Nixing of Keystone Pipeline Could Be Boon for Railroad Transport

Now that TransCanada Corp.'s Alberta-to-Gulf-Coast pipeline has been denied, however, it's clear that the contest between KXL and railroads in Canada's western oil patch wasn't a zero-sum game.

Rail shippers could see a modest boost from the pipeline's defeat, but analysts say Canada's crude-by-rail business must first overcome unfavorable price spreads, potentially burdensome new regulations and below-$50-per-barrel oil.

"Keystone wasn't going to come online until 2018 anyway, so current dynamics around [rail] terminal capacity, today's pipeline capacity and whether there are enough rail cars, those are conditions that are present now," said Graham Brisben, CEO of PLG Consulting, a freight logistics research and advisory firm. "Keystone XL doesn't really affect what's happening right now in terms of crude takeaway."

Over time, Brisben said the 830,000-barrel-per-day pipeline's rejection could "sustain the opportunity" for rail shippers.

Read Full Article