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Major Oil Pipeline Rejected - But Will Alternatives Have Greater Environmental Impacts?

Kinder Morgan's proposed $2 billion 'Freedom Pipeline' to transport West Texas oil to California refineries has been rejected - not by a governmental entity as occurred with the Northern Gateway, but by oil refineries opting to ship by rail instead.
June 7, 2013, 12pm PDT | Irvin Dawid
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Ben Lefebvre writes how transporting oil by rail has changed from being a last resort or a temporary measure to being a realistic, permanent alternative to oil pipelines, 

Once seen as temporary necessities to deliver oil from emerging oil-producing regions in Alberta, Texas and North Dakota, rail cars have become a permanent fixture of the North American energy landscape because they allow refiners more diversity of supply.

The 277,000 barrel-a-day pipeline was proposed by Kinder Morgan "to woo West Coast refiners dependent on more expensive (imported) oil. Refiners in the fuel-hungry California market are eager to buy the same cheaper domestic crude that is already benefiting their competitors in the Midwest and Gulf Coast."

In 2012, California imported 51% of its crude for refineries, plus 12% was shipped from Alaska according to the Ca. Energy Commission  - both are more expensive than oil from N.D., Texas, and Alberta, Canada.

The Freedom Pipeline would have charged a $5-a-barrel tariff. Valero, Tesoro and other refiners opted to "ship crude oil via rail from the Bakken oil field in North Dakota", saying it would cost about the same as the pipeline from Texas, give them more flexibility, and not "tie them down to long-term pipeline contracts."

In fact, Bay Area refineries are already receiving oil via rail from inland sources - including Canada, to the dismay of local environmentalists.

Matthias Gafni of the Contra Costa Times writes on June 1 that the "Bay Area's five refineries have quietly moved toward transporting controversial Canadian tar sands crude oil via another means: rail."

With rail mishaps more common than pipeline failures, Bay Area environmentalists who have previously fought the Keystone pipeline from afar are now paying attention to the possibility of trains full of the heavy crude materials or already refined bitumen rolling through local neighborhoods and into refineries.

While major oil pipelines like Keystone XL in the U.S. and Northern Gateway in Canada have become a target for environmentalists in both countries to prevent tapping Alberta's vast oil sands, will they be able to stop having it shipped by rail? 

Full Story:
Published on Friday, May 31, 2013 in The Wall Street Journal
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