Crude-by-rail no substitute for Keystone XL: energy minister

Wed Apr 24, 2013 5:40pm EDT
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By Patrick Rucker

WASHINGTON (Reuters) - 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 dent 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 Coast.

"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 early March.

But Oliver said pipelines reliably beat 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."   Continued...

Minister of Natural Resources Joe Oliver speaks during Question Period on Parliament Hill in Ottawa April 17, 2013. REUTERS/Blair Gable