million barrels each day to Alaska.

Vickers was unavailable to discuss the project with the News-Miner on Wednesday.

Although the project apparently has been discussed with Alberta leaders, not many details have made their way to Alaska. Alyeska Pipeline Services Company officials said they didn’t know much about the plan, which would at least quadruple the volume of oil in the pipeline from Delta to Valdez.

“I’m not aware of any serious discussions, certainly not anything that would rise to the level of infrastructure planning or anything like that,” Alyeska spokeswoman Michelle Egan said.

Egan said such a large project would be a huge challenge for Alyeska, which transports roughly 600,000 barrels of oil most days.

The most oil ever moved through the pipeline was about 2.1 million barrels per day in the late 1980s, and Egan said even that amount was beyond its original design parameters. She said an effort to send 5 million additional barrels of Canadian oil through the line per day “would be quite a stretch.”

Egan said Alyeska also doesn’t have the capability to move different products at different times, which would result in a mixture of North Slope crude and oil sands product being delivered to Valdez unless changes were made. An agreement to connect to the pipeline also would need to be negotiated, she said.

Contact staff writer Jeff Richardson at 459-7518. Follow him on Twitter: @FDNMbusiness.

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