Keystone XL’s deepening fight spurs move to oil by rail


mentalfloss
No Party Affiliation
#1
Keystone XL’s deepening fight spurs move to oil by rail

CALGARY — As the year rolled to a close, Russ Girling, chief executive officer of TransCanada Corp., repeated on television what he has often said: he’s “very confident” that President Barack Obama will approve the Keystone XL pipeline.

The problem is that people have been saying that for years. As a result, the oil industry on both sides of the border has begun to aggressively deploy alternatives to the pipeline, including shipping by rail and barge, to get that oil to U.S. Gulf Coast refineries.

Rail, though, poses its own issues. A train carrying hazardous materials, including crude oil, derailed and caught fire in New Brunswick, Canada, on Jan. 7, causing the evacuation of as many as 150 residents — the latest serious accident involving rail cars hauling flammable liquids.

The tilt toward rail is rooted in an industry sense that more than five years after it was first proposed, the $5.4 billion Keystone XL project seems stuck in a deepening impasse caused by shifting U.S. environmental politics and a radically reordered American energy landscape.

Once framed as a fight over how the line’s route might harm Nebraska prairie land, Keystone has been recast as a fight against global warming by increasingly vocal green groups who have chained themselves to equipment and brought in actor Robert Redford to battle the project. Their stand seemed to gain traction from Obama, when he declared in June he wouldn’t approve the project if it exacerbated “the problem of carbon pollution.”

SURPASSING RUSSIA

While the pipeline is being reviewed, the U.S. has also undergone an energy transformation owing to the shale oil and natural gas boom. Output from fields in North Dakota and Texas has pushed production past 1988 peaks, helping to explain how the U.S. is estimated to have surpassed Saudi Arabia and Russia as the world’s top oil and gas producer last year.

So even as owners of Gulf Coast refineries have fine-tuned them in anticipation of processing the estimated 800,000 barrels a day Keystone would ultimately deliver, oil supply is not the pressing issue it once was — rendering Keystone more of an option than an absolute must for U.S. energy needs.

“It gives the U.S. administration, if nothing else, a reason to sit on the fence,” said Sandy Fielden, director of energy analytics at RBN Energy LLC in Austin, Texas. If shale didn’t exist, “the importance of securing supply from friends and allies would be more important.”

Keystone backers may see opposition soften in the face of high profile incidents associated with moving millions of barrels of oil by rail. Canadian and U.S. oil interests still want the pipeline, which they say will form the backbone of a new North American oil supply that will create U.S. jobs, keep those Gulf Coast refineries humming and allow Canada to expeditiously develop its largest oil asset.

Canadian Prime Minister Stephen Harper has said he won’t take no for an answer on Keystone, calling the project an economic “no-brainer.”

Behind that bravado is concern that the portion of the route under review, a 1,179-mile (1,897-kilometre) leg from Canada to Steele City, Nebraska, may never win approval. The entire Keystone, fully built out to the Gulf of Mexico, would cover about 2,000 miles.

“There’s growing concern over the extended uncertainty of Keystone,” said Bob Schultz, a professor at the University of Calgary’s Haskayne School of Business.

FOUR-LETTER WORD

The major Canadian response to this U.S. foot-dragging has largely amounted to a four-letter word: rail.

“I think at this point the companies have said, ‘If Keystone goes, that’s fine, if it doesn’t go, we’ll ship it by rail,’” Schultz said.

That’s already happening. Exxon Mobil Corp.’s Imperial Oil Ltd. last month announced what may be the biggest oil-by-rail loading terminal yet if expanded to the full potential of 250,000 barrels a day, built to accommodate production from its Kearl oilsands project.

Canadian producers are backing proposals to move as much as 1.1 million barrels a day by rail in the next three to five years, five times more than last year, according to the Canadian Energy Research Institute.

Cenovus Energy Inc., which has bigger reserves than Yemen, was moving 11,000 barrels a day by train to coastal markets in 2013 and plans to ratchet that up to 30,000 barrels a day by year-end, said CEO Brian Ferguson. Rail and barge transport will form a “significant” part of Cenovus’ oil-export strategy, he said.

The U.S. output boom created competition between crudes and woke the energy industry to the viability of using rail and barge to transport oil, as producers and refiners worked around a shortage of pipelines, said Skip York, principal analyst in oils research at Wood Mackenzie Ltd. in Houston.

“Now with tight oil, there is a new supply source we didn’t see,” York said. “Those tight oil barrels that don’t go to the East and West Coast are going to go to the Gulf Coast. There’s a now a new competitive dynamic where the refiners that can increase their take of light oil versus heavy, they now have a choice.”

Rail transit raises its own issues, among them the safety of moving that much crude over a system in which accidents involving crude-bearing tanker cars have grabbed headlines. Moreover, it poses questions for activists who oppose Keystone on environmental grounds, since the crude winds up in the U.S. anyway.

Beyond the safety issues, shipping by rail means “more cost, less efficiency, more greenhouse-gas emissions,” said TransCanada’s Girling. But the prolonged delays give the industry little choice, he said.

Incidents like the runaway train full of oil from North Dakota’s Bakken region that exploded and killed 47 people last year in Lac-Mégantic haven’t so far dented the growth in rail shipments.

Last month, 1,500 North Dakota residents fled fumes from a fire that engulfed Burlington Northern Santa Fe LLC railway cars carrying oil, after a collision with another train about 25 miles west of Fargo. The Transportation Department said Jan. 2 that oil pumped from North Dakota may be more flammable and thus more dangerous to ship by rail than other crude.

Environmentalists say the Canadian oil industry is exaggerating its ability to develop its oilsands by using rail if Keystone is killed.

Trains are “not a substitute” for Keystone XL, but a “niche market” that favours transporting light oil and not the thick oilsands bitumen that requires special heated rail cars, Anthony Swift, an attorney for the Natural Resources Defense Council, wrote in a recent blog post. “Expansion of tarsands depends very much” on Keystone’s approval, according to Swift.

Environmentalists also note that pipelines are subject to accidents as well.

A State Department draft report last year said Keystone wouldn’t worsen climate change because the oilsands could be developed without the pipeline, moving to market by other means including rail. The government is in the midst of putting together a final report — whose results may be released within weeks — that will be based on input to the draft that includes environmental arguments against it.

“What people don’t understand is the magnitude of the asset and the magnitude of the production increases” that would follow Keystone’s approval, said billionaire Tom Steyer, an Obama fundraiser who has urged him to kill the pipeline. “Once it’s built, it will enable this thing to run for decades."

Keystone XL’s deepening fight spurs move to oil by rail
 
mentalfloss
No Party Affiliation
#2
Opposition Leader Thomas Mulcair talks rail safety

Federal Opposition Leader Tom Mulcair is scheduled to speak at 2:30 p.m. ET today in Ottawa regarding his concerns over rail safety, in light of the latest train derailment and fire in northern New Brunswick.

CBCNews.ca will carry Mulcair's press conference live. Mobile users can watch the livestream video here.

The latest accident happened Tuesday outside the village of Plaster Rock, N.B.

The cause of the derailment has yet to be determined but the fire from exploding fuel tanks is becoming an uncomfortably familiar scene.

On July 6 last year, a freight train carrying fuel tanks loaded with crude oil from the Bakken field in North Dakota rolled out of control into the centre of Lac Mégantic, Que. The ensuing fire explosions and fire destroyed the downtown and killed 47 people.

In October, an explosive derailment happened near Gainford, Alta. One hundred people were evacuated from their homes.

And on Dec. 30, a series of train cars carrying Bakken crude oil exploded outside Casselton, N.D., when they went off the tracks.

Two and a half weeks after the Lac-Megantic derailment, Transport Canada issued an emergency directive requiring two operators on all trains with tank cars carrying dangerous materials. It also prohibited similar trains from being left unattended on main lines.

The emergency directive expired at the end of 2013 but was renewed on Jan. 1 for all rail companies that are not members of the Railway Association of Canada (RAC). That's because the RAC submitted new operating rules in November. Non-RAC members have until March to do the same.

Opposition Leader Thomas Mulcair talks rail safety
 
petros
#3
Laughing my as$ off....
Last edited by petros; Jan 9th, 2014 at 02:58 PM..
 
BaalsTears
+1
#4
Pipelines are safer for transporting oil, but Keystone probably won't happen. President Obama's environmental supporters oppose the pipeline, and his campaign donors are invested in rail transportation.
 
captain morgan
Bloc Québécois
+1
#5
I believe that the White House is making a tactical error that will come to bite them in the long run
 
BaalsTears
+1 / -1
#6
Quote: Originally Posted by captain morganView Post

I believe that the White House is making a tactical error that will come to bite them in the long run

The error rises to the level of a strategic mistake for the entire USA imo. America has no friends left with the exception of Canada. Treating Canada in this manner alienates Canadians and misses the opportunity to fuse the energy futures of the two countries. The real lesson for Canada is that America is an unreliable partner. The day will come when America regrets treating Canada with such casual recklessness.
 
mentalfloss
No Party Affiliation
+1
#7
Quote: Originally Posted by BaalsTearsView Post

The error rises to the level of a strategic mistake for the entire USA imo. America has no friends left with the exception of Canada. Treating Canada in this manner alienates Canadians and misses the opportunity to fuse the energy futures of the two countries. The real lesson for Canada is that America is an unreliable partner. The day will come when America regrets treating Canada with such casual recklessness.

Please.

You're derailing my thread.
 
BaalsTears
-1
#8
Quote: Originally Posted by mentalflossView Post

Please.

You're derailing my thread.

Sorry. It was unintentional.
 
MHz
+2
#9  Top Rated Post
Depending on the viscosity of the product it would be desireable to line the tanks with some pellets or other product that can be easily separated at the destination and both products used in full. Tanks would almost become puncture proof and rips would ooze out a glob rather than thin liquids. One can be retrieved, the other should be ignited asap to minimize overall damage. Tunneling through mountain ranges opens up the possibility that the valleys would hold the extracted material and with minimal materials the tunnel serves as the pipe with gravity helping get it across the level spots. The problem lies with a full pipe and a break that leaks until the pipe is empty. Belts are almost as efficient and maintenance is easier and a spill is over as soon as a stop device trips.

Quote: Originally Posted by mentalflossView Post

Please.

You're derailing my thread.

BOO-HISS wish I had posted it lol
 
captain morgan
Bloc Québécois
+1
#10
Quote: Originally Posted by mentalflossView Post

Please.

You're derailing my thread.


BT is not derailing the thread... I see it as an analys*s and dissection of the motivation(s) behind approving (or not) KXL.
 
mentalfloss
No Party Affiliation
+1
#11
Quote: Originally Posted by BaalsTearsView Post

Sorry. It was unintentional.

My sarcasm detector may be broken here but I was just kidding.

Carry on.

Let's keep this train moving.
 
petros
+1
#12
Quote: Originally Posted by BaalsTearsView Post

Pipelines are safer for transporting oil, but Keystone probably won't happen. President Obama's environmental supporters oppose the pipeline, and his campaign donors are invested in rail transportation.

Quote: Originally Posted by captain morganView Post

I believe that the White House is making a tactical error that will come to bite them in the long run

It'll happen and rail will continue at a growing pace. It has nothing to do with Obama and enviro. It's Obama and a percentage of the content.
 
BaalsTears
+1 / -1
#13
Quote: Originally Posted by petrosView Post

It'll happen and rail will continue at a growing pace. It has nothing to do with Obama and enviro. It's Obama and a percentage of the content.

I hope you're right.
 
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