According to the new IHS study, the proposed Keystone XL
pipeline would have no material impact on US GHG
emissions. In the absence of the pipeline, alternate
transportation routes would result in oil sands production
growth being more or less unchanged, the study says.
The study also found that any absence of oil sands on the US
Gulf Coast (the destination for Keystone XL) would most likely
be replaced by imports of heavy crude oil from Venezuela, which
has the same carbon footprint as oil sands.
The pipeline's potential impact on GHG emissions has been
the subject of increased focus. President Barack Obama's June
25 climate address indicated that the relative emissions
related to increase Canadian oil sands processing in US markets
resulting from the pipeline are key criteria for the United
States' decision whether to approve the project.
The new IHS CERA Canadian Oil Sands Dialogue study agrees
with the conclusions of the US State Department's Draft
Supplemental Environmental Impact Statement for Keystone XL
that says oil sands production is expected to continue at
similar levels regardless of whether Keystone XL goes forward.
IHS currently expects oil sands production to grow from 1.9
million barrels per day (MMbpd) in 2013 to 4.3 MMbpd in 2030
and does not expect the Keystone XL decision to have a material
impact on the production outlook.
The IHS study points out that 3 MMbpd of additional oil
sands pipeline capacity (not including Keystone XL) is
currently proposed. Eighty percent of this proposed alternate
capacity travels exclusively through Canadaconnecting the
oil sands with Canada's west and east coastsand thus
would not require U.S. government approval.
Even if pipeline capacity were to lag behind oil sands
growth, the study says that transportation by rail is expected
to play an ongoing role and that greater investment could make
rail more economic to a level approaching that of
The study found that with sufficient scale and investment
the additional cost of transporting oil sands by rail to the US
Gulf Coast rather than by pipeline could be lowered from today.
If heavy oil sands producers were to invest in improved rail
efficiencies, the economics could be within $6/bbl compared to
pipeline (for each barrel of oil sands produced). This would
place rail well within the break even range for most oil sands
production. One source of improved economics could come from
shipping oil sands bitumen in its pure state. A lack of
pipeline capacity would incentivize such added investment.
The study also found that, were oil sands not to be shipped
to the US Gulf Coast, it would result in little to no change in
overall GHG emissions. The regionwhich contains 50% of
total US refininghas 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, the study says.
Venezuela is currently the largest single supplier of heavy
crude to the US Gulf Coast and would be the most likely
alternative source of heavy crude supply absent oil sands. IHS
research has found Venezuelan heavy crude to have a similar
range of life-cycle GHG emissions as oil sands imported into
the United States.
Venezuelan heavy oiland Venezuelawould be
the number one beneficiary of a negative decision on
Keystone, the study says.
The complete study is available at the oil sands