IHS CERA said it prepared the report in response to President Obama’s June statement that he’d oppose the controversial Canada-to-Texas pipeline if it “significantly exacerbates” carbon pollution.
The pipeline is currently under federal review at the State Department. The department said in a draft environmental review that Keystone wouldn’t substantially increase greenhouse gas emissions.
IHS CERA and the State Department arrived at similar conclusions.
Both suggested rail or other pipelines would satiate market demand in Keystone’s absence. They also said hauling crude through the Keystone pipeline would displace Venezuelan oil and the emissions that come with transporting that fuel.
But the pipeline’s left-leaning and environmental opponents have challenged those assumptions. They note cross-country pipeline proposals have run into roadblocks in Canada. And they say rail can’t keep pace with the supply growth oil sands producers anticipate.
They contend that Keystone is therefore integral to getting oil sands to market and would accelerate its production. As such, they have urged the State Department to go back to the drawing board to conduct another review.
The IHS CERA report took aim at those criticisms, focusing on opponents’ claim that shipping oil sands by rail isn’t economical and that production growth therefore depends on Keystone.
The report pinned the lower prices Canadian oil sands fetched last year on “constraints in the pipeline and refining systems,” not the high cost of rail.
The report also said greater investment in rail could help bridge the gap between supply growth and transport capacity.
It added that oil sands are particularly suited for rail transport. That’s because bitumen “is the consistency of peanut butter” before it’s diluted, the report said.
“With the appropriate investment, they can transport pure bitumen, using heat to thin the bitumen during railcar loading and unloading,” the report said.