Warren Buffett's Burlington Northern Santa Fe is among U.S. and Canadian railroads that stand to benefit from the Obama administration's decision to reject TransCanada Corp.'s Keystone XL oil pipeline permit.

With modest expansion, railroads can handle all new oil produced in western Canada through 2030, according to an analysis of the Keystone proposal by the State Department.

"Whatever people bring to us, we're ready to haul," Krista York- Wooley, a spokeswoman for Burlington Northern, a unit of Buffett's Omaha, Neb.-based Berkshire Hathaway Inc., said in an interview. If Keystone XL "doesn't happen, we're here to haul."

The State Department denied TransCanada a permit Jan. 18, saying there was not enough time to study the proposal by Feb. 21, a deadline Congress imposed on President Obama. TransCanada, based in Calgary, Alberta, has said it intends to re-apply with a route that avoids an environmentally sensitive region of Nebraska, something the Obama administration encouraged.

The rail option, though costlier, would lessen the environmental impact, such as a loss of wetlands and agricultural productivity, compared with the pipeline, according to the State Department analysis.

Greenhouse gas emissions, however, would be worse.

If completed, Keystone XL would deliver 700,000 barrels a day of crude from Alberta's oil sands to refineries along the Gulf of Mexico, crossing 1,661 miles over Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas.

Investors such as John Stephenson, who helps manage $2.7 billion for First Asset Management Inc. in Toronto said he anticipated the project would move forward next year.

Pipeline shipping costs remain lower than rail, and a lack of readily available tanker cars may create a bottleneck.

The availability of tank cars may create a temporary "hiccup" in transport capacity, according to Tony Hatch, an independent railroad analyst in New York. Rail cars are "a pretty hot commodity," as a result of demand from oil producers in North Dakota, he said.

Rail car production is already at a three-year high as manufacturers such as Greenbrier Cos Inc. and American Railcar Industries Inc. expand to meet demand for sand used in oil and gas exploration, according to Steve Barger, an analyst at Keybanc Capital Markets Inc. in Cleveland, citing Railway Supply Institute statistics.

Rail-car suppliers can add capacity, Hatch said.

"Railroads are not just a stopgap while we wait for a pipeline," Hatch said in an interview. "They are potentially part of the long- term solution."

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