First of all, although it should be obvious, apparently it needs stating that we are oil and gas users here on this forum.
Not sure I understand the topic "Transporting Keystone oil By Rail". There is no transporting of "Keystone oil" by rail. "Keystone" refers to the first three phases of the pipeline project, all of which are build and operating right now, and all are within the boundaries of the United States.
"Keystone XL" is the fourth phase of the project, which crosses an international border, and therefore falls under a whole gamut of regulatory issues the built sections did not have to deal with. Naturally this presents an opportunity for those opposed to oil development to dig in and fight the project.
Make no mistake about it ... those who are against Keystone XL are not anti-Pipeline; they are anti-Oil. They cannot reasonably be against pipelines since pipelines are an order of magnitude safer than rail, which is safer than truck. There are something like 250,000 miles of currently operating pipelines in the US. New York to LA and back maybe 80 times.
Keystone XL will transport crude from North Dakota and Montana as well as from Saskatchewan and Alberta. Like Saskatchewan (25% of Canadian production) North Dakota and Montana oil is light sweet crude ... not oil sand derived.
Canada is not relying on Keystone XL to somehow save it's oil industry in Western Canada. Pipeline projects to transport oil to Chicago and Eastern Canada are under construction; an existing West-East natural gas pipeline is being converted to oil, etc.
Pipeline projects to move oil to the West Coast and on to China are underway, or planned. An existing pipeline is being doubled. And so on.
Certainly Canada and Western Canada want Keystone XL to be built. But if not, oil will just ship to China instead. Take your pick.
As for Oil Sands, it's true that it's extraction is slightly (10%) more impactful as far as CO2 emissions go compared to conventional crude, but there has always been steady improvement in that regard. You can see "scary" images of Oil Sands production, but note that these are images of the first production site (1980's) and modern extraction is far friendlier to the environment.
