Keystone Won't Be Finished Until 2016. Here's What That Means.

President Obama speaks at a pipeyard for the southern leg of the Keystone XL Pipeline. (National Journal)

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.

Meanwhile, environmental groups have taken heat for focusing efforts on the pipeline. New York Magazine's Jonathan Chait called the fight "marginally relevant to the cause of stopping global warming," noting that the pipeline would contribute just a few tenths of a percent to U.S. greenhouse-gas emissions, while coal-plant emissions are far larger.

But that isn't likely to keep green groups from continuing the fight. An International Energy Agency report released earlier this month found that construction of the pipeline would cause tar-sands production to double by 2035. The added environmental and climate costs of that extra production has added fuel to the fire of environmentalists' arguments.

No one doubts that Obama's decision on Keystone will provoke heated responses from a variety of stakeholders. But, increasingly, the volume of the debate isn't matched by the significance of the project.