Tar Sands Won't Go By Rail

The recent State Department review of the Keystone XL pipeline that was released on Friday, March 1st, comes to the false conclusion that Keystone XL won't have a serious climate impact because even if the pipeline isn't built tar sands oil can be shipped out of Alberta via rail. Here's the truth of the matter. 

Transporting oilsands by rail grabs headlines but will likely remain a very small percentage of total shipped oilsands.  The exact numbers are hard to track but in 2011 only 20k bpd of western CDN crude moved by rail. That's 0.69% of western Canada's oil supply. Even if there was a massive increase in rail transport – it will remain a niche service for oilsands producers. Given the current price discount for oilsands, it is starting to make economic sense for rail. This could change with the new pipeline links between the midwest and the gulf coast opening up – but hard to say at this point.
 
Currently there is a continent wide shortage of oil rail cars because of the rush to transport Bakken oil, which is now starting to travel via rail at significant volumes. This limits the amount of rail cars available to transport oilsands. Some companies try to lower their costs by shipping un-upgraded dilbit but that requires heated rail cars because the bitumen will be too viscous to be extracted. It's my understanding is that there is not many of these insulated cars available at this stage.
 
So while there may be some oilsands leakage onto rail from pipelines, the notable leakage will be from other pipelines. There is mounting intell here in Ottawa, that the government will be increasing their sales pitch for Arctic or Atlantic-Canada bound bitumen pipelines in 2013. Meanwhile, recent rail line blockades in BC from folks protesting coal exports and in eastern Canada from Idle No More has shown how vulnerable rail is to direct action campaigns.