Prospects for Oil Transportation on North American Inland Waterways

In early July 2013, a train of carrying oil derailed in the town of Lake Megantic in Quebec, with devastating results. The oil originated from the Canadian side of the Bakken oil reserves located between North Dakota and Saskatchewan. Prior to the derailment, the news media reported on leaks from oil pipelines. In Western Canada, there is opposition to plans to build an oil pipeline to carry oil from Alberta to a Pacific port. There is also opposition to the Keystone XL oil pipeline that could carry oil from Alberta to Texas.

The opening of the Bakken oil reserve has resulted in massive growth in the railways carrying oil, a result of insufficient capacity in the existing pipelines and a lack of infrastructure for maritime to carry additional. The northern navigable section of the Missouri River crosses the southern region of the Bakken oil reserve, while in Canada, a section of the navigable Saskatchewan River flows in close proximity to the Canadian side of the oil reserve. There is scope for short-distance pipelines to connect the oil reserve to river barge transportation in both countries.

Northern River Navigation:

While a navigable inland waterway along with barges capable of carrying bulk freight and that may be modified to carrying oil already exists in the USA, there is much work to be done in Canada in this regard. The McKenzie River [pictured above] is navigable between the Beaufort Sea to within close proximity of Northern Alberta’s oil producing region. Opposition to an oil pipeline across British Columbia could see the combination of trains carrying oil to a Pacific port, while barge trains may carry oil to a terminal on the Beaufort Sea following modifications to the Peace, Slave and Athabasca Rivers.

A section of the Saskatchewan River is navigable across parts of Saskatchewan and Manitoba, including into Lake Winnipeg. There are waterway connections to the Nelson and Churchill Rivers, with future prospects of making one or both rivers navigable to barge traffic that may sail into Hudson Bay at some future time. While a railway line does connect between the Port of Churchill on Hudson Bay and the eastern region of Saskatchewan, the railway bed rests on tundra/muskeg that can only support limited weight. A navigable waterway connection between Saskatchewan and Hudson Bay would be more appropriate to moving bulk tonnage.

Transportation Market:

Navigable waterways to the Beaufort Sea and to Hudson Bay could carry both oil as well as agricultural produce such as wheat, barley, oats and dried beans. Given that the transport of oil would greatly exceed the transport of agricultural produce along northern waterways, it may be feasible to make some northern rivers navigable for future barge transportation. There is a network of rivers in Saskatchewan that flow in close proximity to each other, allowing for a future waterway connection between the Saskatchewan River in eastern region of the province, to the Churchill and Reindeer Rivers.

There are a series of nearby lakes and rivers that could allow for a future waterway connection between the Reindeer/Churchill Rivers through to Lake Athabasca and the Athabasca River that flows into the McKenzie, with access into the Beaufort Sea. Such a waterway connection would allow inland maritime transportation to carry oil from Saskatchewan to an oil terminal on the Beaufort Sea, along with oil from Alberta. Toward the end of the agricultural season, inland waterways may carry both oil and a variety of agricultural produce to ports on Hudson Bay and on the Beaufort Sea.

Connecting Two Large Lakes:

East of Lake Winnipeg, the Winnipeg River flows from Ontario and from a region where a myriad of rivers flow and lakes lie in close proximity. Depending on the volume and tonnage of oil and agricultural produce that may sail via the St Lawrence Seaway, it may become feasible at some future time to develop a navigable waterway between Lakes Winnipeg and Superior. The main advantage of the St Lawrence Seaway is a longer navigation season than the McKenzie River. A combination of trains, pipelines and barge trains could carry oil (and grain) to a port on Lake Superior.

A future waterway connection between Lakes Superior and Winnipeg would connect into the American inland waterway system at Chicago and at Cleveland, with future prospects of moving much bulk freight between Western Canada and the Central regions of the USA. It would also provide the Central USA with future navigable waterway access to ports on the Beaufort Sea and on Hudson Bay along with possible future access to shorter oceanic voyages to certain Asian and northwestern European ports. It could also provide lower cost bulk freight transportation between Western Canada and Eastern Canada plus the Northeastern USA. 

Conclusions:

The development of the Bakken oil reserve offers the prospect of developing future viable navigable waterway access to the Beaufort Sea and Hudson Bay, for regions that are at present without such access. A more extensive navigable network would benefit the agricultural sector as well as provide lower cost bulk freight transportation between new points of origin and destination. Ongoing concerns about railway safety and ruptured oil pipelines would allow the maritime sector to perhaps present an economic argument for inland waterways to carry a percentage of the Bakken oil.

Harry Valentine is a frequent contributor to the MarEx newsletter. He can be reached at [email protected].