As Premier Wab Kinew pitches investors on a Port of Churchill expansion that could cost as much as $80 billion, the company that owns the northern Manitoba port says it only needs a small fraction of that cash — less than $3 billion — to improve the port and the railway that connects it to the rest of Canada.
The premier is in Toronto to attend the Canada Investment Summit, Prime Minister Mark Carney’s effort to secure international investment in major Canadian construction projects.
Kinew is promoting a Port of Churchill expansion that would include a floating, offshore liquefied natural gas platform. This version of the project would cost $70 billion to $80 billion, the premier said in August.
Arctic Gateway Group, which owns the port as well as the Hudson Bay Railway, says the money required to conduct more basic work in order to make Churchill a viable commercial port is an order of magnitude below the premier’s estimated price range.
“It’s a fraction of those numbers,” Arctic Gateway CEO Chris Avery said Friday in an interview, defining that fraction as “less than four per cent” of Kinew’s estimate in August.
Avery suggested it would cost $2 billion to $3 billion to build new facilities at the port, upgrade the 1,300-kilometre Hudson Bay Railway to handle heavier loads and rebuild railway service facilities at The Pas.
“What we’re proposing is what we believe is required to make Churchill a major port in Canada in support of our national goals,” he said, listing those goals as diversifying trade, becoming an energy superpower, asserting Canadian sovereignty in the North and advancing Indigenous economic reconciliation.
Avery says Arctic Gateway, which is owned by 29 First Nations and 12 northern communities, is not trying to build a liquid natural gas pipeline to Churchill or an LNG terminal along Hudson Bay.
The Kinew government is behind the LNG effort, he says.
“What we’re focused on is all the different commodities that can go through the port, whether it’s critical minerals or potash or agricultural products or energy products,” Avery said. “We facilitate that, but we’re not the proponents for all those different types of commodities.”
Kinew’s office did not respond to interview requests or requests for comment.
Less ice creates wishful thinking: supply chain expert
According to a report by consulting firm PwC, there’s widespread support in northern Manitoba for a port expansion, but not for fossil fuel pipelines or shipments of oil and gas through Hudson Bay.
For potential investors, improving the Port of Churchill might become more attractive, with or without an LNG component, thanks to a combination of climate change and geopolitics.
In August, the province released the results of studies that suggest year-round shipping through Hudson Bay is possible with the use of ice-hardened freighters, although more study is required. This could increase the shipping season at the ice-encumbered Port of Churchill beyond its existing four-to-five-month window.
The collapse of Canada-U.S. trade talks this summer and the recent threat to shipping through the Red Sea has added renewed urgency to a search for new routes unencumbered by politics or endangered by armed armed conflict.
Avery says Arctic Gateway hears often about geopolitical concerns from potential European customers.
“What they tell us … is the EU has a strategic imperative to secure critical minerals and energy products from trusted and reliable partners like Canada. They don’t want to be dependent on Russia and China and other places, [including] the U.S.”
Vidya Mani, a University of Virginia professor who studies global supply chains, says the Port of Churchill might be attractive as an alternative shipping route even if it only remains open for a third of the year.
“If the Arctic Ocean is going to get developed, then I would assume going through the Port of Churchill would be the one of the first sorts of places people would look at,” Mani said in an interview last week from Charlottesville, Va.
“My worry is not so much whether those four to five months is enough. It’s all the infrastructure that has to get to the Port of Churchill to make it viable, and I think that’s where the bottleneck is.”
Mani also said the Port of Churchill must radically ramp up its capacity in order to become commercially viable — and said insurance costs for Arctic shipping would have to come way down.
“Simply because ice gave away and now you have this wide swath of water and expect it to just magically provide an option? I think that’s wishful thinking,” she said.
Churchill LNG raises skepticism
The prospect of shipping natural gas through the Port of Churchill is being met with even more skepticism from industry experts.
Agnieszka Ason, an energy lawyer and senior research fellow with the Oxford Institute for Energy Studies, says shipping LNG through the Port of Churchill is attractive because of the absence of geopolitical choke points.
As well, she says, shipping LNG through Hudson Bay would be more costly due to the need to operate a terminal in frigid conditions and use ice-hardened vessels to transport natural gas.
“For this type of facility, it’s to a great extent a question to what extent there will be demand for LNG from a facility that is so technologically challenging that it will be very costly to build,” Ason said in an interview last week from Gdynia, Poland.
She says the Port of Churchill must sign offtake agreements — that is, long-term purchase agreements with prospective natural gas customers — in order to demonstrate an LNG export terminal at Hudson Bay could be commercially viable.
This alone will take some time, Ason says.
“What makes this project interesting is the very long-term planning horizon and the strategic choices being made today about how the project could ultimately position itself in the global LNG market,” she said.
Michael Tamvakis, a professor of commodity economics and finance at the Bayes Business School in London, also questioned the high cost of building an LNG terminal at Hudson Bay, and the navigational issues associated with shipping through ice.
He says LNG terminals must be capable of exporting more than five million tonnes of natural gas annually — and ideally more than 10 million tonnes — in order to be commercially viable.
No one at the province has stated the export volume target for a Port of Churchill LNG terminal.
Nonetheless, Tamvakis said, shipping gas through Hudson Bay is a good opportunity for Canada as it seeks to wean itself off U.S. customers and diversify its trade.
“It’s an excellent idea, but the problem is it’s in a place which is difficult to access, even if you forget about the environment and the flora and fauna, which are sensitive,” he said in an interview last week from the United Kingdom’s capital.
“Just the fact that it’s not open throughout the year immediately means high costs. And if [the gas] goes to somewhere like Europe, then there is plenty of competition from the United States itself.”
Arctic Gateway CEO Avery says he’s not concerned about skepticism about shipping LNG through Hudson Bay, and he does not believe Kinew has lost his focus on basic Port of Churchill improvements as he pitches an LNG terminal.
“I don’t believe that the premier is focused on LNG,” Avery said. “I do believe that the premier is a great champion for northern Manitoba and for the Port of Churchill.”
