{"id":64644,"date":"2015-11-13T04:38:22","date_gmt":"2015-11-13T10:38:22","guid":{"rendered":"https:\/\/canadianinquirer.net\/v1\/?p=64644"},"modified":"2015-11-13T04:38:22","modified_gmt":"2015-11-13T10:38:22","slug":"after-keystone-xl-denial-a-boom-for-crude-by-rail-is-not-a-foregone-conclusion","status":"publish","type":"post","link":"https:\/\/canadianinquirer.net\/v1\/2015\/11\/13\/after-keystone-xl-denial-a-boom-for-crude-by-rail-is-not-a-foregone-conclusion\/","title":{"rendered":"After Keystone XL denial, a boom for crude by rail is not a foregone conclusion"},"content":{"rendered":"
\"(Photo<\/a>
(Photo from Keystone-xl.com)<\/figcaption><\/figure>\n

CALGARY \u2013 Now that the Keystone XL pipeline has been rejected, it\u2019s not a foregone conclusion that much of the 830,000 barrels a day that would have flowed through it will move on trains instead, industry watchers say.<\/p>\n

\u201cI think that rail certainly will play a part, but a lot has to do what happens to the price of crude and happens to oilsands projects,\u201d said Dirk Lever, an analyst at AltaCorp. Capital.<\/p>\n

Proponents of Keystone XL and similar proposals frequently trumpeted the benefits of moving crude by pipeline over rail \u2013 safety-wise, economically and environmentally.<\/p>\n

\u201cThis denial will result in more oil moving by rail along with an increase in (greenhouse gases),\u201d TransCanada warned after U.S. President Barack Obama announced he’d be denying a permit for the US$8-billion cross-border pipeline.<\/p>\n

The safety of shipping crude by rail has been top of mind since a fiery crash in the summer of 2013 killed 47 people in Lac Megantic, Que.<\/p>\n

Canada\u2019s crude-by-rail exports have fallen this year, according to National Energy Board data.<\/p>\n

The industry finished off 2014 shipping an average of 158,532 barrels a day across the border. In the first quarter of 2015, that dropped to 119,755 and in the second quarter it plummeted to 83,605.<\/p>\n

Shipping crude by rail is significantly more expensive than pipeline \u2013 think US$10 a barrel versus US$5 a barrel, though it does vary depending on market conditions, said Lever.<\/p>\n

The West Texas Intermediate crude price, the main U.S. benchmark, is around US$42 a barrel. But that’s not even the price oilsands producers get for their heavy, trickier-to-refine product.<\/p>\n

\u201cIf you\u2019re getting US$120 a barrel, you might not care about that US$5. But when you\u2019re getting US$30, you care very much,\u201d Lever said.<\/p>\n

There\u2019s also a question mark hanging over the outlook for how much crude output is coming, given some projects have been cancelled or delayed. The barrels Keystone XL would have shipped aren\u2019t being produced today; the idea was to build the pipeline in time to carry crude from expansions that are in the works, said Lever.<\/p>\n

Afolabi Ogunnaike, a Houston-based analyst at consulting firm Wood Mackenzie, agrees rail is \u201cless desirable\u201d because of the dent to producers\u2019 bottom lines \u2013 at least in today\u2019s market.<\/p>\n

\u201cMany of these projects, they are long-lived projects and between now and 2020, we would expect that the price of oil will rise some,\u201d he said.<\/p>\n

Joshua Axelrod, a policy analyst at the U.S.-based Natural Resources Defense Council \u2013 one of the environmental groups that campaigned against Keystone XL \u2013 said it\u2019s not well understood that the boom in U.S. rail traffic hasn\u2019t been originating from Canada, but rather from the Bakken oil deposit centred on North Dakota.<\/p>\n

\u201cKeystone XL would not have relieved that problem,\u201d he said.<\/p>\n

There are a number of crude-by-rail facilities planned for the Pacific Northwest that would surely be attractive to oilsands producers, but those are contentious. So between mounting opposition, the costs of rail and the lack of certainty on new oilsands projects, the prospects for crude-by-rail filling the Keystone XL gap aren\u2019t good, said Axelrod.<\/p>\n

\u201cWith all those caveats, there\u2019s no way that Alberta oil is going to be put on trains and come to the U.S. It would be such a loser for the industry that it would basically sink it.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

CALGARY \u2013 Now that the Keystone XL pipeline has been rejected, it\u2019s not a foregone conclusion that much of the …<\/p>\n","protected":false},"author":33,"featured_media":64648,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[35],"class_list":["post-64644","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-original","mauthors-lauren-krugel","mauthors-the-canadian-press"],"_links":{"self":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts\/64644","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/users\/33"}],"replies":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/comments?post=64644"}],"version-history":[{"count":0,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts\/64644\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/media\/64648"}],"wp:attachment":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/media?parent=64644"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/categories?post=64644"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/tags?post=64644"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}