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Keystone XL pipeline supporters – who have been waiting years for this project to be completed – just received good news from the U.S. Department of State.
The Keystone pipeline is 1,179 miles long and would connect heavy crude oil from bitumen deposits in Canada to the southeastern refining network of the United States. While the southern portion has been built, the northern section requires approval given its cross-border passage.
The State Department on Jan. 31 released a study on the Keystone pipeline's environmental impact. The report concluded that the Keystone pipeline would not substantially worsen carbon pollution.
In fact, the pipeline provides a steep reduction in emissions compared to what's happening now….
Keystone XL Pipeline Is Key to Canada's Oil
There's a significant oil glut in Canada. Without the Keystone pipeline, that oil gets moved by rail.
One million barrels of oil are set for rail shipment from Canada to the United States by the end of 2014. According to the State report, rail shipment of oil from Canada would be 28% to 42% higher than if the same volume of 830,000 barrels moved through the pipeline.
But last year saw a string of environmental accidents rattling the railcar industry. So now the administration must decide whether an 830,000-barrel-per-day pipeline is a suitable and more eco-friendly alternative.
With the emissions alternative of a pipeline to railcars reducing emissions from expected levels, President Obama is likely to approve this pipeline by the end of the year.
Plus, the United States wants this oil – badly…
If the United States doesn't buy it, it will likely be sold to China.
And Canadian producers want the pipeline because the oversupply of oil and lack of infrastructure are driving spot prices down. Once the infrastructure is in place, and the glut reversed, oil prices will appreciate locally, a boon for producers. This same trend happened to natural gas prices over the last three years.
This means profits ahead for shareholders of certain oil producers and transportation companies…