Keewatin Tribal Council and Fox Lake Cree Nation Left In The Dark Over OmniTRAX’s Plan

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Keewatin Tribal Council (KTC) Tribal Grand Chief Irvin Sinclair and Fox Lake Cree Nation Chief Walter Spence say neither OmniTRAX or any level of government has consulted with them on the Denver-based railway’s plan to ship 330,000 barrels of crude oil from the Port of Churchill in a test next month – after it rolls north on Hudson Bay Railway tanker cars through their traditional territories.

Starting either next year or in 2015, OmniTRAX, Inc. plans to transport Bakken and Western Intermediate sweet crude oil on 80-tanker car Hudson Bay Railway trains from The Pas through Wabowden, Thompson Junction, Gillam and to Churchill to load for 10 Panamax-class tanker trips per shipping season out if Hudson Bay from July through late October or early November.

KTC, with its head office on the Bayline in Bird on the Fox Lake First Nation, represent 11 First Nations – Fox Lake First Nation; York Factory First Nation; War Lake First Nation; Split Lake Cree First Nation; Barren Lands First Nation; Sayisi Dene First Nation; Northlands First Nation; Shamattawa First Nation; God’s Lake Narrows First Nation; Manto Sipi Cree Nation; and Oxford House First Nation – in Northern Manitoba.

The Fox Lake Cree Nation currently consists of about 1,100 members with about 500 residents in the home reserves in Bird and Gillam Reserve and the Town of Gillam. The remaining members live mainly in Thompson, Churchill and Winnipeg. Fox Lake Cree Nation is signatory to 1910 Adhesion to Treaty 5 signed at York Factory. In 1947, Canada recognizes the Gillam Band as an independent band and renamed the Fox Lake Band in 1949.

Sinclair said in a Sept. 16 Keewatin Tribal Council news release that “Hudson Bay railway runs through the Hudson Bay Lowlands region which contains thousands of lakes, ponds and small waterways. There is a long history of aboriginal peoples living in this area.

“The Fox Lake, War Lake and York Factory First Nation peoples occupy and continue to use this land for hunting, trapping and spiritual purposes. It is a fragile and unique ecosystem. The traditional knowledge of the local Cree are preserved in place names here, reflecting the long-past history and connection to the land. The Fox Lake and York Factory First Nations continue to help manage the area through participation on the Wapusk National Park Management Board.

“York Factory First Nation (YFFN) has land in Churchill in close proximity to the Churchill Marine Tank Farm which will be upgraded to accommodate the oil venture. A large number of YFFN members living in Churchill have raised concerns about the potential impacts to their means of livelihood, transportation and environment in light of the recent disaster in Lac-Mégantic. In addition, members of several other First Nations have contacted their leadership to express their concerns and opposition to the OmniTRAX plan based on health concerns, environmental risks and infringement of their aboriginal and treaty rights.

OmniTRAX recently announced they want to ship 330,000 barrels of crude oil from the Port of Churchill in a test in October. It proposes to ship Bakken crude oil which is produced by hydraulic fracturing of the Bakken shale formation in North Dakota and Montana. In addition, starting either next year or in 2015, OmniTRAX, Inc. plans to transport Bakken and Western Intermediate sweet crude oil on 80-tanker car Hudson Bay Railway trains from The Pas to Churchill to load for 10 Panamax-class tanker ships per shipping season out of Hudson Bay from July through late October or early November.”

Sinclair goes on to say, “Bakken crude oil was involved in the Lac-Mégantic tragedy that killed 47 people on July 6. This concerns the First Nations of Keewatin Tribal Council as it does the U.S. Federal Railroad Administrator. “We believe there’s risk,” Federal Railroad Administrator Joseph Szabo said. “Most grades of crude would not be that volatile.”

Sinclair also said, “Our communities do not take any comfort with an 80-year-old northern rail line carrying an additional 330,000 barrels of crude oil travelling through our communities, risking our territory that is still used for trapping, hunting and spiritual purposes. Surely, we cannot forget the destruction seen at Lac-Mégantic which took the lives of 47 people. We cannot and will not sit by and watch this happen.

“The statement, ‘The speed we can afford to keep’ made by OmniTRAX officials at a public meeting held in Thompson Aug. 15 does not sit well with First Nations. The Hudson Bay Railway has had 63 railway accidents for the years 2003 to 2012. Accidents have happened every year from a low of three in 2010 to a high of 14 in 2007. Freight train derailments occurred in both 2010 and 2011. The statement suggests OmniTRAX is only willing to spend the minimum required on track maintenance to allow for a certain level of speed and that track maintenance is a low priority. We are concerned the rail line will not be able to handle the increase in traffic volumes under the current track maintenance plan.

“The Hudson Bay Railway (HBRY) was created in 1997 by OmniTRAX, a US-based holding company that specializes in transportation-based services. OmniTRAX also took over operation of the Port of Churchill around the same time. It operates 627 miles of track in Manitoba between The Pas and Churchill.

“The overarching concern to all our citizens and for our territory is the potential for loss of human life; loss of traditional lands and the devastating impacts overall to our collective environment” said Chief Walter Spence of Fox Lake Cree Nation. He added, “As Treaty people, there is a Crown’s obligation to consult and inform First Nations affected regarding this venture. To date, this has not been done by any level of government nor OmniTRAX.”

OmniTRAX operates a network of 16 regional and short line railroads that cover 10 states in the United States and three provinces in Canada. The company’s railroads interchange with BNSF Railway, Canadian National (CN), CSX Corporation, Norfolk Southern Railway and Union Pacific Railroad and transport commodities within the agricultural, aggregate and industrial mineral, energy, food, chemical, lumber, metal, petroleum and plastic industries. OmniTRAX, Inc is an affiliate of The Broe Group and was founded in 1986 and is privately owned by Pat Broe, who founded the company in Denver in 1972 as a real estate asset management firm.

OmniTRAX also operates and manages terminal and intermodal facilities where services such as railcar switching, container handling, ramp, de-ramp and carrier management are provided.

The Port of Churchill has the largest fuel terminal in the Arctic and is North America’s only deep water Arctic seaport that offers a gateway between North America and Mexico, South America, Europe and the Middle East. OmniTRAX, Inc. bought the track from CN in 1997 for $11 million. It took over the related Port of Churchill, which opened in 1929, when it acquired it from Canada Ports Corporation, for a token $10 soon after buying the rail line. The deep-water port is looking to diversify its customer base following last year’s dismantling of the Canadian Wheat Board, its preeminent customer for many years. Major customers have included the Canadian Wheat Board, Hudson Bay Mining and Smelting (Hudbay), Tolko Manitoba, Gardewine North, Manitoba Hydro and various grain merchandisers.

OmniTRAX, Inc. wants to compete for the business of delivering sweet crude oil to discharge at the Port of Rotterdam for northern European consumption, competing with the Saudi Arabian Ras Tanura complex, including Ras al-Ju’aymah, the largest global crude oil terminal for export in the world, and Nigeria’s Bonny Terminal in the Rivers State of the lower Niger Delta basin.

The Denver short line railroad believes it can compete with Middle Eastern and African terminals for that northern European business by shortening the route from the Port of Churchill through Hudson Bay and the circumpolar Arctic and using smaller vessels, making sweet Canadian crude oil cost-competitive for the first time.

If the plan is realized, it would also run counter to long-established Canadian crude oil flows, in which three refineries in Atlantic Canada – in Dartmouth, Saint John and Come By Chance in Placentia Bay on Newfoundland and Labrador’s Avalon Peninsula – and two in Montreal now rely exclusively on expensive crude imported from the North Sea, Africa or the Middle East.

OmniTRAX, Inc also believes Churchill would be viable to both east coast refineries in Canada and American refineries in New York and down the eastern seaboard of the United States.

OmniTRAX, Inc. wants to ship 330,000 barrels of crude oil from the Port of Churchill in a test in October. Starting either next year or in 2015, OmniTRAX, Inc. plans to transport Bakken and Western Intermediate sweet crude oil on 80-tanker car Hudson Bay Railway trains from The Pas through Wabowden, Thompson Junction, Gillam and to Churchill to load for 10 Panamax-class tanker trips per shipping season out if Hudson Bay from July through late October or early November.

The Denver railroad has been negotiating with 25 Alberta oil companies that are interested in shipping oil through the port to refineries on either the east coast of Canada or in Europe.

But before prospective customers are willing to make long-term commitments, they want to conduct a trial run, Brede said. If all goes according to plan, a tanker carrying about 330,000 barrels of oil will leave the port on a test run in October.

Between now and then there are about $2 million in upgrades to the Port of Churchill’s oil-handling system that need to be done, Brede said. The upgrades, which should be completed by the end of September, will boost the port’s oil-pumping capacity to about 3,000 gallons per minute from the current 800 to 900 gallons per minute.

While the Port of Churchill wants to diversify into more outbound and inbound fertilizer and light sweet crude oil shipments, outbound grain shipments remains the bread-and-butter operation at the port. This is shaping up to be an above-average year for grain shipments through Churchill, with about 600,000 tonnes already committed. In an average year, the port handles about 500,000 tonnes during its shortened shipping season, which ends in late October or early November.

OmniTRAX officials are also in negotiations with a Russian company about moving more farm fertilizer through Churchill into Western Canada. The fertilizer would arrive by ship in October, be stored over the winter at the port, and then shipped out by rail in the spring to Prairie customers.

The port has handled some inbound fertilizer shipments in the past, but it would have to upgrade its handling and storage systems if it were to expand that business.

The Kapitan Sviridov, a Murmansk Shipping Company vessel, sailed into Manitoba’s Arctic seaport at Churchill on Oct. 17, 2007, bringing the first-ever ocean shipment from Russia, OmniTRAX Canada and the Churchill Gateway Development Corporation noted at the time. The ship unloaded fertilizer imported by Farmers of North America, a farm membership-based organization. Upon discharge of the fertilizer, the Russian vessel was loaded with 20,000 tonnes of wheat destined for Italy – part of the Canadian Wheat Board’s 600,000 tonnes to be loaded for export for the 2007 season, the largest wheat shipping program through the Hudson Bay town since 1977 when 816,000 tonnes were shipped.

Canada’s oil producers are looking for a “Plan B” on Manitoba’s coast as the proposed Northern Gateway and Keystone XL pipelines futures remain unclear. The Port of Churchill is among a growing number of potential options for diversifying oil exports as production climbs and major pipeline proposals face lengthy regulatory delays.

The number of rail cars used to transport oil in Canada has more than tripled over the last two years, rising from a low of 4,549 in June of 2011 to 14,217 this past April, according to a recent report by Poten & Partners, a global broker and commercial advisor for the energy and ocean transportation industries.

Under the plans by OmniTRAX, light-grade crude from Alberta and the Saskatchewan-North Dakota Bakken would be received by in The Pas at its interchange with CN Rail, Brede said, and shipped northeast to Churchill on its Hudson Bay Railway in three legs over 35 hours from The Pas to Wabowden, Wabowden to Gillam, and Gillam to Churchill.

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