Keystone foes energized as price pressures allure of tar sands.

Bloomberg: “….U.S. benchmark crude has tumbled 10 percent this month, closing at $81.01 a barrel in New York trading last week, and further declines are forecast. At $75, a government analysis said producers may be discouraged from developingCanada’s oil sands without pipelines like Keystone.”
“….The pace of oil-sands production is key in the debate over Keystone, a Canada-to-U.S. lineTransCanada Corp. (TRP) proposed in September 2008 when oil was more than $100 a barrel.
Environmentalists oppose developing oil sands because the process releases more greenhouse gases than other types of crude. President Barack Obama has said he won’t approve the $10 billion project if it would significantly exacerbate carbon pollution. It only would do that if it promotes more oil sands production.
“If you build cheap infrastructure to enable tar sands development, you are going to get tar sands development,” said Jim Murphy, a senior attorney at the National Wildlife Federation. A lack of pipelines means less development, he said.
An environmental analysis released by the State Department said oil prices would have to fall to $75 a barrel for Keystone XL to affect development of Canadian heavy crude. The report said higher transportation costs might have a “substantial impact on oil sands production levels” at that price, a scenario they deemed as unlikely.
When crude prices are higher, producers would find another way to get the heavy, tar-like bitumen delivered to refiners — by trains, for example — even if Obama blocked the link, a January environmental assessment from the department said. The State Department is overseeing the review because the pipeline would cross an international border.
Now that prices are lower, environmental groups are renewing their argument that Keystone is a linchpin to oil-sands development and rail isn’t a reliable option. At the very least, they say, the tumble shows the State Department’s assumptions aren’t reliable.
Kevin Book, an analyst at ClearView Energy Partners in Washington, said falling oil prices may help environmentalists make a case that alternatives like rail, which cost more, aren’t viable. But he called the current price drop a “blip” that probably won’t affect the U.S. review of Keystone.
….Environmentalists also say their viewpoint is validated by announcements of canceled or delayed projects. In September, Statoil ASA postponed its 40,000-barrel Corner project in Alberta, citing costs and “limited pipeline access.”