Canada Envoy Sees Rail Growth as Answer to Keystone Foes

Canada’s U.S. ambassador said the fact that rail lines are carrying more heavy crude from the Alberta oil sands than before should prompt President Barack Obama to approve the Keystone XL pipeline.

“The facts basically speak for themselves,” Gary Doer said in an interview at the Canadian Embassy in Washington. Pipelines are safer, cheaper and release less carbon dioxide, a greenhouse gas, than rail does, he said.

The U.S. State Department is completing a final report assessing the environmental risks of building TransCanada Corp. (TRP)’s proposed $5.4 billion link between Alberta’s oil sands and U.S. Gulf Coast refineries.

A draft version released in March found that Keystone wouldn’t have a big impact on the climate because the oil sands would be developed even if the administration blocked the project, with the oil moving by rail lines instead.

“We have more facts on our side because that’s what happened,” Doer said.

Keystone could carry 830,000 barrels of oil a day to U.S. refiners. By comparison, an average of 175,000 barrels of oil were imported by rail each day this year, about 75,000 barrels of it heavy oil, according to the Canadian Association of Petroleum Producers. About 45,000 barrels of oil was shipped to the U.S. daily on average in 2012, according to the group.

Environmental Concerns

Environmentalists have criticized the State Department draft analysis, and pointed to other assessments by groups including Goldman Sachs Group Inc. (GS) that show development of the oil sands could be delayed if Keystone were blocked.

The Environmental Protection Agency also called for a more complete review in its response to the State Department draft environmental analysis.

Keystone’s potential impact on the climate is key because Obama has said he wouldn’t approve the pipeline if it would significantly worsen carbon dioxide pollution.

Doer said the pipeline would cause less harm to the environment than rail lines.

“I deal with lots of issues,” Doer said. “Some are really kind of on-the-one-hand or the other. This is actually bang, bang, bang. Higher cost, higher risk, higher” greenhouse gases.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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