Churchill corridor ideal for ammonia export

Opinion

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This article was published 28/08/2022 (852 days ago), so information in it may no longer be current.

In view of the announcement of hydrogen exports to Germany from Newfoundland, the government of Canada should be advised of the opportunity to export hydrogen, in the form of ammonia, from western Canada via the Port of Churchill.

In 2021, the governments of Alberta and Canada agreed to a $1.3 billion “blue” hydrogen production investment. “Blue” relates to removing the carbon from natural gas (methane) and storing it underground. Alberta has the geology to hold carbon gases in permeable layers of rock below impermeable ones. The transport of hydrogen to markets is more problematic than its production, which is where the Hudson Bay Railway (HBR) and Churchill come in.

Hydrogen can be transported as a compressed gas, or potentially as liquid hydrogen, but it is more economic to convert it into anhydrous ammonia. Converting hydrogen to ammonia is a well-established process and offers wider market opportunities, as well as lower shipping costs.

Ammonia can be used as a fertilizer, it can be burned directly as a fuel, or the hydrogen can be stripped from the ammonia, releasing only inert nitrogen.

The supply-chain proposal is to ship ammonia to Europe in ISO containers. Containers especially designed for transporting ammonia can be leased from Eurotainer or other suppliers. The ammonia containers would be shipped from Alberta via the CN or CP railways and interlined with the HBR for delivery to the Port of Churchill.

The delivery of ammonia could proceed as direct sailings from Churchill to a European container port. Alternatively, they could be shipped via a feeder service to Halifax, where they would be transloaded on larger container ships to cross the Atlantic Ocean.

This proposal has several advantages.

For decades, the Churchill corridor has been starved for sufficient traffic to maintain the costs of their infrastructure. When grain handling was the port’s mainstay, annual volumes have never exceeded 650,000 tons. The HBR requires approximately two million tons of traffic each year to be economically self-sufficient.

Containerized ammonia could provide that volume. One 20-foot container (TEU) of liquid ammonia equals 13.7 tons. Two million tons would equal 146,00 TEUs, or about 365 double-stacked train movements per year. It would take time to spool up to one train per day, but this is still less than one 3,500 TEU ship per week.

Moving containerized ammonia would automatically provide two-way traffic, because the empty ammonia containers need to return on the same route. Container cranes will also enable the Churchill trade corridor to attract other containerized freight.

The HBR would be a lower-cost route to export lentils and other containerized grain to Europe and the Middle East. It could also open the route for inbound and outbound general freight via a feeder service to Halifax or Montreal. Full backhauls would greatly enhance the economics of the HBR. Lastly, a container terminal at Churchill could lower the cost of shipping goods to Nunavut.

The potential market for hydrogen in the form of ammonia is huge. The supply of hydrogen for Europe is critical because the Russians are threatening their methane supplies. Regardless of how the invasion of the Ukraine ends, the EU will never allow the Russians to have such a large market share again. Europe is committed to a green energy future and would no doubt help bring this supply chain into operation as quickly as possible. The guarantee of long-term traffic flows should help underwrite any public investment needed for infrastructure.

The Alberta government is searching for new markets for methane exports in the form of hydrogen. They would have an interest in developing the Churchill corridor to this purpose, as would the governments of Manitoba and Canada that have been subsidizing the HBR.

The export of hydrogen through the Port of Churchill is consistent with the government of Canada’s environment policy. Movements of oil through the Port of Churchill would likely raise objections of environmentalists because of the risk of spills; while anhydrous ammonia needs to be handled with care, any accidental release is likely to be limited to a single container and would dissipate quickly. Providing “blue” hydrogen to export markets will reduce global carbon emissions.

A few regulatory barriers may need to be addressed, but in general this project has minimal financial or market risk. Most of the assets required to develop a containerized ammonia supply chain through the Port of Churchill already exist. The exception is a container crane and port terminal to handle ships of 3,500 TEU and larger.

The short shipping season can be mitigated by ice-breaking or by storing the ammonia containers at the port for transport during the available shipping season.

If Canada wants to help Germany adjust to the Russian threats, sending “blue” hydrogen from Alberta via the Churchill corridor would arrive sooner and add to the Newfoundland exports.

Barry Prentice is a professor of supply chain management at the University of Manitoba