IHS: Keystone XL would have minimal greenhouse gas emissions impact

Completing the proposed Keystone XL crude oil pipeline would not have a significant impact on greenhouse gas emissions because other transportation routes used in its absence would not significantly change Alberta oil sands production growth, a recent IHS CERA study concluded.

Venezuelan heavy crude imports most likely would replace any Canadian bitumen that did not reach the US Gulf Coast, it added.

The Aug. 8 IHS CERA Canadian Oil Sands Dialogue study reached conclusions similar to the US Department of State’s Draft Supplemental Environmental Impact Statement for Keystone XL’s latest cross-border permit application.

Both found that preventing the project’s construction would have little effect on oil sands production in Alberta. IHS said it expects production to rise to 4.3 million b/d in 2030 from 1.9 million b/d in 2013 and does not expect the Keystone XL decision to have a material impact.

It noted that another 3 million b/d of oil sands pipeline capacity has been proposed, 80% of which traverses exclusively through Canada and consequently does not require US government approval.

With sufficient scale and investment, the cost of transporting bitumen from Alberta to Gulf Coast refineries by rail could fall to within $6/bbl of pipeline transportation costs, the study indicated. “This would place rail well within the break-even range for most oil sands production,” it said.

Gulf Coast GHGs

The study also concluded that there would be little change in the Gulf Coast’s overall GHG emissions if bitumen from Alberta’s oil sands was not shipped there. The region, which contains 50% of the nation’s refining capacity, could process similarly heavy crudes from elsewhere, it said.

Venezuela, which now is the biggest heavy crude supplier for Gulf Coast refineries, would most likely continue in that role, it continued.

IHS said its research has found Venezuelan heavy crude to have a range of life-cycle GHG emissions similar to oil sands imported into the US. “Venezuelan heavy oil—and Venezuela—would be the number one beneficiary of a negative decision on Keystone,” the study said.

The conclusions show building Keystone XL “would leave the climate in neutral, but place the economy in drive,” Consumer Energy Alliance Executive Vice-Pres. Michael Whatley responded.

“Five billion dollars in new investment and over 40,000 jobs is nothing to shake a stick at,” he said. “Combine that with American energy consumers being able to access both Bakken and Alberta-sourced oil, and you move the US away from being beholden to [Organization of Petroleum Exporting Countries] suppliers.”

Contact Nick Snow at nicks@pennwell.com.

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