By Anthony Swift | Natural Resources Defense Council (NRDC)
Wednesday, March 06, 2013
In its recently released draft environmental review of the Keystone XL pipeline that would bring tar sands from Canada to the Gulf Coast for export, the State Department attempts to make the case that rail could be a viable alternative. The State Department argued that Keystone XL would have little effect on tar sands production because rail could provide an equally feasible and economic transportation option for tar sands. This is a critical element of the draft environmental review because while State determined that tar sands is dirtier than conventional oil, it concludes that Keystone XL would have little impact on the expansion of tar sands and therefore policymakers and the public needn’t consider the impacts of that expansion. However, State’s assumptions are on the wrong track. The Keystone XL tar sands pipeline will drive tar sands expansion. Expansion depends on tar sands being able to reach the high prices of overseas markets. But pipelines to the east and west are stalled and rail – as we will show here – is not an economically viable alternative to Keystone XL. And without Keystone XL, financial analysts are already saying that the tar sands industry’s expansion plan will go off the rails.
In its most recent environmental review, the State Department is repeating its argument that the Keystone XL tar sands pipeline will have limited impact on greenhouse gas emissions because rail transport is an economically feasible alternative. State made several flawed assumptions in its environmental review, including 1) an unrealistically low cost for transporting tar sands by rail from Alberta to Texas, 2) an inaccurate estimate of tar sands production costs and 3) an unrealistic assumption that tar sands production costs will not increase with rising labor, material and energy prices. In its analysis, State relies on statistics that pertain to rail transport of shale oil from North Dakota but that do not apply to Alberta’s tar sands. Given the unfeasibility of transporting large quantities of tar sands by rail and the massive opposition to tar sands pipelines to the East and West coast of Canada, Keystone XL is the lynchpin for significant expansion of the tar sands – and industry analysts agree. Tar sands is expensive to extract and process – with breakeven prices approaching $100 per barrel – and cheap transportation is required to make new projects profitable. Without Keystone XL and the cheap transportation it provides, the tar sands industry will not reach its goal of tripling production by 2030 and the significant climate emissions that come with it.