Keystone pipeline defeat could translate to rail gains

November 10, 2015

oil-train-railPresident Obama’s decision to reject the Keystone XL pipeline Friday could come with a heavy side of tank cars. Canadian energy companies need about a dozen crude-laden trains each day to replace the volume of oil that could have been transported through KXL.

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.

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