If Keystone XL is rejected, will rail shipments fill the gap?

© Photo by Doug Bellefeuille, Courtesy of Minnesota Pollution Control Agency

Brad Plumer at WonkBlog digs in:

EPA doesn’t think shipping oil by rail is as easy as State does.

So which argument is right?

There’s decent evidence that the State Department is being overly optimistic. Its draft assessment predicted that rail shipments of Canadian heavy crude to the Gulf Coast would reach 200,000 barrels per day by the end of 2013. But, according to Reuters, this forecast appears to be based on a misreading of industry reports. Shipments to the Gulf Coast “have not exceeded 30,000 barrels per day in any of the past 12 months.”

In addition, the market for tar sands oil is less lucrative without the pipeline:

The State Department report estimates that shipping Alberta’s heavy crude by pipeline costs about $10 per barrel. But producers tell Reuters that shipping by train to the Gulf Coast costs about $30 per barrel.
Now, even at those higher prices, shipping tar sands by rail could still be viable — but it all depends on the demand for oil and available alternatives.

The role of demand -- specifically reducing demand -- has been a point Lloyd has made several times regarding the battle over Keystone. The concern over spills from rail transport is also something I've addressed recently, as well. While rail may be considered more risky than a pipeline, I don't find that argument for the pipeline compelling when considered in the context of the math of climate change. The debate over rail versus pipelines is the wrong argument to be having. The more important issue is whether we allow these fossil fuels to be extracted or leave them in the ground and their carbon out of the atmosphere.

Tags: Canada | Global Climate Change | Global Warming Causes | Oil | Tar Sands