By R. Bruce Striegler
Province a hot spot for project cargoes
On a cold, snowy evening in early March, over 150 people gathered in Calgary as guests of Duluth Seaway Port Authority, The St. Lawrence Seaway Management Corporation, Saint Lawrence Seaway Development Corporation and fifteen other major shipping and logistics companies from central Canada and the U.S. “This evening’s event is a sign of our appreciation, we know that we have to earn your business, we’re in a competitive market and we realize that,” begins Bruce Hodgson, Director of Market Development for The St. Lawrence Seaway Management Corporation.
Under the glass-domed rotunda of the Canadian Pacific Railway Pavilion of Calgary’s Palliser Fairmont Hotel, representatives from specialized heavy-lift carriers, pipeline companies, grain handlers, rail company logistics specialists, project procurement managers and freight forwarders socialized and talked with senior representatives from the eastern transportation and port organizations. Mr. Hodgson says that the group does other events around the continent promoting the eastern transportation corridor and notes, “In spite of the large presence of oil people, we still have involvement with grain and coal shippers.”
Hodgson said that the two St. Lawrence Seaway organizations are acutely aware that they are competing in a very diverse market, “One of our competitors is Port of Houston which does a lot of business into this area and we recognize it is important to work with shippers in Alberta to promote the Seaway.” He notes that originally the event started as an affair for grain shippers, but with the advent of the oil sands, has evolved with project cargo.
Jonathan Lamb, Vice-President and General Manager of Duluth’s Lake Superior Warehousing says, “We do a lot of business with the Alberta business community, not just the oil and gas industry, but the power generation sector including the wind industry. For us it’s a tremendous opportunity to network and dialogue, and do some customer visits in a setting that involves all the partners in the supply chain, not just us as a port and operator, but also including the shipping lines, railroads and trucking companies.” The March event marked the 23rd time the combined power of central Canadian and U.S. ports, seaway officials, the transportation and logistics industries have gathered in Calgary to promote the eastern transportation corridor to western producers.
Mr. Lamb says much of the Alberta-related business is in project cargoes. “It’s spot business depending what major project may be going on. Our U.S. side business tends to be a lot of the bulk commodities such as grain, coal or iron ore. Project cargoes include general breakbulk freight, especially on the wind energy side and occasionally steel products and forest products.”
Specialized heavy-lift and transport needed for oil patch
The guests mixed and talked between tables containing information and promotional materials carrying names of the event’s sponsors including Jumbo Shipping, Mammoet and Big Lift. While western Canadian export of oil and commodities such as grain, coal and potash are one side of the balance sheet, the other side is importation of equipment. The immense bitumen processing plants called ‘upgraders’ use complex methodologies requiring massive vessels for fractional or vacuum distillation, de-asphalting, cracking or hydro treating. As of January 2013, there were 127 operating oil sands projects, five of which are mining projects, in total processing 1.7 million barrels of oil per day. Expectations are that by 2021 crude bitumen production will double to 3.7 million barrels per day.
The processing towers or vessels weigh several hundred tonnes or more, and may measure more than 100 metres long. Often manufactured in Europe or Japan, these specialized pieces of equipment require extraordinary lift and transport capabilities to move from the Lakehead ports of Duluth or Thunder Bay to the oil fields of Alberta, more than 1,500 kilometres inland. Raw bitumen extraction involves some of the largest construction machines available to mine and move the oil sands to processing and dilution plants, and the size of this equipment can also call for heavy-lift specialists.
“Our event started out many years ago more as a general meeting in the west to talk about the various commodities, like grain, coal and the other bulk commodities moving on the Seaway,” says Tim Heney, CEO of Thunder Bay Port Authority.” Tonight, however, most are talking about oil sands equipment, and power generation equipment. We’ve moved power plants for the Cities of Calgary and Edmonton, there’s equipment going into Saskatchewan for the potash mines and, of course, Port of Thunder Bay also handles wind turbines.”
Mr. Heney says that the event has proved beneficial in a number of ways, not least of which is increased port volumes. “The same group of freight forwarders that comes here every year will tell you that this event is one of the few where they all get together in one spot. They like to come.” He points out that freight forwarders control a vast number of the cargoes that move, so Seaway Days provides an opportunity for the sponsors to find out what’s moving each year, and who is competing for the business. “There’s a lot of information exchanged.”
Although Port of Thunder Bay historically exports Canadian grain, Heney says the last nine years have seen growth in project cargo, “Mostly from Europe, although we’ve handled shipments from Japan or China.” He adds that there is a benefit to using the Seaway since shippers can reach 2,300 miles inland from Atlantic Ocean ports. “What many people don’t always understand is that the Rocky Mountains are still a significant barrier coming out of the west coast with large, heavy loads. The Seaway remains a reliable system and, of course, we always have grain to take as our back haul.”
Growth outlook for project cargo remains steady
Energy developments account for 31 percent of Alberta’s GDP, capital investment and exports. The Province’s energy resources have created thriving industries in equipment and services related to energy extraction and processing that include metal fabrication, and pipeline and pump manufacturing. Not to be forgotten by all the attention on oil production, in 2011, Alberta agri-food exports rose 19 percent to $8.1 billion from $6.8 billion the year before, and Alberta continues as the third largest exporter of agri-food products after Saskatchewan and Ontario. Wheat remains the number one export, canola seed second, while the U.S. is Alberta’s largest export market, followed by Japan, China and Mexico.
Statistics Canada reported earlier this year that manufacturing sales in the province of Alberta reached $6.4 billion, an increase of 16.5 per cent from a year ago. Alberta’s manufacturing activity is concentrated in industries that support the energy sector such as steel pipe and specialized equipment used in the oil fields, or that produce refined petroleum and chemicals. Alberta accounts for more than 80 per cent of Canadian natural gas production, has the world’s second largest proven oil reserves after Saudi Arabia, and produces the majority of the country’s petroleum derived products.
In addition to the extraction of bitumen, there are large-scale developments associated with the oil sands. Hundreds of millions of dollars are being invested in carbon capture and storage projects. Designed to reduce CO2 emissions, the technology involves construction of hundreds of kilometres of pipelines as well as highly specialized processing facilities. Given the uncertainty of pipeline approvals both south and west, many oil sands developers are breaking up large projects into smaller more manageable stages to control risk. As well, steam-assisted gravity drainage projects are creating new opportunities for smaller players in the market and allowing larger firms to become leaner.
As Bruce Hodgson pointed out in his welcome to the Seaway Days guests, “Both Duluth and Thunder Bay continue to offer seamless connectivity into various western Canadian and U.S. markets, while we at the Seaway have a number of initiatives underway to expedite these connections.” He was referring to the St. Lawrence Seaway’s work with ‘hands-free’ mooring and the infrastructure improvements over the past five years. “We’re certainly committed to keeping the Seaway system operational so you can rely on it.”
Sponsors of Seaway Days
· Canada Steamship Lines
· Fednav International
· Big Lift Shipping Canada Inc
· Lake Superior Warehousing Co.
· Logistec Stevedoring
· The St. Lawrence Seaway Mgmt. Corp.
· Project Transport & Trading
· Thunder Bay Terminals Ltd.
· Chamber of Marine Commerce
· Saint Lawrence Seaway Dev. Corp.
· Port of Thunder Bay
· BBC Chartering Canada
· Algoma Central Corp.
· Port of Duluth
· Mammoet Canada Western