As we proceed through the first month of 2014, and following five years of incessant federal and state studies, it's tough to be optimistic about the Obama administration's ultimate approval of TransCanada's (TRP 0.71%) proposed Keystone XL pipeline. But following recent events in a couple of areas, a Keystone turndown could be doubly damaging for citizens of the United States.

You likely know about the tragedies that hit North American railroad trains carrying oil of late. With much of the light sweet crude coming from the prolific Bakken formation of North Dakota and Montana now being transported by rail, these incidents obviously bode ill for producers in the big play, as well as for the environment.

Another option for Canada
But what you may not realize is that another Canadian pipeline company, Enbridge (ENB 0.75%), is lobbying for permission to construct a line that would carry crude from Alberta's oil sands to Kitimat, a small, but increasingly important, city on British Columbia's Pacific Coast. The beneficiaries of that potential development -- which is being called the Northern Gateway pipeline and which remains unapproved by Canadian authorities -- would obviously not be U.S. citizens. Rather, much of the oil or product transported to Kitimat would likely find its way to China.

Regulators north of the border have tentatively blessed the $8 billion twin Northern Gateway lines, subject to Enbridge's compliance with a mere 209 conditions. Kitimat is also the site of a proposed $4.5 billion LNG plant and export terminal that would be operated by Conoco (COP -0.34%), the second-largest U.S.-based integrated producer, in partnership with Apache. Conoco expects the facility to be capable of processing about 700 million cubic feet of natural gas per day.

And there's more. Royal Dutch Shell (RDS.B), which, given its massive gas supplies, is becoming a leader in the development of LNG projects, including the construction of a behemoth $12.5 billion processing vessel that'll dwarf an aircraft carrier sixfold and be employed off northwest Australia. The company is also planning a $12 billion joint venture LNG export facility at burgeoning Kitimat. It's meaningful that Shell's partners in that project include PetroChina.

Minimal environmental impact
All this calls into question President Obama's assertion in June that the Keystone XL project wouldn't be in the national interest if it results in an acceleration of climate change. Should the project ultimately be turned down by the administration, however, Canada will obviously continue to produce bitumen in Alberta, and China will likely be all the better for it. As such, either way the effects of production from Alberta's oil sands will remain unchanged. Obviously, the atmosphere knows no national borders.

In normal times, the aforementioned railroad catastrophes would seem to tip the balance in favor of a Keystone XL presidential imprimatur. In July, for instance, a runaway oil-laden train exploded in Canada's Quebec province, killing 47. Following that incident, in November a train carrying crude derailed and exploded in western Alabama. And just last week, a BNSF Railway train carrying crude caught fire after colliding with another train, which had become derailed in its path.

Bakken cost increases?
These incidents have prompted the National Transportation Safety Board to take a close look at the railroad incidents, clearly with an eye toward upping the ante of rules and regulations tied to the safety of moving crude by rail. Likely to be affected most by resulting cost increases would be operators in the Bakken, where some have contended that the produced crude may be more flammable and dangerous to transport than that coming from other areas.

Meanwhile, Bakken producers plan to continue moving their crude by rail, even at the risk of more catastrophes. Indeed, Continental Resources (CLR) has said that its own testing indicates that Bakken crude is lower in sulfur and contains fewer flammable "light ends" than most other oil. By some measures, Continental is the largest player in the Bakken/Three Forks.

Foolish bottom line
To my mind, there's little to support the notion that a decision on the Keystone XL is imminent. Nevertheless, Fools with a penchant for energy investing would be well advised to keep close eyes on this lingering, important, and often frustrating set of circumstances.