Can Rail Fill the Gap if Keystone XL Isn't Approved?

"Yes it can", at least to some extent appears to be the answer according to the WSJ. While the Keystone XL pipeline can move 830,000 barrels of oil a day, rail shipments are set to double this year to 200,000 barrels. Not so, according to the NRDC.

3 minute read

March 13, 2013, 8:00 AM PDT

By Irvin Dawid


Ben Lefebvre of the Wall Street Journal writes on the role that rail is filling - and will fill, regardless of whether the controversial pipeline is built to transport tar sands oil from Alberta, Canada to the U.S..

As the fight over the Keystone XL pipeline drags on, U.S. refining companies are turning to railroads to bring crude from Canada's oil sands to refineries along the Gulf of Mexico. Shipments are set to double this year, to more than 200,000 barrels a day, according to one estimate, as Valero Energy Corp. and other U.S. fuel companies make an end run around the much-delayed pipeline.

Rail's ability to transport the crude was one reason why the State Department report (NYT article) concluded that "environmental and climate change impacts are manageable (and) could provide Mr. Obama political cover if he decides to approve the pipeline." 

And (the 2,000-page documentsays that alternate means of transporting the oil — rail, truck and barge — also have significant environmental and economic impacts, including higher costs, noise, traffic, air pollution and the possibility of spills. The study does not say that one method is better for the environment than another. It does say that a spill is more likely for rail transport, although the report says that the volume of oil spilled from a pipeline is likely to be greater.

While cost of rail transport exceeds pipeline cost of moving oil, the oil glut caused by the inability to move much of it is changing the market economics, making more expensive modes feasible, writes Lefebvre.

(L)arge amounts of the oil are piling up in the province of Alberta, driving its price down. Western Canadian Select oil prices recently averaged just over $65 a barrel, only two-thirds the price of U.S. benchmark West Texas Intermediate.

Presenting an opposing viewpoint, Anthony Swift of the Natural Resources Defense Council blogs that rail "is not an economically viable alternative to Keystone XL."  He rebuts the example used by State Dept report of oil producers using rail to ship oil from the Bakken basin in North Dakota because "oil producers facing price discounts and transportation constraints have turned to rail to move their crude to market." Yet those same restraints appear in Alberta as noted above.

According to Bloomberg News, oil shipments "averaged about 456,000 barrels a day in the third quarter (of 2012), according to the (American Association of Railroads).

Swift goes on to analyze the actual movement of oil from Canada. "Nearly two years since State’s 2011 prediction, there has been little evidence of a North Dakota trajectory for tar sands to the Gulf by rail.  While rail data for crude oil across the Canadian border isn’t available for 2012, there is no evidence of significant volumes of tar sands being shipped by rail to Gulf Coast refineries", he writes.

Environmentalists, who are "reeling" at the State Dept. report, may not be the only ones with a stake as to whether the pipeline is built. As previously reported here, Venuzuela should be concerned because 40% of there crude oil exports - a heavy oil similar to Alberta's bitumen, is refined at Gulf refineries that are designed to process heavy oil - be it from Canada or Venezuela. E&E reporter Blake Sobczak writes about the threat to Venezuelan imports:

"There isn't enough capacity to refine both the Canadian oil and the Venezuelan oil," said professor Erick Langer, director of the Center for Latin American Studies at Georgetown University and an expert on Venezuelan politics. "So if the pipeline is built, then Venezuela might be up a creek without a paddle, because they won't have anywhere else to refine the oil."

[Note: Full access to article may be time-limited to non-Wall Street Journal subscription readers after March 18].

Tuesday, March 12, 2013 in The Wall Street Journal

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

July 16, 2025 - Diana Ionescu

Green vintage Chicago streetcar from the 1940s parked at the Illinois Railroad Museum in 1988.

Chicago’s Ghost Rails

Just beneath the surface of the modern city lie the remnants of its expansive early 20th-century streetcar system.

July 13, 2025 - WTTV

Blue and silver Amtrak train with vibrant green and yellow foliage in background.

Amtrak Cutting Jobs, Funding to High-Speed Rail

The agency plans to cut 10 percent of its workforce and has confirmed it will not fund new high-speed rail projects.

July 14, 2025 - Smart Cities Dive

Worker in yellow safety vest and hard hat looks up at servers in data center.

Ohio Forces Data Centers to Prepay for Power

Utilities are calling on states to hold data center operators responsible for new energy demands to prevent leaving consumers on the hook for their bills.

July 18 - Inside Climate News

Former MARTA CEO Collie Greenwood standing in front of MARTA HQ with blurred MARTA sign visible in background.

MARTA CEO Steps Down Amid Citizenship Concerns

MARTA’s board announced Thursday that its chief, who is from Canada, is resigning due to questions about his immigration status.

July 18 - WABE

Rendering of proposed protected bikeway in Santa Clara, California.

Silicon Valley ‘Bike Superhighway’ Awarded $14M State Grant

A Caltrans grant brings the 10-mile Central Bikeway project connecting Santa Clara and East San Jose closer to fruition.

July 17 - San José Spotlight