By September 4, 2015 Read More →

Keystone XL pipeline ‘death knell” coming this weekend?

Alberta oil sands bitumen finding other ways than Keystone XL to Gulf Coast refineries

According to rumour, President Obama is expected to issue the death knell for the Keystone XL pipeline before or during the Labour Day weekend.

Keystone XL

President Barack Obama

The irony is somewhat rich, given that Labour Day is ostensibly when both Canadians and Americans celebrate the working men and women who keep the machinery of society functioning—the same people who would be harmed if Mr. Obama kills Keystone.

Setting aside the issue of job losses (and estimates vary considerably to be sure), the termination of Keystone will also accelerate the movement of still more oil by rail.

Seven years of stalling Keystone has contributed to a dramatic increase in the amount of oil being shipped by rail. According to the EIA, over the last five years, annual exports of oil from Canada to the United States have increased from 42 thousand barrels in 2010 to just under 42 million barrels in 2014.

And though the current low oil prices might slow things down a bit, the long-term trend is expected to continue. The Canadian Association of Petroleum Producers projects that in the absence of more pipeline infrastructure, shipments of Canadian crude could increase from about 185,000 barrels per day in 2014 to between 500,000 and 600,000 barrels per day in 2018.

Keystone XL

Oil train carrying crude to market

Why is this a problem? Because although both pipeline and rail have excellent safety records (and we do need all transport modes to satisfy predicted continental and global demand), there’s no getting around the fact that rail is a more risky way to transport hydrocarbons compared to pipelines.

In a recent study, we found that in every year from 2003 to 2013, pipelines had fewer releases per million barrels of oil equivalents transported.

Overall, rail was found to be just over 4.5 more likely to have an occurrence when transporting oil and gas compared to pipelines. The evidence from Canada is clear. Pipelines are the safer way to transport oil and gas.

Evidence from the United States is equally clear. An analysis conducted by Diana Furchtgott-Roth found that transporting oil and gas by road and rail resulted in higher incident rates per billion ton-miles of product transported compared to pipelines.

In addition, road and rail incidents were associated with higher rates of fatalities and hospitalizations compared to pipelines. Overall, her analysis concluded that pipelines were the best way to ensure oil and gas arrives safely at its destination.

Keystone XL

Photo: Suncor Energy

And the president’s own State Department, in its review of Keystone, concluded rail has a higher number of releases per ton-mile compared to pipelines, and although pipelines release larger volumes per ton-mile, this could by somewhat offset by the increased likelihood of spills if the oil moved by rail.

More importantly, State found that moving the 830,000 barrels per day intended for Keystone by rail instead would potentially lead to an additional 49 injuries and six fatalities on a yearly basis.

As we approach the Labour Day weekend, President Obama should give consideration to the very workers being celebrated, who will be denied some employment, while being exposed to higher levels of risk, as will both the American and Canadian environments.

Despite current low oil prices, the oil from Alberta’s oilsands is expected to make its way to market, Keystone XL or not. That may be via expanded East/West pipeline capacity within Canada and shipment via tankers to countries overseas, or it may be through expansion of existing pipeline capacity mixed with increased rail transport to the United States.

The question for Mr. Obama and his environmental friends this Labour Day then is, why increase environmental risk and risks to workers for no demonstrable environmental benefit? For that’s surely what you will do by putting the kibosh on Keystone XL.

Kenneth P Green is Senior Director, Natural Resource Studies at The Fraser Institute.

This article first appeared in the Toronto Sun on Sept. 4, 2015.

Posted in: Politics

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