Most, if not all, crude oil that would be trans­ported on the proposed Keystone XL pipeline from Canada to the Gulf Coast would not be exported, and the vast majority of refined product—about 70%—derived from it would be consumed in the U.S., according to a new report by IHS. The report, which analyzes the outlook for oil sands and other heavy crudes in North America, also says that the amount of oil sands flowing into the U.S. would still grow, regardless of whether Keystone XL is built.

“There is a common misunderstanding that somehow most or all of the oil shipped to the U.S. Gulf Coast via the Keystone XL pipeline would be exported to other countries,” said Aaron Brady, senior director for IHS Energy. “The reality is that the U.S. Gulf Coast is the world’s largest single refining market for heavy crudes such as oil sands, making it unlikely these barrels would be exported offshore. And, the overwhelming majority of refined products produced in the Gulf are consumed in the United States, regardless of the crude source.”

IHS notes that the U.S. Gulf Coast is the largest refining market for crude, and particularly heavy crude of the type produced by Canada, Mexico, and Venezuela, in the world. Some 2.7 MMbbld of refining capacity on the Gulf Coast has been optimized for heavy sour crudes over several decades. As a result, the report predicts “a contest looms on the U.S. Gulf Coast between Canadian and Latin American crudes.” The report adds that “Venezuelan exports have also tilted away from the U.S. market and toward Asia as a result of a set of Chinese government loans that carry along a commitment of oil supply.”

Previous IHS research has concluded that the greenhouse gas emission impact from importing and pro­cessing more oil sands crude in the U.S. would be negli­gible since they would take the place of other heavy crudes that are currently being imported that have a similar carbon intensity—such as those from Venezuela. “Regard­less of whether the oil is imported from Canada or Ven­ezuela, the overwhelming majority of the refined products produced in the Gulf will continue to be consumed in the United States,” Brady said.

The IHS report finds that, absent new pipeline capacity, the use of alternate transportation routes, includ­ing rail, would still result in the growth of oil sands imports into the U.S. The report also finds that overall growth in oil sands production is expected to continue despite the collapse in oil prices over the past several months. Oil sands projects, the report notes, have a very long time horizon, with production lasting as long as 30 to 40 years, making them relatively resilient to periods of low oil prices. “Cur­rently there is over 1 million barrels per day of capacity at various stages of construction in the oil sands,” said Kevin Birn, director of IHS Oil Sands Dialogue. “IHS anticipates existing projects will continue to operate, and those under construction will proceed to completion. While investment will not be immune to the drop in oil prices, significant production growth is still expected over the coming years. IHS expects oil sands production to rise to 2.9 MMbbld by 2020, an increase of 800,000 bbld—without diluent.”