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A “No” on Keystone XL Could Divert Billions in Investment Away From Tar Sands

According to a report released last Monday by the Royal Bank of Canada (RBC) Dominion Securities, a decision against the proposed Keystone XL pipeline could put nearly $10 billion in investments on hold. Should US president Barack Obama say no to the pipeline, capital spending on the tar sands would drop between $8 billion and $10 billion, with the drop coming most likely in 2015 and 2016.

The report follows news that major investors have begun to shy away from the Alberta tar sands, suggesting a 'No' on Keystone is likely to push investment west toward liquefied natural gas development in BC which drew more than $12 billion in deals last year, according to the report.

RBC says the majority of that money—about $7 billion—could only be delayed until closer to the end of the decade.

Whether or not that capital disappears entirely or is simply delayed by a few years depends largely on alternative modes of transportation. The report is confident that producers will make use of those other means, saying, “Keystone XL impacts will be short-term in nature as operators find other ways to ship bitumen and synthetic crude to markets, leading to project deferrals but not outright cancellations.”

The oil companies’ ability to get tar sands oil to market is one of the key assumptions made in the US State Department’s evaluation of the Keystone XL pipeline. That report, which claimed the Keystone XL would have little impact tar sands expansion or greenhouse gas emissions, was roundly criticized by the Environmental Protection Agency for failing to fully consider the cost and risk of alternatives like oil transport by rail, as well as the “social cost” of emissions, such as human health and damage to agriculture.

Critics say oil transport alternatives like rail are also cause for concern.

The day the RBC’s report was released, a Canadian Pacific Railway freight car moving oil through Saskatchewan derailed, spilling an estimated 91,000 litres of crude oil. Prime Minister Stephen Harper called the spill evidence of the “environmentally challenging” nature of oil transport by rail. There is no known failsafe way to transport the fuel.

In his response to the report, Greenpeace climate campaigner Mike Hudema suggested that there are far better ways to spend the billions of dollars investors may devote to the tar sands.

“We can spend billions to build this pipeline and the new tar sands mines required to fill it or we can invest those dollars in solutions that end our addiction to oil, improve the health of our communities and stop climate change,” he said in a statement.


Image Credit: transcanada.com

Like a kid in a candy store
When those boxes of heavily redacted documents start to pile in, reporters at The Narwhal waste no time in looking for kernels of news that matter the most. Just ask our Prairies reporter Drew Anderson, who gleefully scanned through freedom of information files like a kid in a candy store, leading to pretty damning revelations in Alberta. Long story short: the government wasn’t being forthright when it claimed its pause on new renewable energy projects wasn’t political. Just like that, our small team was again leading the charge on a pretty big story

In an oil-rich province like Alberta, that kind of reporting is crucial. But look at our investigative work on TC Energy’s Coastal GasLink pipeline to the west, or our Greenbelt reporting out in Ontario. They all highlight one thing: those with power over our shared natural world don’t want you to know how — or why — they call the shots. And we try to disrupt that.

Our journalism is powered by people just like you. We never take corporate ad dollars, or put this public-interest information behind a paywall. Will you join the pod of Narwhals that make a difference by helping us uncover some of the most important stories of our time?
Like a kid in a candy store
When those boxes of heavily redacted documents start to pile in, reporters at The Narwhal waste no time in looking for kernels of news that matter the most. Just ask our Prairies reporter Drew Anderson, who gleefully scanned through freedom of information files like a kid in a candy store, leading to pretty damning revelations in Alberta. Long story short: the government wasn’t being forthright when it claimed its pause on new renewable energy projects wasn’t political. Just like that, our small team was again leading the charge on a pretty big story

In an oil-rich province like Alberta, that kind of reporting is crucial. But look at our investigative work on TC Energy’s Coastal GasLink pipeline to the west, or our Greenbelt reporting out in Ontario. They all highlight one thing: those with power over our shared natural world don’t want you to know how — or why — they call the shots. And we try to disrupt that.

Our journalism is powered by people just like you. We never take corporate ad dollars, or put this public-interest information behind a paywall. Will you join the pod of Narwhals that make a difference by helping us uncover some of the most important stories of our time?

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