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Canada 'Arctic passage' still a ways off: transportation minister

WASHINGTON (Reuters) - Logistical challenges to large-scale sea shipments within the Arctic Circle mean such trade will not be a near-term rival to existing routes, a senior Canadian official said on Tuesday.

Insurance companies are beginning to weigh the hazards of sea traffic across waterways in northern Canada and investors are mulling the potential using Arctic trade routes, said Canadian Transportation Minister Lisa Raitt.

"It is not imminent but it is possible," she said in Washington.

Shippers could trim thousands of miles on voyages between Asia and Europe if forecasts of melting ice caps are fulfilled and energy interests are eager to tap a region rich in oil and gas.

The U.S. Geological Survey estimates that, beneath its unspoiled natural scenery, the Arctic holds about 13 percent of the world's undiscovered conventional oil and 30 percent of its undiscovered natural gas.

But there are considerable challenges to opening a year-round passage across northern Canada and the dangers of a drilling mishap are at the forefront of concerns, said Raitt.

"I can tell you, one oil spill or accident in the Arctic is going to be a visual you do not want," she told a forum sponsored by the Canadian American Business Council.

Specifically, officials need to help define navigable routes and decide which ships are fit to move in Arctic waters.

"Bringing those gigantic container ships through areas where it is shallow, first of all, and there is not a lot of navigational markers, it is far riskier than other routes," she said.

Canada is chair of the Arctic Council which coordinates policy with United States, Russia and Nordic nations.

"I don't think the Panama Canal and the Suez Canal have any worries in terms of competition with the Northwest passage right now," Raitt said.

(Reporting By Patrick Rucker; Editing by David Gregorio)

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