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EIA: Alberta oil will move by rail

U.S. review finds rail could serve as the alternate for Keystone XL.

By Daniel J. Graeber
EIA: Alberta oil will move by rail
U.S. study of post-Keystone XL energy landscape in Canada finds rail may carry more oil across the region. Photo by Steven Frame/Shutterstock

WASHINGTON, Nov. 11 (UPI) -- Crude oil deliveries from Alberta, Canada, will rely on rail in the wake of the permit refusal for Keystone XL, the U.S. Energy Information Administration said.

The U.S. State Department last week denied TransCanada's permit to build the cross-border Keystone XL oil pipeline. The project was designed to carry as much as 830,000 barrels of oil per day from Canada to Nebraska. From there, it would eventually send oil through the so-called Gulf Coast Project, which TransCanada put into service in 2014, and on to refineries along the southern U.S. coast

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Mark Cooper, a TransCanada spokesman, said saying no to Keystone XL means more of Canada's crude oil would be sent to the U.S. market by rail, which the company said is more risky than pipeline systems.

EIA in a post-Keystone review of the Canadian energy sector said "crude oil from Alberta will continue to be shipped by rail" as an alternative to TransCanada's project.

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A report circulated by TransCanada in August shows transport of crude oil and natural gas in Canada by pipelines is 4.5 times safer than rail. By mining federal Canadian data, the study found that while pipelines did experience more issues than rail because of larger transport volumes, more than 90 percent of reported pipeline incidents caused little direct damage to the environment and 16 percent resulted in no spills.

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The State Department's record of decision on Keystone XL said there's about 775,000 barrels per day of rail capacity in place. Under current conditions, the review found existing pipelines and rail capacity would be able to accommodate any new production from Canada.

In July, the federal Transport Canada filed charges against Montreal, Maine and Atlantic Railway for a 2013 derailment of a train carrying crude oil through Lac-Megantic, Quebec. The incident left more than 40 people dead.

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Nearly all of Canada's proven oil reserves are in Alberta. EIA said Canada produced a net 4.4 million barrels of oil and other liquids per day in 2014, an increase of 300,00 bpd from the previous year.

"Canada's production is on track to increase again in 2015, despite decreases in crude oil prices that have curtailed investment," EIA's report read.

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