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The Keystone XL pipeline under construction in North Dakota. Prime Minister Stephen Harper’s Conservative government and Alberta Premier Alison Redford have aggressively lobbied U.S. politicians ahead of the Obama administration’s decision, likely this summer, whether to approve the $5.3-billion TransCanada Corp. project.Reuters

Ask dealmakers or traders who cover Canadian energy about their outlook for the oil sands, and they all say that the dark shadow is receding. Since January, deal flow has been so muted that the biggest energy acquisition is Canada this year doesn't even crack the billion dollar mark. Finally, however, there are glimmers of hope.

While investors and the media focused on TransCanada's Keystone XL pipeline, a number of developments occurring out of the spotlight have improved market conditions. Now they're all coming together, and they paint a much rosier picture. This didn't happen by magic, and there's still a long way to go. But insiders stress that companies are much more receptive to new ideas than before.

The linchpin of these hopes is the rapid growth of oil-by-rail. I know, you've heard it all before. But analyst Phil Skolnick at Canaccord Genuity said that the industry's now an inflection point. By the first quarter of 2014 – just a few months away – rail cars will be capable of transporting much more heavy oil out of Alberta.

Earlier this year, there was a big backlog due to the lack of rail cars. That's now subsiding, Mr. Skolnick noted, because new cars are being delivered and will continue to arrive into 2014. Loading capacity is also growing quickly, and manifest trains (which carry a number of different products) are being replaced by oil-only trains.

These positive developments are being buttressed by a surge in pipeline options, such as the removal of the pressure restriction on Enbridge's Line 6B and the commission of Keystone XL's southern leg in early November.

So even without approval for the full Keystone pipeline, Mr. Skolnick asserts that "major rail advancements combined with near-term pipeline capacity additions should allow oil to make its way out of Alberta through at least the end of 2018." (Full disclosure: I own shares of MEG Energy.)

Sounds great, but let's not get ahead of ourselves. The price difference between Canadian heavy oil and U.S. crude is still north of $26 per barrel (U.S.). While a number of analysts think that's probably just a short-term problem, don't expect too much dealmaking until it gets a little better.