A rash of explosive accidents involving oil-bearing trains has led to a surprising number of headlines and high-profile comments directly linking the fiery derailments to the fate of the long-stalled Keystone XL oil pipeline, the controversial project that would carry heavy bitumen from Canada’s oil sands to Texas refineries.
"North Dakota train fire adds fuel to Keystone XL debate," said a Bloomberg News headline. The Los Angeles Times published "Canada rail crash stirs debate over Keystone XL pipeline delay." And a year-end Fox Business segment asked, "Recent train derailments renewing push for Keystone Pipeline?"
Proponents of the pipeline project have been even more explicit in using the rail accidents to drum up support for the more than $5.4 billion northern segment of the Keystone XL, which the Obama administration has delayed for years over environmental concerns.
Diana Furchtgott-Roth, a Keystone backer and a Manhattan Institute senior fellow, wrote an opinion piece published by Canada's Globe and Mail just days after a runaway crude train killed 47 people in Quebec. "After Saturday’s tragedy in Lac-Megantic, Que., it is time to speed up the approval of new pipeline construction in North America," she wrote. After reciting pipeline and rail safety statistics, she noted that the Quebec disaster "brings home to all of us that in evaluating whether to build more pipelines, human safety should be a paramount consideration."
Few would dispute that it's appropriate—even urgent—to find out what caused the recent oil train disasters and enact safety measures to prevent them. Since the tragedy in Quebec last July, accidents in the United States involving oil-carrying trains have triggered explosions in Alabama and North Dakota. But for many, it seems a stretch to use the issue to promote oil pipelines, and the Keystone XL in particular, as being safer and therefore a cure for oil-by-rail safety concerns.
"That's a political idea that's not particularly well supported by the facts," said Peter Goelz, a former managing director at the National Transportation Safety Board, the federal agency that investigates plane crashes as well as accidents involving rail, highway, marine and pipeline transit. He questioned the safety comparisons being cited and said Keystone XL backers have "tried to turn it into a zero-sum game, where they advance Keystone at the expense of railroads."
In fact, the realities of today's fast-changing oil market make it clear that even if the Keystone XL and similarly stalled Canadian pipelines had already been operating, they would not have supplanted the rapid rise in oil-by-rail. Today, more than 70 percent of the North Dakota region's surging oil production leaves the area by rail, according to the North Dakota Pipeline Authority.
What's more, the existence of the Keystone XL would not have prevented the recent rail accidents because it would not have been carrying the type of U.S. crude that spilled and erupted in flames.
How can we know all that?
First, it's the wrong oil. The Keystone XL and comparable pipelines under review in Canada would be almost entirely filled with less-volatile, diluted bitumen from landlocked Alberta on its way to the refining hub and export terminals of Houston, or to export facilities on Canada’s east and west coasts. They would carry very little, if any, of the light crude oil that is now riding the rails, such as that being drawn out of the Bakken in North Dakota. That lighter oil is chemically more combustible than heavy grades of crude, and regulators suspect that the specific make up of the Bakken variety may have boosted the risk of fire.
Second, most Bakken producers want rail. The producers of light, sweet Bakken oil are largely focused on shipping to the east and west coasts, where light crude usually sells at higher prices—and where only oil rail goes. Virtually all of the existing U.S. crude oil pipelines—as well as those on the drawing board such as Keystone XL—run north and south through the nation's midsection, reaching markets that usually aren't as lucrative for Bakken producers.
For instance, the delivery point for the Canadian heavy crude that would be carried by the Keystone XL is the Gulf Coast, where refineries are flooded with all the light crude they can handle, much of it from Texas' Permian Basin and Eagle Ford formation. And so, even though a small portion of the Keystone XL's capacity was reserved to carry light crude from the Bakken to the Texas Gulf Coast, that's unlikely to be a popular option now.