Still Months from a Decision, Keystone XL Debate Rages On

keystone-pipelineThe next chapter in the Keystone XL (KXL) novel has begun.

The US State Department released its 2,000 page study on the controversial measure late last week, making no statement as to whether the pipeline should, or should not be built.  While that decision is being held for President Obama in the months ahead, the State Department did suggest that the project would only have a minimal effect on climate change, much to the ire and disappointment of environmentalists who oppose the pipeline and believe it will do more harm than good.

Climate change has been a main sticking point for anti-KXL advocates since the beginning, and this report will seemingly dampen their efforts moving forward.  Sierra Club Executive Director Michael Brune expressed his shock and discontent in a statement last Friday, “The Sierra Club is outraged by the State Department’s deeply flawed analysis today and what can only be interpreted as lip service to one of the greatest threats to our children’s future: climate disruption.”  He continued, “[The Sierra Club] is mystified as to how the State Department can acknowledge the negative effects of the Earth’s dirtiest oil on our climate, but at the same time claim that the proposed pipeline will ‘not likely result in significant adverse environmental effects’…whether this failure was willful or accidental, this report is nothing short of malpractice.”

In addition to the study winning approval from the majority of Democrats and a sizable majority of Republicans in Washington DC, Fox News released a poll this week showing that 70% of online voters also support KXL, with 23% opposed and a 3% margin for error.  One notable statistic references how Democratic approval of the pipeline rose from 50% in the same poll last year to 57% this year, while Republican support remained steady at 87% both years.

There was an interesting twist in the State Department’s report however, regarding a third option being presented if KXL wasn’t built.  Rather than fully committing to building or not building the pipeline, the State Department analyzed the concept of improving railway transportation to ramp up distribution and cater the transfer of oil away from Western Canada and the central US to the coastlines.

Some are quick to dismiss this notion, believing that this is a tactic to convince people it’s feasible.  In 2011, 350.org spokesman Daniel Kessler detailed how rail shipment only made up for .69% of all western Canadian oil supply.  He added, “Transporting oil sands by rail grabs headlines but will likely remain a very small percentage of total shipped oil sands…even if there was a massive increase in rail transport – it will remain a niche service for oil sands producers.”

Susan Casey-Lefkowitz, director at the Natural Resources Defense Council, agrees with Kessler on how rail would not be able to keep up with distribution from a pipeline.  She said, “Keystone XL is a driver of expansion…rail doesn’t appear to be an alternative for the quantities that will be transported by Keystone XL.”

However, the idea was gaining a considerable amount of steam following the State Department report.  Michael Levi at the Council on Foreign Relations believes that refineries would prefer a pipeline because they typically cost about $5 per barrel of crude to transport, but he adds, “[I]f it turns out they need to spend $20 a barrel to move it by rail, they’re going do to that instead of leaving this $100 a barrel oil in the ground.”

Gary Doer, Canada’s ambassador to the US, was equally as direct in an interview last Friday, “Oil will get to market.  This is clear. Canadian oil and, for that matter, North Dakota and Montana oil is going to get to market.”  He mentioned that it will get there even if companies must opt for rail.

It’s really as simple as going down the list of recent statistics supporting the latest influx of rail distribution.  Plains All American Pipeline, a major transporter of oil and gas in the US, is doubling its domestic crude oil rail capacity.  Canadian National Railway said last week they expect to double their crude shipments this year as well.  In Canada, there’s an 18 to 24 month waiting period for new tank cars.  The State Department announced in the report that there’s an additional 48,000 rail cars on back order in North America, too.

The State Department report had this to add as well, “in the past two years, there has been exponential growth in the use of rail to transport crude oil throughout North America, primarily originating from the Bakken in North Dakota and Montana, but also increasingly utilized in other production areas.”  Based on figures from Justin Kringstad, director of the North Dakota Pipeline Authority, in five years time the Bakken Formation has seen a jump from zero to 550,000 barrels a day in production, all transported by rail.  And for the record, it’s widely believed that the Keystone XL pipeline would have the capacity to deliver 830,000 barrels of oil per day.

So who’s to say that in another 5 years, assuming the Keystone XL pipeline isn’t built, with a concentrated effort by both Canadian and American companies, the 830,000 barrel a day threshold couldn’t be met?  It’s not the ideal option of building the pipeline, but it does appear to be an interesting alternative being presented by the State Department.

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