The Port of Churchill on the shore of Hudson Bay in Churchill, Man., in January. The port is far from ready to facilitate all-season shipping, but it is in contention to be designated a key nation-building project by the Carney government, writes Rita Trichur.Matt Horseman/The Globe and Mail
There are grim realities of a worsening war in the Middle East.
Death, destruction and the deepening distress of hundreds of millions of civilians living in the region should be foremost in our minds.
So, forgive me, dear readers, for my admittedly gauche recognition that this widening conflict is reinforcing the need for more Canadian energy and its potential future transport through the Port of Churchill in northeastern Manitoba.
The war, coupled with U.S. trade protectionism, is unintentionally highlighting Canada as a stable energy producer and reinforcing the business case for expanding our country’s only deepwater Arctic port.
To be clear, the Port of Churchill is far from being ready to facilitate all-season shipping, so that ambition – and many billions of dollars – may not be realized for at least another 15 years, if at all. There are signs, however, that it is in contention to be designated a key nation-building project by the Carney government.
The Middle East conflict is yet another reminder of why Canada must prioritize long-term projects that increase energy security. Its failure to do so has already resulted in missed opportunities for the oil and gas sector.
Churchill port signs development and trade partnership with massive Belgian terminal
The war is already causing problems for energy producers across the region. The Strait of Hormuz, a critical shipping passage for the industry, is effectively inaccessible.
QatarEnergy, the world’s largest liquefied natural gas company, was forced to shut down production on Monday after an attack by Iranian drones. That, in turn, caused a spike in gas prices.
Gas prices continued their ascent on Tuesday after the United States and Israel launched new attacks on Iran and Lebanon.
An Iranian attack on Saudi Arabia, meanwhile, caused its state oil company, Aramco, to pause operations at one of its refineries on Monday. Oil prices have also risen.
Israel, meanwhile, suspended some gas production because of Iranian missile strikes.
Sure, the production shutdowns and energy-price gyrations could prove temporary. There are also longer-term reasons why this conflict should shore up interest in Canadian energy.
Consider this: Even if the U.S. and Israel prevail in their military campaign, this conflict is poised to create a power vacuum in Iran just like previous military interventions did in Iraq and Libya. Both countries, each with vast energy resources, have been marked by chronic instability with no end in sight.
That brings us back to the Port of Churchill. Manitoba Premier Wab Kinew believes it could serve as a pivotal hub in an energy corridor that could transport Canadian energy exports, including LNG, to international markets.
That would require a slew of costly upgrades and new ice-breaking capabilities to extend the shipping season. But Mr. Kinew argues that the port could serve as the starting point of a shipping route connecting the Hudson Strait to the Atlantic Ocean. He has also said that the port is garnering increased corporate interest, including from a major energy company.
Oil prices jumped on Monday as the U.S., Israel and Iran stepped up their conflict in the Middle East, with attacks damaging tankers and disrupting shipments from the key producing region.
Reuters
Separately on Tuesday, Arctic Gateway Group, which owns and operates the Port of Churchill, signed a development and trade partnership with the Port of Antwerp-Bruges, one of the world’s largest cargo-shipping facilities.
Arctic Gateway chief executive Chris Avery was asked if the impact of the current Middle East crisis shows that Canada has been late to develop Churchill.
“I don’t know if it’s really late, but it’s something that we need to do, and we need to do it with speed and determination, as the Prime Minister says,” Mr. Avery told my colleague Jeffrey Jones in an interview. “I think that’s what we’re focused on, is getting things done quickly.”
Geopolitical risk is indeed proving unpredictable. What’s more, countries in Europe and Asia are clamouring for more Canadian energy. This project has strategic importance.
“If it’s not a crisis in the Middle East, it’s the geopolitical situation with the U.S. or it’s Russia or something else going on in another part of the world,” said Mr. Avery. “It really underlines that our geopolitical situation, the way we trade, has fundamentally changed, and the Port of Churchill is going to play an important part of that for Canada going forward.”
Proponents claim the project has the potential to enable faster delivery of products to Europe by shaving two days off delivery times as compared to other North American ports.
Just over a month ago, Dan Jorgensen, energy commissioner for the European Union, mused about buying more LNG from Qatar and Canada to diversify its supply away from the U.S., according to a report by Bloomberg News.
The world changes on a dime. Canada must be ready to respond.