TransCanada acknowledged Tuesday that the Keystone XL Pipeline — even if approved — will not be operational until 2016. It's the latest admission that the project, long stalled in the federal approval process, is losing relevance. The pipeline has been a flashpoint of controversy for environmentalists and industry leaders, but as the administration has drawn out its reviews, the pipeline's significance from an energy standpoint has faded.
Oil-by-rail transportation has filled the gap in recent years where pipelines have met delays. The amount of oil shipped as U.S. train cargo has doubled in the past two years, and Canada is exporting oil barrels in the six figures daily after shipping just marginal amounts a year ago. One oil executive told National Journal the rail boom and new pipeline alternatives have rendered Keystone nonessential as a transporter of U.S. oil.
The spike in oil shipment alternatives has come largely over the past two years, and it's likely to continue to expand in the two years it would take to build Keystone. "Rail has a first-mover advantage as a transport method for crude oil," conceded Andrew Black, president of the Association of Oil Pipe Lines. "Rail can gain market share while pipelines race to catch up." Left unsaid is that the pipeline "catch-up" can be stalled by federal policy, not just construction time.