* Trains poor alternative to pipeline for oil sands,
* He says oil sands output would be dented if rail only
* Upbeat view of crude-by-rail of State Dept. questioned
By Patrick Rucker
WASHINGTON, April 24 Using trains to move heavy
crude oil out of Western Canada would be a poor alternative to
the controversial Keystone XL pipeline, Canada's top energy
official said on Wednesday, and a rail-only plan would likely
put a dent in future oil sands development.
U.S. officials are weighing whether to approve construction
of the proposed Keystone pipeline that could deliver as much as
830,000 barrels a day of mostly Canadian and some U.S. crude oil
to refiners in Texas and Louisiana.
Joe Oliver, Canada's natural resources minister, said costs
and logistical challenges make crude-by-rail a poor second
choice for oil sands producers trying to reach the U.S. Gulf
"I don't think anybody feels that it could be a substitute
for pipelines," Oliver told Reuters.
In a report that weighed the environmental impacts of the
Keystone pipeline, the U.S. State Department concluded that
blocking the 1,200 mile project would do little to slow the oil
sands sector since crude-by-rail was such a close second choice.
"Limitations on pipeline transport would force more crude
oil to be transported via other modes of transportation, such as
rail, which would probably (but not certainly) be more
expensive," the State Department said in the report released in
But Oliver said pipelines reliably beats crude-by-rail which
"is more expensive for longer hauls than pipelines."
"It is a good supplement but not the longer-term solution,"
he said. "I don't think anybody would suggest it is."
Industry officials, energy analysts and recent data raise
questions about whether the industry is really eager to adopt
crude-by-rail should the U.S. government rule against the
TransCanada Corp pipeline. [ID: nL2N0D502L]
The State Department on Monday closed a public comment
period on Keystone with the Environmental Protection Agency
criticizing officials' conclusion that crude-by-rail is a likely
alternative to Keystone.
The State Department should conduct a new study of crude by
rail, the EPA says, and "include further investigation of rail
capacity and costs, recognizing the potential for much higher
per barrel rail shipment costs."
The State Department said this week it would hold another
public comment period after it decides, with the help of federal
agencies including the EPA, whether the pipeline is in the
Oliver, who said advocating for Keystone is one of his top
priorities. He is in Washington this week to meet with lawmakers
and other officials. Asked if a rail-only scenario would put a
dent in oil sand production, he said "Yes, I would say it would.
But we don't see that happening."