While the Obama administration has yet to rule on the future of an international pipeline that many residents along its route oppose for environmental and safety reasons, heavy Canadian oil is finding another way to U.S. ports: rails. "The equivalent of hundreds of thousands of barrels of oil a day will soon be moving from western Canada into the U.S., even if the Keystone XL Pipeline is never built," Patti Domm reports for CNBC. (Getty Images: Oil train near Williston, N.D.)
"Canada's railroads, Canadian Pacific Railway Ltd. and larger Canadian National Railway Co., both report expanded oil shipments this year and both expect demand to continue to grow," Domm writes. "By the end of next year, rail loading capacity could grow enough to handle 700,000 barrels of crude a day from the oil sands region in western Canada, according to IHS data. Trains currently carry just 150,000 barrels from there, and more than 450,000 barrels a day could be riding the rails by the end of next year."
TransCanada's Keystone pipeline is designed to carry 830,000 barrels per day. Without it, IHS expects 700,000 barrels to move by rail in 2016. Rail transport could peak at 500,000 to 600,000 if Keystone and another Enbridge pipeline project, which does not need State Department approval, are put into operation, because of expected growth of oil sands production," Domm writes. Moving oil by rail, though, is more expensive, costing $4- to $5 more per barrel in the U.S., and $7-8 more from Canadian oil sands to the Gulf. (Read more) Oil trains may also pose more safety concerns, as the recent disaster in Quebec showed.
Still, the rail option has some believing Keystone isn't necessary for the oil business to continue booming, Elizabeth Douglas reports for Inside Climate News. "Conditions have changed so radically that U.S. refiners are now exporting record amounts of fuel to overseas customers, and there’s a parade of tankers delivering Texas oil to refineries on the east coast of Canada. Many benefits being touted by Keystone XL supporters—American jobs, lower oil costs, greater energy independence through lower imports—are already being delivered by the domestic oil rush. The Canadian oil pipeline might expand some of those benefits, but its significance has been eclipsed by surging production in North Dakota and Texas."
The total output of U.S. oil "rose to 7.9 million barrels per day, the highest level in more than 24 years, according to weekly production data from the federal Energy Information Administration," Douglas writes. That has led to a glut of oil in the Gulf Coast, with oil inventories in the region having "grown in nine of the last 10 weeks, and topped 197 million barrels on Oct. 25, the highest stockpile ever recorded for this time of year, according to EIA data." (Read more)