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TransCanada exec says Keystone delays mean increase in dirtier rail transport

By: The Canadian Press

Posted: 03/14/2013 1:22 PM | Comments: 0 | Last Modified: 03/14/2013 2:19 PM

CALGARY - A TransCanada Corp. executive says opponents to the Keystone XL pipeline should consider one consequence of delays in building the oil pipeline — an increase in dirtier and more dangerous rail transport.

Alex Pourbaix, president of energy and oil pipelines at the Calgary-based pipeline and utility company (TSX:TRP), says although rail has an important role to play in moving oilsands crude to market, there are downsides to consider.

"For every mile you move a barrel of oil by rail, you emit three times the (greenhouse gases) that you do by moving it by pipeline and you have an order of magnitude higher risk of having some sort of incident, leak or spill," Pourbaix told an energy conference in New York Thursday.

"So from that perspective, I make the point that if you're actually concerned about the environment, for long-haul movement of oil, you very much want to see that moving by pipeline."

Environmental groups opposed to the US$5.3-billion project have broader concerns about the oilsands crude that's inside the pipe, which they consider to be much dirtier than other types of oil. They see pipelines such as Keystone XL as enabling oilsands extraction and have made them the focus of their campaigns in recent years.

A draft environmental report from the U.S. State Department released earlier this month said the Keystone XL pipeline will have no impact on the pace of development in the oilsands — a finding pipeline opponents refute.

Crude transport by rail is not immune to the sort of opposition that has galvanized around pipelines. In January, 16 environmental groups sent a letter to Claude Mongeau, the CEO of Canadian National Railway Co. (TSX:CNR), warning that any potential efforts to bring oilsands crude across British Columbia by rail to the West Coast for export would "face major opposition and risks to the company."

CN moved more than 30,000 carloads of crude to various North American markets last year, and believes it can double that business in 2013. None of that oil is moving to the West Coast, since there is no infrastructure in place to move the oil onto tankers.

In an email, company spokesman Mark Hallman said rail is an energy efficient way to move freight and that the industry has a good record of moving hazardous materials safely.

Citing figures from the Rail Association of Canada, he said that while Canada's rail sector moves more than 70 per cent of all surface goods each year across the country, it only accounts for 3.4 per cent of the transportation sector's greenhouse gas emissions and less than one per cent of Canada's overall emissions.

"Rail complements pipeline in the movement of crude oil," Hallman said.

"Both modes are safe and the risk of accidental releases of product is extremely low for both modes of transport, with no appreciable difference considering both spill frequency and size."

TransCanada expects it will be another two or three months before U.S. President Barack Obama makes a final decision on whether to allow the controversial project to go ahead. By then, the regulatory process will have lasted about five years.

If Keystone XL is approved before mid-year, Pourbaix said a late 2014 startup for the pipeline is possible.

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