PETROPOLITICS FEBRUARY 19, 2014
The fight over the Keystone XL pipeline hasn’t just pit environmentalists against oil-drilling magnates who prefer to profit now and deal with the climate implications later. It’s also opened up a rift among those who think climate change is worth trying to stop before it gets worse.
On one side of this debate are leaders of major environmental groups and prominent activists who want President Obama to block the pipeline’s development. Their argument, which you may know by now, goes like this: Without that crucial piece of infrastructure to carry oil from the tar sands to coastal refineries and the supertankers that ferry it across the world, companies won’t have an easy time moving the oil they extract. The industry will have to slow down extraction efforts dramatically—or, better still, give up on them altogether.
On the other side are energy policy wonks who wonder whether fighting this one, seemingly obscure project is worthwhile—and whether blocking it would really do much to reduce emissions. For a while, the dissent was pretty quiet. You’d only hear murmurs, usually from people working on the drier side of climate policy—like advocates for improving public transit infrastructure or energy efficiency. But then, in October, Jonathan Chait came right out and said it in New York magazine: “Picking a fight over Keystone XL,” he wrote, “was a bad idea.”
Late last month, the State Department finally weighed in on Keystone XL's climate impacts, by issuing a report that more or less sides with the skeptics. According to the report, the tar sands industry has other options for transporting, refining and (eventually) burning the oil it's pulling from the ground. As a result, the report said, blocking the pipeline was “not likely” to affect the amount of oil companies took from the tar sands. Here in the pages of the New Republic, Ted Nordhaus and Michael Shellenberger—who, like Chait, have seen Keystone XL as a distraction for environmentalists—summarized the logic behind the State Department’s conclusion: “If new pipelines aren’t available, rail cars or supertankers can be easily substituted with little technological or economic difficulty.”
But is that really so clear? There is a reason that Keystone XL is the oil industry's first choice for transporting tar sands oil. Generally speaking, pipelines are the cheapest, safest way to transport oil. That’s a big reason why the vast majority—more than 94 percent—of oil into U.S. refineries goes that way.
Not so long ago, the discussion of Keystone XL alternatives focused on the possibility of alternative pipelines heading east or west through Canada and to the coasts. But those pipeline projects have run into the same kind of political opposition (from the same sorts of groups and people) as Keystone XL has generated. As for trucks or barges, the State Department concluded that they are not a viable alternative to the pipeline. Transporting that much oil would take too many trucks, the State Department report said, and there's not an inland waterway big enough to accommodate such heavy barge traffic.
That leaves rail. This is where the ambiguity comes in. It's technologically possible to transport large volumes of oil by rail, and TransCanada, the company that wants to build Keystone XL, has considered the possibility. But it would take extra investment both to add tank cars, spur lines, and oil storage facilities to the existing infrastructure and to comply with safety regulations. Shipping oil by rail already costs more than shipping by pipeline: estimates about the difference range from as low as five dollars extra to closer to $25, or more. And the price of increasing a single terminal's oil-loading capacity comes in at a magnitude of hundreds of millions; the system-wide improvements it will take to replace Keystone XL's carry capacity will cost billions.
With rail, the industry also increases its chance of spilling a lot of oil, which means losing some of the supply and dealing with the consequences—legal, financial, and political. And it may not even be much of a chance: as train traffic from the U.S.'s Bakken oil fields has increased, so have spills. (If you're interested in the details of tank car safety regulations, and the implications for the Keystone debate, Elena Schor has a good write-up.)
The bottom line? Companies like TransCanada will probably keep developing the tar sands even if they don’t get Keystone XL. But they probably won’t be able to do it as quickly—or successfully. Approving the pipeline, in other words, is likely to ease the flow of oil to Gulf Coast refineries. Whether that makes the Keystone XL fight worthwhile, obviously, is another matter entirely.
Sarah Laskow is reporter and writer in New York City. She has written about energy and the environment for Grist, the American Prospect, Salon, Reuters, and other publications.