The AlCan RailRoad

Total Cost $15 Billion US

Saves $35 Billion Instantly

500,000 Barrels of Bitumen to market Daily.

4BCF Natural Gas to Market Daily.

      In simplest conceptual form we (perhaps a joint venture between First Nations and AFN) build a railroad from the North Slope of Alaska to Fort Nelson, BC, or Ft. McMurray, Canada. We ship Bitumen on that railroad from Alberta to Alaska, dilute it with North Slope condensates to make synthetic crude oil and inject it into the Trans Alaska Pipeline which carries it to Valdez and oil tankers haul it to Pacific markets.  We then load the same Dual Use Cryogenic tanks that moved the bitumen to Alaska with LNG. The tanks need to be returned to Alberta  anyway so the Natural gas now gets a free ride to Alberta. The Bitumen producers buy the LNG and use it to extract more Bitumen and the process repeats. Excess LNG is re-gasified and sold into the North American gas pipeline grid. Everybody wins. Here are the High Points.

Highlights of this plan:

     --It provides the least expensive method for Canadian Bitumen to be loaded on Pacific Tankers.    

     -- It fills the Trans Alaska Pipeline with heavy Crude oil for the next 30 years or more.

     -- It brings in value added income to oil companies that process Bitumen to Synthetic Crude Oil for at least 30 years.

     -- It brings a railroad link to the lower 48 from Alaska.

     -- It brings free transport of at least 4 BCF of Natural Gas from the North Slope of Alaska to Alberta Canada each day for 30 years.

     -- It brings energy security to every Alaskan Community for 30 years.

     -- It assures financial security to the Railroad for 30 years.

     -- It allows Crest Iron Mine to operate (Canadian Benefit)

     -- It allows MacKenzie River Oil and Gas exploitation. (Canadian Benefit)

     -- It allows Alaskan Iron expliotation

     -- It allows Alaskan Limestone development

     -- It allows Alaskan Coal development

     -- It allows creation of Alaskan Steel industry

     -- It allows creation of Alaskan Cement industry 

     -- It reduces the US Balance of Trade with China

     -- It provides another mechanism for tourists to visit Alaska.

     -- It ties in with the Electrical Intertie between Panhandle Communities of Alaska and the Canadian Electrical Grid. 

     -- It provides transportation for numerous smaller industrial and resource businesses to thrive.

     -- It reduces the cost of goods sold and the cost of living in Rural Alaska and Canada.

     -- It provides huge carbon credits and improves the environment

     -- It provides up to 30 million tons of intermodal freight each year to be moved thru Alaska for Centuries to come, that's about 3% of all freight moved on earth.

     -- It provides thousands of new jobs for Alaskans

     -- It provides more income to the state than the gas pipeline does.

Phase One

Intermodal Gas for Alaska

     Three of the big problems our State has been working on are the decline of Oil Production, and the Stranded Natural Gas on the North Slope, and providing inexpensive energy to all parts of our state. Phase one concentrates on providing gas to all parts of our state at a reasonable price, and keeping an alternative method of exporting natural gas open. It fascinates me how much effort is being put into building a natural gas pipeline for Alaska natural gas when it is clearly not economical to do so at this time. The numbers are just not there, at least not yet. 

     This scheme will accomplish everything both the in-state and the AlCan gas pipelines will and much more, but for far fewer dollars. While it will accomplish the task of moving Gas from the North Slope, it should not be seen as competing with either gas pipeline. The gas pipelines will come about when the economics dictate. Political desire or any other emotional push to make an uneconomic plan work will only lead to disaster.

     The first phase of this plan can stand alone as an economic method of moving natural gas regardless of whether the later phases are developed or not. That is to extend the Alaska Railroad from Nenana to the North Slope. At a cost of approx 2.5 billion dollars, liquefied natural gas, can be loaded aboard stackable intermodal shipping containers that look very similar to the standard 8’X 40’ shipping containers we are all accustomed to seeing, loaded on railcars and shipped to all the rail belt cities in Alaska and also by barge to all of the cities of Alaska. Here is what the railcar carrying connexes of LNG look like in Japan. This method has been used for the past decade to supply gas to central Japan .     This method is very economic as you will see. A liquefaction plant capable of liquefying enough LNG to power every part of the State of Alaska already exists on the North Slope today. It is currently used to liquefy natural gas so the NG can be injected into the oil fields and recover oil that would otherwise be unrecoverable. As the fields mature there will be less and less use for this LNG, thus the overage in capacity may be tanked up and moved by rail to fill the needs of Alaska . These types of shipping containers will also fit on a standard Semi-Truck for over the road transport, on standard freight and cargo ships or on river barges. They can also be used as simple storage containers left on site near where the gas is to be consumed much like propane tanks are used.     

     While it is evident that the gas can be used in a village to power the electrical generators and plumbed to heat the homes, everything from lawn mowers to snowmobiles and automobiles to large trucks can be adapted to burn LNG instead of gasoline. With a small industrial process container, the LNG can also be converted into methanol which can be used to power most anything that can run on gasoline with little or no adaptation.

     The LNG experiences boil off of approximately ¼ of one percent per day as it is being transported or stored in these containers. Thus these intermodal containers have a method of re-liquefying the natural gas. This boil off can also be used to fuel the Locomotives that propel the train, or the engines on the boat, or if absolutely needed can be safely vented into the atmosphere.  

     Once a rail link is created from the North Slope to Nenana we will have all the gas we need for in-state use. The rail link also provides an economic common carrier method of accessing ice free tidewater ports. This is important. If a natural gas pipeline is built there will be an open season. If small producers don’t buy into the pipeline the entire pipeline capacity will be owned by the big producers who do buy in. However, if economic conditions improve, the small producers of LNG or latecomers into the production business will have no method of moving gas. But if the rail connection is built, they will always have the ability to put gas on the railroad as the railroad is a common carrier and must carry everybody’s freight. The railway method of moving the gas provides much more capacity than any pipeline can muster. That means the rail link should be built even if a pipeline is eventually built.

     The rail link will allow up to 24 billion cubic feet of natural gas (possibly even more) to be moved each day. Thus the capacity can be expanded or contracted at will. A gas pipeline must be filled to capacity and throughput maintained at that level regardless of economic conditions. The rail throughput can be scaled downwards or upwards as supplies and economic conditions dictate.

     We have the money to build the Nenana to North Slope rail link in the State Coffers today. We don’t need FERC approval to build the rail link. The rail link will supply much needed transportation to the North Slope . There are a number of other customers to haul freight on a rail link to the North Slope , including an as yet unnamed cement manufacturer. The railroad to the North Slope must cross one of the biggest limestone shelves on the North American Continent. A rail link could make Alaska the biggest supplier of cement in North America. There are a number of other valuable petroleum products that can be produced on the North Slope and economically carried by the railroad if the rail link is built. These other products are commonly referred to as condensates. My last thought is that the rail link could provide a safe, enjoyable, environmentally friendly method for many tourists to visit the Arctic National Wildlife Refuge and other parts of the North Slope. 

     Now as if that is not enough for our visit, let's look at the really grandiose portion of this plan. Call it Phase Two.

Phase Two

Export Gas, Import Bitumen, Export Synthetic Crude, Save the TAP

     Free Railroad

     If we build the AlCan rail link thru to Alberta the Oil Sands customers come into play. None of these customers were included in revenue projections for the Alcan rail link generated in Governor Murkowski’s term. I don’t know how to persuade the State to re-figure that plan with these oil sands revenues. But I invite my readers to contact whomever they think might be able to influence such a decision. The more the merrier.

     We know they need an inexpensive method of heating the Oil Sands in Alberta to release the heavy crude oil called Bitumen. Natural Gas is currently the most economic and environmentally best way to do this regardless of which extraction method is utilized. There are some promising techniques that use renewable sources of energy to power them but they are not readily available at this time, and they do not provide the extra free hydrogen necessary for the process like natural gas does. If, or when those renewable energy methods come about, the natural gas can simply be sold into the North American gas pipeline grid. If we build the AlCan rail link and we move 1000 to 1200 or so rail cars per day, each with 80 short tons of LNG aboard and the railroad charges the average rate per mile that was charged in 2007, the shipping cost for each 1,000 cubic feet of gas will be 99 cents excluding any taxes. That provides approximately 3.3 to 4 million cubic feet of gas per railcar (depending on technical variables), and a total of at least 4 billion cubic feet of gas per day. That gas which is not used to release the oil from the sands can be re-gasified and pumped into the North American Gas Pipeline Grid, or sold in LNG form to any rail connected customer in North America. This could easily be the first step in converting the North American automotive market from gasoline to natural gas.

     I don’t want to minimize that statement, this is a huge market and it needs to be exploited. It will mean the creation of a Spot Market for LNG and that means a lot more profit for both the gas producers and for the State of Alaska. It also means a great improvement in our environment. But as important as that is to Alaska, there is an even greater impact for us, at least economically.

     The bitumen produced by heating tar sands/oil sands with natural gas needs to get to market. Many of those markets are only available if we get the bitumen to an ocean going tanker. There is a plan to build a pipeline to the coast of BC, but I have it on good authority that the green party people, in conjunction with the First Nations People are going to resist. The 30 inch pipeline, which requires a 20 inch return pipeline to carry diluting oil called Naphtha or Condensates, may get the oil to the coast, but the First Nations People are not going to allow the tankers to come into port. At least not without a fight. They do not want anything like an Exxon Valdez in their waters. The waters where they want to port the tankers are much trickier than the port of Valdez in Alaska. They feel they will face a certain spill if the tankers are allowed to port there. Nuff said.

     The bottom line is they need to move the bitumen. They can move it by rail to any place on the continent, but the closest and least expensive port is Valdez in Alaska. The railroad could be tunneled into Valdez at great expense, but why do that when we have a perfectly fine pipeline into Valdez already and it is not filled to capacity. The Bitumen can be converted into synthetic crude oil on the North Slope and injected into the Trans Alaska Pipeline along with the crude oil currently running thru the pipeline. To do this the Bitumen is diluted with naphtha condensates (which are currently re-injected into the earth as unwanted by-product or mixed with crude oil and sold at crude oil prices) to make synthetic crude oil, we may also need to supply methanol to make the synthetic crude oil, but that is most easily manufactured by processing natural gas.... We have a lot of natural gas.... Thus it is possible to flow the bitumen to the tanker facility in Valdez without building a railroad into Valdez. The Bitumen gets where it needs to go, there is no need to haul in diluting oils, and the pipeline is once again filled to capacity. It is important that the pipeline be kept near its capacity if possible. Otherwise once we drop below some daily production number, I have heard 330,000 barrels per day being bandied about, the pipeline becomes unable to maintain a steady flow and it will have to revert to batch use, or worse, be shut down permanently.

     As you can see, this is a win win situation. The Bitumen gets where it needs to go as does the gas, and the pipeline stays in production for a much longer period of time. Everybody gets paid, and this entire project will cost less than 1/3 of the cost of the gas and oil pipelines currently being considered. To boot, if the gas pipeline is built, the railroad can move the pipe segments for less cost and save the highway system from damage caused by the transport of such heavy materials.

     Best of all, if the pipeline is built this rail project still makes economic sense. It is competitive in landed price per unit volume delivered and can carry the overflow of gas that is beyond the capacity of the pipeline, and it can carry the bitumen back to Alaska as well, something the gas pipeline can not do. Here’s the kicker. The Bitumen must be maintained at some high temperature, something above 130 degrees C while it is in transport in order to maintain a somewhat liquid character. It also needs fume containment. The LNG needs to maintain a low temperature, something below -160 degrees C to maintain its liquid character. It also needs fume containment. Thus the same tanker cars that carry the LNG south can be used to haul bitumen north. While this is not self evident, the bitumen cars don’t need to be steam cleaned to prevent cross contamination. The bitumen can not maintain liquid properties at the low temperature of LNG. So residual bitumen just makes a round trip back to Alberta as it becomes more like a paint coating on the inside of the tanks when they are carrying LNG. This is no small detail, steam cleaning 1200 railcars of sticky bitumen each day would be one heck of a task.

     If the LNG and Bitumen are shipped in this manner, the cost of shipping the gas is 99 cents per thousand cubic feet, and the cost of moving the bitumen to the Pipeline is just under 6 dollars per barrel. If no other commodity is hauled on the railroad, this railroad still generates 85 billion dollars in revenue at the above rates over a 30 year period. Not bad for a 15 billion dollar investment.

     But wait, there’s more. Once this rail link is created it will be able to move intermodal freight from Seward or Whittier to any east coast port in North America. It will provide a much quicker turn around for freighters than Vancouver, Tacoma, Portland, San Francisco or Long Beach. It will add two days to the transcontinental rail transit time, but remove 9 days from the trans-pacific transit time on average. This intermodal freight passage will generate many jobs as well as taxes and tariffs to add to State income, and those are dollars that won’t go away when the oil and gas fields dry up. One of the major potential customers for this rail link will likely be the Chevron owned "Crest" Iron deposit in the peel watershed in Yukon Territory Canada. I'll discuss this further in Phase 3 of this proposal.

     Ok now let’s look at the future of the rail system once phases one and two have been completed. Let’s call this Phase Three.

Phase Three

A Billion Tourists

     This is a rail link from Nenana to the West coast of Alaska. Whether the terminus is the Red Dog Mine, Kotzebue, Nome, or maybe all three. We need such a line to haul the minerals from Red Dog mine, that much is obvious. Not so self evident is the Lost River Bituminous Coal deposit. This deposit was studied intensively a number of years ago. There is more than 3 Trillion Tons of economically viable coal to extract from this area alone. This type of coal is perfect for converting into Coke. Coke is made by burning coal in the absence of oxygen. High quality Coke is needed to convert Iron into Steel. By putting the Lost River Coal deposit together with the Limestone Deposit crossed by the link to the North Slope and the Crest Iron deposit in Yukon Territory and you get a three way trade route to a cement and steel industry for Alaska or Yukon Territory. There are many smaller jobs that may only require one rail car or so per week to move their materials. I don’t have an extensive list of candidates, but one needs to be generated to see who else would use such a link. Perhaps a reader will know of potential customers for this last leg of the rail plan in Alaska . Obviously the movement of freight by rail to these communities will vastly improve the cost of living for everybody, but even those communities that don’t have direct access to the rail will be able to hub out by small plane from communities that are on the rail line to receive the benefit of the reduced shipping costs. This is a big benefit to the State that is not easily quantified.

     The biggest benefit however will come when Wally Hickel’s group comes into play. They want to build a sub-marine rail “Chunnel” to connect the Trans-Siberian Railroad with our railroad, and then on to the North American Rail System. This will make it possible to access Chinese and Russian markets for our oil, coal, gas, fish, timber, and minerals. Likewise it will give us better access to their products and resources. Then finally, there is trans-continental rail tourism. This is perhaps a bigger potential boon to Alaskan economics than all of the other aspects of rail infrastructure combined. Billions of potential tourists will be able to afford to come to Alaska or thru Alaska on their way to North and South American destinations. They will all need to eat, sleep, buy trinkets, sightsee, go fishing, etc. But instead of a few hundred million potential tourists, we could see billions of potential tourists in our future.

     But not unless we take the first step and start building our rail infrastructure.

     There you have it. This is what I want to discuss with everybody who will listen. But my goal in having this discussion with you is more than just idle chatter. I want you to write a letter, or better yet have you introduce me to Oil Executives who will write a letter to the Alaska Railroad requesting a proposal to build the railroad.  It will only happen with the application of public pressure, that's you. Now go put your gloves on, we have a railroad to build

Sincerely

Dan Apted

Apted Technologies Inc.

Alcan Railroad