Railroads emerge as alternative to Keystone XL pipeline for moving oil sands from Canada

“Even if foes of the Keystone XL pipeline block it, companies seeking to get Canada’s oil sands to U.S. and world markets could travel the old-fashioned way: by rail.”

Read more at the Washington Post.

14 thoughts on “Railroads emerge as alternative to Keystone XL pipeline for moving oil sands from Canada”

  1. Surprise! Surprise! As a commenter said, Warren Buffett has battled KXL in favor of his railroads. This is hardly news.

    What is news is that WaPo doesn’t know the difference between oil from sand and oil sand. No one is “seeking to get Canada’s oil sands to U.S.” Just the oil. Duh.

  2. The oil will flow by rail, regardless. There are refiners which are not adjacent to the planned pipeline route and will have the crude shipped to them by rail if the prices are favorable. How often that will be true, I do not know. Moving crude by pipeline is cheaper than by rail, or they wouldn’t want to build the thing.

    Extend that rationale just a little bit and you can see there will be winners and losers with the pipeline. Refineries not on the pipe route will pay proportionally extra for their crude, which will proportionally reduce their profits compared to those on the pipe route, and suffer whatever economic disadvantage comes with that.

    So likely some refiners are not real enthusiastic about the pipeline, either.

  3. The cost of moving oil by rail is 3x higher than by pipeline and carries higher risk. The consequence of no Keystone XL pipeline is a lower price for the oil stranded in Canada. The price differential between WTI (North American) and Brent (Global) is ~$20/barrel. The capacity of the KXL is 800,000 barrels per day and it should drastcally cut the WTI VS Brent difference. So the pipeline has the potential to increase revenue to the Canadians by $16 million/day or nearly $6 billion per year. A pipeline will carry the Canadian oil to global markets, one way or another.

  4. Sean, wow, that’s one heck of a multiple for the costs of moving oil by pipeline vs. rail, and yes, I can see the elevated risk with rail transport. Derailments are distressingly common for anyone concerned. I guess this means — dare I say it — that the pipeline is more sustainable.

  5. Did anyone think Canada was going to leave the oil in the ground if the US didn’t build the Keystone XL pipeline? They’re going to sell that oil by the most expeditious route available. They sure don’t need our permission to extract it nor our refineries to process it. If the price is right, it will be consumed by someone.

  6. US is awash with natgas and we are all waiting for Detroit to get natgas cars in the showrooms. There will be natgas stations built when Detroit lets us know they will be in production. I assume all this will happen with government permission, if no permission then we will know Obama is dancing to a higher tune. Government control of energy. With natgas we will not need the pipeline…. nor Buffet’s Burlington Northern.

  7. They actually build little pipeline branches to the main line. It isn’t like the pipeline swerves and turns to try to hit every well – esp considering that a well might only produce a few years before being replace by another one at another location.

  8. Natgas has a lot of issues. You can only reasonably get half the energy in a car with natgas as Gasoline. You have a very high pressure tank that is hard to make.

    A much better / easier way to get the NG into our cars is to convert it into ethanol – almost all american cars can drive on gas that is E15 – E85 so the care companies already “allow” alternate fuels

    What needs to happen is for congress to allow NG produced ethanol to be blended into fuels. Right now the laws favor/DEMAND corn based ethanol be put in the gas / ethanol fuel mix so gas distributors won’t touch the NG based stuff. Non-renewable need not apply

    Again it isn’t the evil car or oil companies causing the problem, it is our own insane government.

  9. Transporting Canada’s oil is likely to be “all of the above” in the end. Over major routes, there will be some competition between pipeline and rail; if the engineers and the production people get to solve it, they will be more likely to choose the most efficient method available. If the politicians get to solve it, it will be the rent-seekingest method, at higher cost to all.

  10. Actually the laws of economics favor/demand corn-based ethanol. But these are all bad ideas — it’s a sin to not drink ethanol.

  11. In what way do the laws of economics push the use of corn-based ethanol as a fuel? There are rent-seeking government policies right now but, by definition, rent-seeking distorts markets.

  12. Because we have a lot of Natural Gas, and would like to find domestic uses for it? As bestruger1022 pointed out (I should have thought to include a link to companies actually already doing this for non-fuel purposes) it is already a commercially viable way to make ethanol on the ultra cheap – its just these companies are not allowed to sell the product because of government biofuel mandates.

    The article above also grossly mistates the cost of corn ethanol way on the low side.

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