By R.Bruce Striegler

Arctic transformation underway, but it’s an alarming one

For much of our history, urbanized, southern-concentrated Canadians have largely paid lip service to the notion that the country is an Arctic nation. Was it then ironic or prescient that in a March 1943 address to a Toronto audience of the Empire Club of Canada, retired Royal Canadian Army Major David Livingstone McKeand said, “… and to judge by developments in the past few years, that part of our country north of 56 degrees is likely to be well to the front, if not in the lead, in the coming era of expansion and prosperity.” He said in the same speech, “That northern channel that may have a great deal to do with the future of our race because that is the Part of the Continent that is going to touch the heart of Russia. It is the easiest route to the great Asiatic Continent and so today it will be a beaten path.”

Not surprisingly, an Arctic transformation has begun, but brought about by global warming, not industrial development and prosperity and it’s having a profound impact on the Arctic. The warmer temperatures are opening previously ice-covered waterways, creating sea routes which are extremely attractive (and cost-effective) to commercial shipping. Given these changing circumstances, conceivably there will also be a change in the country’s largely indifferent attitude. For decades, the world has seemingly passed this land by. Canada already perceived as having a diminished capacity to protect its sovereignty and security, is now seeing other nations openly advancing their claims.

A brief published in July 2011 by the Library of Parliament, Arctic Marine and Intermodal Infrastructure: Challenges and the Government of Canada’s Response, outlines the changes now happening. The brief notes shipping in Canadian Arctic waters is on the rise, documenting that in 2010, one hundred and fifty vessels made 270 voyages, which is up from 108 ships who made 158 transits in 2009. The document also states that ships transiting the Northwest Passage grew from seven in 2009 to 18 in 2010, and 27 in 2011. It continues, outlining how the three territories and the northern sections of Ontario and Quebec as well as Newfoundland and Labrador do not have the marine infrastructure to support this increased activity. In particular, they have limited search and rescue resources and lack reliable aids to marine navigation. Combined with the dangers of ice, weather and the vast distances between sheltered harbours, these weaknesses make shipping difficult and potentially dangerous.

The report adds that limited port infrastructure in the Canadian North also creates special challenges for marine operators. In many communities, there are no docks and cranes for loading and off-loading goods. That means that cargo is off-loaded onto barges, which then deliver the goods directly onto the beach. The report also states this type of operation not only increases the cost of shipping goods by sea because it takes longer and because specialized equipment must be used, but it can also be dangerous in rough seas. One of the federal government’s responses to the situation is a $17 million infrastructure project at Pangnirtung, Nunavut and a deepwater port for coast guard and military vessels in Nanisivik. Nonetheless, the Arctic situation has sparked a competitive situation, with industry voices along with provincial representatives vying for an official federal government “gateway” designation.

Other provinces want in on gateway designation

Officials in Newfoundland and Labrador as well as from Churchill, Manitoba, want the government to select a location in their territory as an Arctic service centre, or gateway. They acknowledge the federal commitment of up to $55 million for upgrades to the port of Sept-Îles, but wonder if those upgrades, which were to accommodate shipments of iron ore from Labrador, could also have other uses. At the same time, Port of Belledune, in New Brunswick, already promotes itself as “Your Arctic Gateway” billing the port as the most flexible choice for moving project cargo into the Eastern Arctic. An “over the top” transportation route to the North, through the Northwest Territories, has received attention as well.

Located 60 kilometres southwest of Montreal, Port of Valleyfield began operations in 1968. The port established a track-record of experience dealing with Arctic re-supply, officially becoming Valport in 1994. There has been tremendous growth at the port over the past 15 years, which established an all-time record of cargo loading this September when MV Claude Desgagnés, operated by Nunavut Sealink and Supply Inc., departed Valleyfield with 23,384 cubic metres of cargo bound for the Baffinland Iron Mines Corp. beach site at Milne Inlet. The Mary River iron project on north Baffin Island has yet to start producing iron ore in commercial quantities, but it has already ignited an explosion of commercial activity at the St. Lawrence Seaway port in Salaberry-de-Valleyfield.

Meanwhile, the Nunavut Impact Review Board has just completed public meetings on Baffinland’s initial proposal. Under that plan, Baffinland would complete development of a port at Milne Inlet by mid-2015 and by 2016 would ship 3.5 million tonnes of ore a year from that port during the summer and fall. The company estimates that 1,400 workers will be on site in 2014 and 2,000 by 2015. By 2020, Baffinland Iron Mines Corp. proposes completing a railway to a port at Steensby Inlet, which would allow 20 million tonnes of ore to start flowing from Mary River virtually all year round. The revamped plan is still under consideration by the Nunavut Impact Review Board, which is working with the Nunavut Planning Commission to determine if the company’s current plans for Milne Inlet conform to the North Baffin Regional Land Use Plan.

Eastern shipping companies pioneering Arctic service

There are a handful of existing marine transport companies hauling freight and life-saving supplies into the eastern Arctic, and in some cases, they’ve been doing it for many years. Along with Nunavut Eastern Arctic Shipping (profiled elsewhere in this edition) which works with Transport Nanuk, a subsidiary of stevedoring specialist Logistec Corporation, there is Groupe Desgagnés. With its fleet of 18 vessels (capable of handling general and dry-bulk cargo, tankers for liquid bulks and two passenger/cargo vessels), Groupe Desgagnés is headquartered in Quebec City. The company’s ships ply the Great Lakes, the St. Lawrence network, the Eastern Arctic and the east coasts of both Canada and the U.S.

The company’s Transarctik division bills itself as the busiest shipping firm in Northern Quebec. Desgagnés Transarctik works in partnership with Arctic Co-operatives Limited through Nunavut Sealink and Supply, providing sealift services out of Montreal and Churchill, Manitoba to Inuit communities in the five Nunavut regions. Transarctik uses four to five specially adapted vessels for northern operations equipped to withstand ice and with cranes to unload the tugs and barges required to discharge at places where there are no port facilities. In a typical summer, these vessels carry a total volume of 350,000 cubic metres, most of it northbound.

Privately owned Fednav Limited, headquartered in Montreal, is the largest dry-bulk shipping group in Canada. The company is involved in several areas of transportation including ship owning, ship chartering for short- and long-term periods; marine transportation of bulk and breakbulk cargoes worldwide, including the Canadian Arctic. The company also is a specialist in ice navigation services and handles stevedoring at terminals owned and operated by the Group and provides logistics services including warehousing and ground transportation.

An associated company, Canarctic, joined the Fednav Group in 1996 and is the owner and operator of MV Arctic and Umiak I. Built in 2006, MV Umiak I, is a 31,500-tonne icebreaking bulk carrier, the most powerful ever of its kind, moving 360,000 tonnes of nickel concentrates a year in twelve voyages from Vale’s Voisey’s Bay mine in northern Labrador to its smelters in Sudbury, Ontario and Thompson, Manitoba. In October 2012, Fednav placed an order with Sumitomo Corporation and Universal Shipbuilding Corporation, Japan for the design and construction of an icebreaking bulk carrier with a design deadweight of 25,000 tonnes to service the transportation of nickel and copper concentrates from Canadian Royalties’ Nunavik Nickel Project in northern Quebec to customers in Europe, as well as the import from Europe of mine supplies and equipment. The ship is scheduled for delivery in December 2013.

There are other players in Canadian Arctic shipping including Northern Transportation Company Limited (NTCL). Northern Transportation Company Limited is the founding member of the NorTerra Inc. group of companies. Other companies owned by NorTerra Inc. include Braden Burry Expediting, Canadian North Airlines, Northern Industrial Sales and Weldco-Beales Manufacturing Inc. NorTerra itself is managed and owned equally by the Inuvialuit Development Corporation, representing the Inuvialuit of the Western Arctic, and Nunasi Corporation, representing the Inuit of Nunavut.

NTCL owns and operates a fleet of combination fuel/deck cargo barges, capable of hauling up to 1.3 million litres per barge on the Mackenzie River and as much as two million litres in the ocean. NTCL has been delivering cargo along the Mackenzie River for more than 75 years, to the North Slope of Alaska since 1963, and into the western Arctic since 1957. Additionally, the terminal at Hay River has been in operation for some 60 years. The marine base of operations is in Hay River, Northwest Territories, located on the south side of the Great Slave Lake and some 30 miles from the origin of the MacKenzie River.

The company’s barges carry tens of millions of litres of fuel per season for community resupply as well as industrial project start-up and support. In May 2012, NTCL began offering service to the North Slope of Alaska from Hay River and Inuvik. In 2005, NTCL began moving fuel into the western Arctic from the B.C. coast, using a chartered articulated tug and barge. Over four seasons of deliveries from the West Coast using a chartered tanker and large freight and fuel barges culminated in the purchase of the ice-breaking tug and the 12,000-tonne barge.

Canada chairs the Arctic Council, but what does that mean?

The Arctic Council is a high-level intergovernmental forum which addresses issues faced by Arctic governments and the indigenous peoples of the region. The Council is composed of Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the United States. In May 2013, Canada assumed the two-year Chairmanship of the Arctic Council from Sweden, and appointed Leona Aglukkaq, an Inuk from Nunavut. Ms. Aglukkaq, Minister for the Arctic Council, Minister of the Environment, and Minister of the Canadian Northern Economic Development Agency, told the Council, “I grew up in the small Arctic community of Gjoa Haven. My family lives there today, and I still call it home.”

Two weeks ago, the Council voted to include six additional nations (China, India, Italy, Japan, Singapore and South Korea) as observers. The founding countries and the newly-voted observers are all seeking to up their various Arctic claims. Their assertions vary from right of resource exploitation and development to division of the Arctic seabed and include the right of transit in the Northwest Passage. As these countries advance their declarations, the potential exists for a serious challenge to Canada’s sovereignty and security in its Arctic.

It is worth recalling that during the 2005-2006 federal election campaign, Stephen Harper promised that if elected, he would budget $5.3-billion over five years “to ensure sovereignty over our land, waters, and airspace in Canada’s north.” Central to this commitment was the purchase of “three new heavy naval icebreakers” and the construction of “a new combined military-civilian deepwater docking facility in the Iqaluit region.” By July 2007, Mr. Harper now Prime Minister, began speaking of Arctic sovereignty as a “use it or lose it” situation. He also announced that instead of three heavy icebreakers, six to eight lighter Arctic Offshore Patrol Ships (AOPS) would be built with ice-strengthened, but not icebreaking hulls. At that time, the construction contract for the patrol ships was to be awarded in 2009, with delivery of the first vessel scheduled for 2013. Today, however, under the National Shipbuilding Procurement Strategy, Nova Scotia’s Irving Shipbuilding is just in the design phase, and is not expected to deliver a first vessel until 2018.

Not all countries ignoring Arctic development

The sharp reality is Canada’s north remains largely unpopulated, unexplored, unmapped and undeveloped. The territories are cold and remote from the southern population bulges. However, both Alaska and Siberia are equally cold and remote, but the same circumstances don’t hold true for them. Russia’s Siberian region has a population of about 36 million (less than 20 per cent of Russia’s population). With 50 ports already in place, the region is often described as the richest in the world, containing an estimated 80 per cent of Russia’ coal and gas, 70 per cent of the country’s oil, copper and nickel, as well as 99 per cent of all platinum group metals, including palladium, as well as gold and silver.

A total of 421 commercial vessels have applied for permission this season to use Russia’s Northern Sea Route, which cuts days off the shipping time between Asia and northern Europe. They will be aided by nearly two dozen icebreakers and protected by a string of 10 up-to-date search-and-rescue centres along the route. Ports are being upgraded. Sea lanes are well-understood and comprehensively mapped. Cooperation with maritime neighbours such as Norway is strong. The Canadian scenario compares unfavourably with these circumstances. Canada has no Arctic commercial ports. Mapping is so poor that cruise ships have run aground and captains use old Soviet-era charts to supplement Canadian ones. The Coast Guard’s six icebreakers are not available to accompany routine commercial voyages.

Alaska, one third the size of Canada’s Arctic, has a population of 710,000 people, seven times more than the Canadian north. A state constitutional requirement directs at least 25 per cent of specified non-renewable resources into a fund, increasing that amount to 50 per cent of revenues from new oil and gas fields. The Alaska Permanent Fund grew from an initial investment of about US$734,000 in 1977 to approximately $42.1 billion as of August 1, 2012, distributing dividends totalling $19.2 billion or 46 per cent of the fund’s total earnings. In 2011, it meant an average payment of roughly US$1,000 per eligible citizen. The state’s seven operating mines provided nearly 2,300 full-time jobs of the nearly 9,500 mining industry jobs in Alaska in 2012. Alaska also has the Prudhoe Bay oil fields and pipeline as well as 25 seaports.

Lack of infrastructure hampering development

In contrast with this record of development, in 1984 the Canadian Amauligak field was discovered by Gulf Canada and its partners, containing an estimated one billion barrels of oil-in-place and about 2 trillion cubic feet of gas. Among the factors that led to the well being capped a few years after discovery were the area’s lack of transportation infrastructure, the lack of technology and level of difficulty required to clean up oil spills. This field remains the only major oil discovery of the Beaufort-MacKenzie Basin and today the undeveloped Amauligak field is owned by ConocoPhillips and its majority co-venture partners Chevron and ExxonMobil.

Arctic search-and-rescue remains based in southern Ontario and depends on planes that were scheduled to have been replaced long ago. And disputes with the United States about border issues and the status of the Northwest Passage add legal uncertainty for shippers. Only 61 tankers and cargo ships entered the Canadian Arctic last season, most of them related to community resupply. Crossing the Northwest Passage remains largely a goal for adventurers including this summer, two crews in rowboats. Canada has no Arctic commercial ports.

In January, the federal government confirmed it would go ahead with Radarsat Constellation which will see the launch of three satellites by 2018, but it will be at least five years before a Canadian satellite surveillance program focused on Arctic maritime traffic comes into play. Radarsat Constellation will provide complete coverage of Canada’s lands and oceans, as well as daily access to images of 95 per cent of the world. Before launching satellites, Canada will need to build capacity for receiving and processing the vast amount of information the satellites will gather. At present, Canada operates a single radar-imaging satellite, Radarsat-2, which provides maritime surveillance data.

In the meantime, international shipping companies will continue to push the boundaries in the previously frozen Arctic, as witnessed in the past week with the successful transit from Vancouver of the 75,000-deadweight-tonne Nordic Orion which successfully completed its passage through the Northwest Passage, having arrived at the Finnish port of Pori on October 7th.

Nordic Orion carried B.C. metallurgical coal bound for a Finnish steel company. Its owner beat other contenders for the job with a bid based on savings of about 1,000 nautical miles and four or five days of sailing time. Transiting through the Northwest Passage, Nordic Orion was able to carry more coal than it could have carried passing through the shallower Panama Canal.