Will The Keystone XL Pipeline Ease Rail Congestion?

Thursday, 20 November 2014 00:00

Following the mid-term elections, the Keystone XL pipeline has resurfaced as the issue of the day. Indeed, despite its defeat in the Senate yesterday, speculation is rife the controversial pipeline will be approved next year by both the Senate and Congress.

The big question, for the ethanol industry, is whether the pipeline will ease rail congestion. Increasing amounts of crude oil produced in North Dakota has led to heavy rail congestion and on many occasions, prevented the supply of other materials, such as ethanol, from being transported.

Keystone XL supporters argue that the pipeline will indeed divert oil from the Bakken away from railroads as the Keystone XL project includes the Bakken Marketlink to transport crude from the North Dakota.

The problem, however, is that it probably won’t ease rail congestion by much.

According to TransCanada Corp, the company behind Keystone, the Bakken Marketlink will be able to transport up to 100,000 barrels of crude oil a day from the Williston Basin producing region in North Dakota and Montana to Cushing, OK and the gulf coast.

Similarly, the Congressional Research Service, in a report in January 2013, said the pipeline would be able to transport 150,000 barrels of crude oil a day from the Bakken.

But there’s 1.13 million barrels of crude oil produced a day in North Dakota. While 10 percent may be diverted to the Keystone XL pipeline, the remaining 90 percent will still have to make its way to refineries in the east and the south and most of it will still be via rail.