Study: No Impact From Keystone on Greenhouse Gases - Washington Wire - WSJ

Study: No Impact From Keystone on Greenhouse Gases - Washington Wire

Study: No Impact From Keystone on Greenhouse Gases

By Keith Johnson

Agence France-Presse/Getty Images

Protesters hold signs against the building of the Keystone XL Pipeline, a 1,980-mile conduit for oil from Canada’s tar sands region to the Gulf Coast, outside a Democratic event with President Barack Obama, in Washington on July 11, 2013.

Ever since President Barack Obama in June made (in a rather a Delphic fashion) climate change the key condition for approval of the Keystone XL pipeline, the arguments over the project have shifted from job creation and groundwater pollution to focus on greenhouse-gas emissions.
Fresh analysis out from energy consultancy IHS Cera says the pipeline, which would carry Canadian tar sands crude from Alberta to Nebraska and eventually to the U.S. Gulf Coast, “will not have any impact on GHG emissions.”

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Essentially, IHS concluded, Canadian tar sands will find a way to market either through all-Canadian pipelines or through the increasing use of railcars to ship the heavy oil. “Even if new pipelines lag oil sands growth, rail will fill the gap, as it is doing today,” the consultancy found, echoing the draft conclusions by the U.S. State Department.
Au contraire, say environmental groups and pipeline opponents. They’ve long argued that Keystone is a “linchpin” for the full development of Canada’s heavy oil—without an economic way to move that heavy crude to refining centers, they say, Canada will be hard pressed to reach its goal of producing 5.8 million barrels a day by 2030. (Discounts for Canadian crude compared to other types of oil have backed up that idea.)
“Without additional export pipelines, the planned expansion to these levels is technically and economically infeasible,” the Natural Resources Defense Council concluded in a report this month.
But IHS argues that shipments by rail are viable today, and could become close to cost-competitive with pipeline shipments in the future. Heavy oil shipments by rail from Western Canada went from basically zero in early 2012 to 150,000 barrels a day in the first quarter of this year, IHS said. Rail shipments could rise to 360,000 barrels a day by the end of next year, or almost half the capacity of Keystone, the consultancy said.
Interestingly, tar sands’ peanut-butter consistency could actually advocate in favor of using rail rather than pipelines. That’s because it requires a 30% injection of fluids to make the tar-like stuff flow through a pipe—and those fluids cost $100 a barrel. Special rail cars, on the other hand, could carry undiluted bitumen at a cost close to transport by pipeline, IHS said.
What’s more, even if the Obama administration eventually blocked the pipeline, it wouldn’t mean fewer greenhouse-gas emissions, IHS argues. That’s because Gulf Coast refiners are thirsty for heavy crude oil, such as the barrels they get today from Mexico and Venezuela (and Venezuelan crude is just as dirty, from a greenhouse-gas point of view, as tar sands crude). If Canadian oil doesn’t pour into those refineries, IHS concludes, Venezuelan crude will.