Already the speculation has started: what will the appalling accident in Quebec mean for the approval or not of the Keystone XL pipeline? Reuters addresses it here:
Much is at stake: Oil by rail represents a small but important new source of revenue for big operators like
Canadian Pacific Railway Ltd and Warren Buffett's BNSF, which have suffered a drop in coal cargo. It is also a flexible and cheaper option to more expensive European or African crude for refiners like Irving Oil, which confirmed on Sunday that the train was destined for its 300,000 bpd plant in Saint John, New Brunswick.And for producers like
Continental Resources Inc which have pioneered the development of the Bakken fields in North Dakota, railways now carry three-quarters of their production; new pipelines that can accommodate more oil are years away.Saturday's train wreck may also play into the rancorous debate over the $5.3 billion Keystone XL pipeline from Canada to the U.S. Midwest, which is hinging on President Barack Obama's decision later this year.
The Wall Street Journal discusses the same issues here:
The deadly weekend explosion of a runaway crude-carrying train in Quebec threatens to ratchet up scrutiny of rising crude-by-rail shipments on both sides of the U.S.-Canada border, amid a boom in North American oil production.
In both countries, shipments of crude by rail have shot up sharply, as producers race to get all their new oil to market and as pipeline companies scramble to build new lines or reconfigure old ones to handle the growing volumes. Meanwhile, uncertainty over several big pipeline projects—including approval delays for
TransCanada Corp.'s Keystone XL, which would connect Western Canada's booming oil sands development to the Gulf Coast—have sent some oil companies looking to rail as a longer-term solution.
A train disaster that killed five people in Quebec promises to touch off debate over the safety of shipping crude oil by rail or pipelines such as TransCanada Corp’s Keystone XL.
There are two related but quite distinct questions here.
The first is whether we want to have oil at all? I have some sympathy with those who insist that for climate change reasons we want to reduce the amount of oil that we use. But there's no way that we're going to stop using it in the next couple of years, nor even, more likely, the next couple of decades. Even assuming that you hold views to the more catastrophic end of the spectrum about oil and fossil fuels it's simply not going to happen that we'll stop using them in anything less than decades at the very least.
So, if we assume that oil is indeed going to be drilled, pumped, shipped to refineries and then used, we want the system to do so which kills the least possible number of people in the process. Other things are also important, the environment and so on but our first duty is of course to people. At which point I think the decision moves firmly in the direction of pipelines. Yes, they can indeed split, yes it is possible for there to be an explosion in or of one. But by their very nature pipelines tend not to go through the centre of towns thus the danger to people will be minimised. Also by their very nature, railroads do tend to go through the centre of towns. It's true that there's very little passenger traffic left in North America but the routes laid out were originally to connect population centres. Therefore they do go through said population centres.
As those three business publications have been ruminating this disaster has implications for how oil is transported: in my view, firmly in favour of pipeline building.
