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Altex Energy Ltd. President and CEO Glen Perry (Roth and Ramberg/Roth and Ramberg Photography)
Altex Energy Ltd. President and CEO Glen Perry (Roth and Ramberg/Roth and Ramberg Photography)

Disrupting the pipeline business Add to ...

But the Alberta-Texas pipe, or Altex, as he called his company, was no Alliance. Thanks to the economic crisis, multibillion-dollar oil sands projects were halted, half-built. The pipeline was shelved.

The downturn got Perry thinking. The cost to build a major new pipeline had roughly doubled since Alliance. So why not skip burying steel altogether? Why not load oil onto trains instead? He ran the numbers. Trains, he figured, offered more flexibility and avoided the environmental scrutiny bogging down pipeline projects. And they could open markets that pipes could never touch.

Thus, in 2008, Altex became a rail company. It started near Lloydminster, Sask., with a loading terminal on a siding next to a seed-cleaning operation. Today, it ships 15,000 barrels a day. That’s barely a rounding error relative to the Enbridge system that can carry 2.5 million barrels a day. But it’s growing fast: By year’s end, Perry intends to quadruple the company’s capacity. More than 20 producers are signing on, including such major firms as Husky and Canadian Natural Resources Ltd. Perry is working to build four more loading facilities across Canada. Enbridge and TransCanada are just starting discussions on how to pipe oil to Eastern Canada. Altex is already sending oil all across the continent.

Perry is quickly discovering the power in cutting out a middleman. In pipelines, heavy oil can only flow if it’s diluted. In railcars, it is shipped undiluted—and one shipper observed that undiluted crude is a lot like Bunker C, the sludgy fuel that is used to power ocean-going ships. So now small volumes of heavy crude are being loaded directly into those vessels, skipping refineries altogether. Perry relishes the disruption: “We don’t have to sell this heavy oil to refineries,” he says. Railcars are already “breaking open the market.”

The road ahead isn’t easy—most oil sands operations are so tightly interwoven with pipelines that they cannot place oil onto trains. Enbridge and TransCanada are fierce competitors, too, pushing their own plans to send oil east, west and south, to the places railcars are now serving. Not only that, but shipping by rail can be expensive.

But Perry figures 10% of oil sands crude will one day flow on tracks. In early June, he ran the math for an oil sands company. He found that it could make more than twice as much revenue—an extra $30 (U.S.) a barrel—if it sent its crude by train. In total, he estimates Western Canada could, some day, pump a few hundred thousand barrels a day by train. That’s enough to replace one major new oil pipeline.

* * *

The most disruptive idea of Perry’s involves nothing less than dismantling much of the world’s oil establishment.

In 2003, he filed for a patent for “Zedgas,” a new method for storing compressed natural gas. Using his system, which involves chilling the gas to minus 40 degrees and adding other substances to help make it more dense, he can store four times more gas than current technologies, and at the same pressure.

The implications are vast. Storage is a critical issue with natural gas, particularly when it comes to powering cars and trucks. Today’s compressed natural gas technology doesn’t allow for big enough tanks, so cars can’t travel far between fill-ups. And liquefied natural gas requires such low temperatures that it can only be stored in huge insulated tanks that are heavy and impossible to use in cars.

Pack more gas into a smaller space, while retaining a light container vessel, and those problems fade away. Suddenly, natural gas becomes a viable option on the world’s highways and railroads. “The numbers I’ve run tell me we can take every car on the planet off oil and run them on gas. Buses, railroads, too—if you just have a decent storage technology,” he says. “Probably 50% of our economy depends on oil. And what I’m saying is you don’t have to do it. Just stop. Shut all that down. Use gas.”

He is suggesting nothing less than a rethink of the entire global system of automotive manufacture and energy production. “In 20 years, you can replace 90% of the oil consumption on the planet with natural gas. That’s my real long-term goal,” he says. “That’s where you stop the oil wars. I was talking to one guy. He said, ‘You want to have world peace, then?’

“To which I say: So what’s wrong with having world peace as a goal?”

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