President Obama's 'Net Effect' Decision on Keystone XL Pipeline

President Obama will direct the State Department to approve the Keystone XL pipeline because he will conclude that the oil would be shipped by rail anyway, probably further increasing greenhouse gas emissions.

In his climate change speech on Tuesday, President Obama said:

“Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest,” Obama said. “And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution.”

“The net effects of climate impact will be absolutely critical to determining whether this project will go forward,” he added. “It is relevant.”

The State Department draft environmental impact statement (DEIS) already concluded that Keystone XL would not lead to significantly more carbon pollution.  Of course, an EPA assessment concluded that shipping tar sands oil by rail would be cost prohibitive.  The State Department report estimates that shipping Alberta’s heavy crude by pipeline costs about $10 per barrel, with rail in the $15 to $18 per barrel range. Yet some producers estimate that shipping by train to the Gulf Coast could cost as much as $30 per barrel.

The amount of oil on Canada’s rail system has already hit 150,000 barrels a day and is on track to hit 300,000 barrels a day by year’s end.  At least two oil sands producers, Suncor and MEG Energy, are adding rail capacity. Canadian National Railway expects to double its crude shipments this year and will expand storage and other facilities in Geismar, La. Two large heavy crude refineries are located there. 

The $5.3 billion Keystone pipeline addition (875 mile northern leg) and extension will carry 830,000 barrels of oil per day 1,200 miles from the tar sands of Alberta down to the Gulf Coast. (Wash Post, 6/24/2013, Wash Post, 6/24/2013, FleetNewsDaily)