Keystone Won’t Be Finished Until 2016. Here’s What That Means.

President Obama speaks at a pipeyard for the southern leg of the Keystone XL Pipeline.
National Journal
Alex Brown
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Alex Brown
Nov. 20, 2013, 7:15 a.m.

Tran­sCanada ac­know­ledged Tues­day that the Key­stone XL Pipeline — even if ap­proved — will not be op­er­a­tion­al un­til 2016. It’s the latest ad­mis­sion that the pro­ject, long stalled in the fed­er­al ap­prov­al pro­cess, is los­ing rel­ev­ance. The pipeline has been a flash­point of con­tro­versy for en­vir­on­ment­al­ists and in­dustry lead­ers, but as the ad­min­is­tra­tion has drawn out its re­views, the pipeline’s sig­ni­fic­ance from an en­ergy stand­point has faded.

Oil-by-rail trans­port­a­tion has filled the gap in re­cent years where pipelines have met delays. The amount of oil shipped as U.S. train cargo has doubled in the past two years, and Canada is ex­port­ing oil bar­rels in the six fig­ures daily after ship­ping just mar­gin­al amounts a year ago. One oil ex­ec­ut­ive told Na­tion­al Journ­al the rail boom and new pipeline al­tern­at­ives have rendered Key­stone non­es­sen­tial as a trans­port­er of U.S. oil.

The spike in oil ship­ment al­tern­at­ives has come largely over the past two years, and it’s likely to con­tin­ue to ex­pand in the two years it would take to build Key­stone. “Rail has a first-mover ad­vant­age as a trans­port meth­od for crude oil,” con­ceded An­drew Black, pres­id­ent of the As­so­ci­ation of Oil Pipe Lines. “Rail can gain mar­ket share while pipelines race to catch up.” Left un­said is that the pipeline “catch-up” can be stalled by fed­er­al policy, not just con­struc­tion time.

Mean­while, en­vir­on­ment­al groups have taken heat for fo­cus­ing ef­forts on the pipeline. New York Magazine‘s Jonath­an Chait called the fight “mar­gin­ally rel­ev­ant to the cause of stop­ping glob­al warm­ing,” not­ing that the pipeline would con­trib­ute just a few tenths of a per­cent to U.S. green­house-gas emis­sions, while coal-plant emis­sions are far lar­ger.

But that isn’t likely to keep green groups from con­tinu­ing the fight. An In­ter­na­tion­al En­ergy Agency re­port re­leased earli­er this month found that con­struc­tion of the pipeline would cause tar-sands pro­duc­tion to double by 2035. The ad­ded en­vir­on­ment­al and cli­mate costs of that ex­tra pro­duc­tion has ad­ded fuel to the fire of en­vir­on­ment­al­ists’ ar­gu­ments.

No one doubts that Obama’s de­cision on Key­stone will pro­voke heated re­sponses from a vari­ety of stake­hold­ers. But, in­creas­ingly, the volume of the de­bate isn’t matched by the sig­ni­fic­ance of the pro­ject.

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