This small company's big idea has legs. It might take $20 billion or so to get them moving in the right direction, but once they're in full stride that'll amount to small change compared with the potential investment return.
At issue here is North America's energy heartland: Alberta's oilsands. You might have heard recent mutterings of discontent over their development. Top of the page these days is a groundswell of opposition to the $7 billion Keystone XL pipeline that would carry oilsands production to America's Gulf Coast and thereafter into the U.S. petro-chemical market.
Negatives on both sides of the battle are many. But, unlike protesters, Revelstoke's Ward Kemerer and his G Seven Generations Ltd. have more than incendiary rhetoric to contribute to the pipeline debate.
They have a viable alternative. It's not for small-time thinkers, however. Kemerer and his three partners want to build an 1,800-mile electrified railway from Canada to connect with the Trans-Alaska oil-shipping infrastructure at Valdez, Alaska. The railway, using insulated, double-walled tank cars, would be an oilsands priority infrastructure, but could also carry other Canadian goods into the Alaskan interior.
Shipping oil long distances via rail has advantages over shipping it through pipelines. For one, it's above ground. Spills are visible immediately and can be contained quickly. Pipelines, on the other hand, inevitably degrade. Leaks take time to be detected and more time to fix.
Using tank cars that carry 1,000 barrels of oil each in trains that can run up to 200 cars long, a railway can get oil to market faster than a pipeline. A rail line dedicated to shipping oil also has few capacity limitations: Kemerer is thinking upward of 500,000 to three million barrels a day.
Delivering Canadian oil to the Valdez terminal rather than sending it to the U.S Gulf Coast distribution complex also gives it access to markets outside the United States – Asia, for example, where Canadian oil would command a higher price than it does in the U.S.
The Valdez connection would eliminate the need to run supertankers down B.C.'s coast, which would be part of any West Coast oilsands pipeline plan.
Also in G Seven's favour is the company's B.C. First Nations business philosophy: make them partners in the venture from the outset rather than obstacles to be paid off, which is the more traditional resource development business plan.
"They're going to be part of the process," Kemerer says, "not just driving trucks."
Kemerer is also refreshingly realistic about the downsides of shipping oil via rail. There will be derailments and spills, he concedes, and "we don't want to downplay the intrusiveness of a railway going up into the Arctic."
Protesters have valid environmental concerns about oilsands development, but they're deluded if they think they'll stop its production from reaching market or that windmills or solar panels are going to replace fossil fuel any time soon. Being against development of an energy source vital to North America's economy without offering any credible alternatives is counterproductive for the fiscal well-being of both countries.
G Seven has an alternative. It won't be to everyone's liking, but of the current options available, it promises to deliver the most economic development benefits while running up the fewest environmental bills.
