Alternative projects ready to carry Keystone XL oil

  • Article by: JIM EFSTATHIOU JR. and REBECCA PENTY , Bloomberg News
  • Updated: December 22, 2013 - 11:16 AM

Other pipelines and loading terminals for railroad tank cars are being developed to offer alternatives to the Keystone XL pipeline that climate activists are trying to stop.

hide

A Canadian Pacific train transporting oil recently left Hardisty, Alberta. Some say rail transport is as dangerous as a pipeline.

Photo: Brett Gundlock, Bloomberg

CameraStar Tribune photo galleries

Cameraview larger

– Keystone XL backers say the proliferation of alternative pipeline projects and rail-loading terminals undercuts opponents who claim blocking the pipeline will keep high-carbon Canadian crude oil in the ground.

Kinder Morgan Energy Partners LP and Imperial Oil on Friday announced a 50-50 joint venture to build a terminal in Edmonton, Alberta, capable of loading up to three crude oil trains per day by 2017. It would have connections to the Canadian Pacific and Canadian National railroads, whose tracks through Minnesota offer a pathway to the U.S. market.

A day earlier, Canadian energy regulators recommended approval with conditions of Enbridge Inc.’s Northern Gateway pipeline, a project that would bring as much as 525,000 barrels a day of oil sands to a port at Kitimat, British Columbia. The recommendation, by the National Energy Board, leaves the final decision up to federal government.

The projects are the just the latest proposals to transport Canada’s oil sands bounty. Kinder Morgan also plans to almost triple the capacity of a line to Vancouver. TransCanada Corp. plans to convert a gas line to oil, and last week its CEO, Russ Girling, told the Financial Post that the company could develop a rail bridge from Canada to Nebraska if its Keystone XL project is further delayed.

“The fact that there are other routes means that the pipeline isn’t a significant source of emissions,” said Kevin Book, managing director of ClearView Energy Partners, a Washington-based consultant. High-carbon Canadian crude is finding its way to market without Keystone XL, he said in an interview.

President Obama has said he won’t approve TransCanada’s application to build the Keystone line between Alberta’s oil sands and United States if it were found to substantially boost carbon dioxide emissions, which scientists say are raising the Earth’s temperature.

“To say yes on the terms that the president has established, there have to be other pathways for the crude to get to market,” Book said.

Keystone has emerged as a flashpoint in the debate over global warming. Pipeline critics say the project poses a risk to the climate because it would encourage increased production from Alberta’s oil sands, a process that releases more carbon dioxide than the extraction of conventional forms of oil.

“Keystone is critical for expansion of tar sands and that remains the case even with the further developments in the existing pipeline proposals,” Susan Casey-Lefkowitz, director of international programs at the Natural Resources Defense Council, said in an interview. “If Keystone is rejected, it’s going to have a significant impact on the expansion plans for tar sands.”

U.S. decision pending

The U.S. State Department is completing a final report assessing the environmental risks of building the proposed $5.4 billion project. A draft released in March found that Keystone wouldn’t have a big climate impact because oil sands would be developed even if the administration blocked the project. The EPA and others disputed that conclusion.

Kinder Morgan wants to almost triple the size of its Trans Mountain pipeline from near Edmonton, Alberta, to Vancouver to 890,000 barrels a day, by 2017. TransCanada is considering converting a gas line to oil so it could transport as much as 1.1 million barrels a day of crude to refineries in eastern Canada. The company’s proposed Edmonton terminal joint venture could carry 100,000 barrels per day with the potential to expand to 250,000 barrels per day.

“The State Department is generally right,” Michael Mc­Kenna, a Republican strategist and president of MWR Strategies, a Midlothian, Va.-based lobbying firm, said in an interview. “That oil is going to come to market.”

Yet, almost a decade after it was proposed, the $7.4 billion Northern Gateway project still faces opposition from aboriginal groups and the New Democratic Party, Canada’s official opposition party. Thursday’s ruling by the regulators recommended 209 conditions, including assurances the project would not endanger the environment and that the company has an emergency response plan.

The City Council in South Portland, Maine, this month voted to place a 180-day moratorium on development related to hauling oil sands by pipeline through the city. Rail transport costs more than pipelines, poses its own safety risks and will lead to 8 percent more greenhouse gas emissions than if Keystone were built, according to the State Department.

More shipments by rail

TransCanada says delays in building the Keystone XL pipeline have resulted in more crude shipments by rail, which creates higher carbon emissions.

“What has actually occurred in the marketplace would corroborate the accuracy of those estimates, where they said rail and other things would allow the oil sands to continue to develop and Keystone wouldn’t have any impact on either refining or production,” Girling, TransCanada’s CEO, said in an interview with Bloomberg.

  • get related content delivered to your inbox

  • manage my email subscriptions

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 
Close