UCP candidate Callaway urges Alberta buy Port of Churchill to spur oil sales

Alberta United Conservative Party leadership candidate Jeff Callaway says one way to jump-start the province's lagging oil industry may be to buy a piece of Manitoba.

The port could serve as a key oilsands tranport link, says Jeff Callaway

An old boat sits on the shore, Port of Churchill, Manitoba, Canada. (Peter Blahut/Getty Images)

With Alberta losing out on lucrative offshore energy markets and revenue, United Conservative Party (UCP) leadership candidate Jeff Callaway thinks he's found a solution.

Seeing it as an "infrastructure investment," Callaway said buying the Hudson Bay rail line and the port of Churchill, Man. may be just what Alberta needs to break free of the single-market stranglehold of having only one customer in the United States.

The plan would require a pipeline to be built from Alberta to northern Manitoba so tankers could ship Alberta oil abroad.

Callaway thinks owning an export terminal would provide long-term benefits for Alberta's economy.

"We'll be increasing domestic prices for the rest of our producers," Callaway said in Edmonton Tuesday. "More tax income, more jobs created — there's a ton of spinoff from doing this."

The rail line and port of Churchill have been shut down since the spring, when a portion of the line was washed out.

Callaway says the cost of fixing up the grain terminals and the rail line would run about $20 million.

"It's a small, small investment to make for prosperity in Western Canada," he said. His plan would also include partnering with industry to build a pipeline to the port, which could run into the billions of dollars.

"I feel we would be showing a lot of leadership as a government of Alberta to actually take on that challenge," said Callaway.

UCP candidate Jeff Callaway says one way to jump-start the province's lagging oil industry may be to buy the port of Churchill on Hudson Bay. (CBC)

However a recent engineering study done by the port's current owner, Denver-based Omnitrax, estimates the cost between $20 and $60 million.

Omnitrax says negotiations are now going on with various levels of governments, including First Nations, to come up with money for the repairs.

"We have been working diligently on a long-term solution, and hope to arrive at a decision soon," Peter Touesnard, chief commercial officer of Omnitrax wrote in a statement to CBC News.

Positioned on the northwest shore of Hudson Bay, the port of Churchill has been limited by a short, four-month shipping season.

Callaway said studies by the University of Manitoba show the season has been getting longer each year.

"We can actually ship through the port of Churchill and across Hudson Bay with new ice-strengthened tankers probably almost year-round now," he added.

Even with an incrementally longer season each year, the relatively short window presents a challenge, said Andrew Leach, an associate professor of business at the University of Alberta.

Leach thinks it might be a better option to look at increasing rail capacity into Churchill, rather than building a brand new road and an oil pipeline that would be unused for much of the year.

"I wouldn't put the lights right out on Hudson Bay and Churchill, but I think it needs a little more examination on the year round, and how to leverage infrastructure best," he said.

Callaway is one of four candidates running to be the leader of the newly formed UCP. The others are Jason Kenney, Brian Jean and Doug Schweitzer.

During his news conference on the steps of the Alberta legislature Tuesday, Callaway took a few verbal swipes at one of his leadership opponents.

Callaway, who has been at odds with former Wildrose leader Brian Jean, said there are questions swirling around how Jean managed his Wildrose caucus budget.

"I'd be concerned about electing someone who can't even run a $2-million budget," Callaway said.

The UCP leadership vote is set for Oct. 28. The party has yet to announce many rules surrounding what type of vote it will be, or even how much money candidates must put up to enter the race.

Callaway said the lack of clarity doesn't worry him. 

"I'm sure we'll figure it out by the 28th of October," he said.