NEW YORK IHS Global Insight Inc. has sided with TransCanada Corp. and the U.S. State Department that approval of the Keystone XL pipeline will not significantly increase carbon emissions as it is unlikely to affect heavy crude oil production or use.
"In the absence of the pipeline, alternate transportation routes would result in (Alberta) oil sands production growth being more or less unchanged," the Lexington, Mass.-based research firm said, adding that "any absence of oil sands on the U.S. Gulf Coast would most likely be replaced by imports of heavy crude oil from Venezuela, which has the same carbon footprint as oil sands."
ISH expects production from the oil sands to increase to 4.3 million barrels per day by 2030 from about 1.9 million barrels per day in 2013 regardless of whether the pipeline is approved, since 80 percent of the pipeline capacity planned for the region runs solely in Canada and wont need U.S. consent.
Also, investment in new rail capacity in the absence of pipeline builds can bring the cost of shipping crude by rail to within $6 per barrel of pipeline transport, making it a viable alternative, it said. "This would place rail well within the break-even range for most oil sands production," IHS said.
President Obama said recently that the pipelines impact on U.S. carbon emissions will be key to its approval (amm.com, June 26).
Environmental groups have argued that the pipeline will lead to a significant rise in greenhouse gas emissions (amm.com, July 25).