The Keystone XL pipeline would cause “no material impact” on greenhouse gas (GHG) emissions in the U.S., according to a new IHS study.
In its findings, the study pointed out that 3 MMbpd of additional oil sands capacity, not counting Keystone XL, is currently proposed with 80% of that total traveling exclusively through Canada to that nation’s west and east coasts, thereby not requiring U.S. approval.
The study, by consulting and research firm IHS CERA Inc., concluded in the absence of the 800,000-bpd Keystone XL pipeline, alternate transportation sources and other routes would bring the same amount of oil sands product to market, leaving its rapid level of growth unchanged.
The growth of rail transportation, according to the study, is expected to play an ongoing role and that greater investment could make rail more economical to a level approaching that of pipelines.
“Even if new pipelines lag oil sands growth, rail will fill the gap, as it is doing today,” the study said. Oil sands shipments from Western Canada stood at 150,000 bpd in early 2013 and could increase to 360,000 bpd by year’s end, which would be almost half of the Keystone’s capacity.
Additionally, the finding showed the elimination of oil sands shipments to the Gulf Coast – the Keystone XL destination – would likely boost imports of heavy crude oil from Venezuela, which has a similar carbon footprint. The Gulf Coast, which contains 50% of all U.S. refining, has a large capacity to process heavy crude. This means that crude oils of similar GHG intensity would continue to be refined in the absence of oil sands.
“Venezuelan heavy oil — and Venezuela — would be the number one beneficiary of a negative decision on Keystone,” the study said.
The study agreed with the findings of the U.S. State Department’s Draft Supplemental Environmental Impact Study of Keystone XL released in March, which said oil sands output is expected to increase at its current rate with or without the Keystone XL project. IHS foresees oil sand production growing from a current 1.9 MMbpd to 4.3 MMbpd in 2030.
The conclusions were similar to those found in March by the State Department in its draft environmental impact review of the proposed pipeline. The Keystone XL’s possible effect on GHG emissions has been an increasing source of debate since President Obama’s June 25 address on the climate in which he said GHG would be a key criteria in the pipeline’s approval process.
Obama recently downplayed the ability of the Keystone XL to create jobs, saying during a speech in Tennessee that the pipeline would cause only a “blip” in nation’s overall jobs picture. He later told the The New York Times the project would account for “maybe 2,000” construction jobs and “between and 100” permanent jobs after it is in operation.
The remarks were in sharp conflict with a State Department report that estimates the project would create nearly 4,000 annual construction jobs and possibly support 42,000 jobs annually.