The Environmental Protection Agency challenged the State Department’s environmental review of the Keystone XL pipeline, saying the analysis should “give additional weight” to whether low oil prices could cause the project to drive the development of oil sands.
The comments, part of the ongoing six-year federal review for the Canada-to-Texas project, could give the White House political cover to reject the $8 billion pipeline. President Obama has said he would reject Keystone XL if it “significantly exacerbates the problem of carbon pollution” that scientists blame for driving climate change.
“Given recent large declines in oil prices and the uncertainty of oil price projections, the additional low-price scenario included in the final [Supplemental Environmental Impact Statement] should be given additional weight during decision making, due to the potential implications of lower oil prices on project impacts, especially greenhouse gas emissions,” said Cynthia Giles, EPA assistant administrator for the Office of Enforcement and Compliance Assurance.
The State Department’s final environmental impact statement concluded that Keystone XL wouldn’t result in a significant uptick in carbon emissions. It said oil sands would come to market with or without Keystone XL, largely by other pipelines or trains.
That has happened in some cases through using various connecting pipelines, helping Canadian crude get to U.S. refineries. Large capital-intensive oil sands projects built before the oil price slump also are likely to keep producing.
But the State Department analysis didn’t consider oil prices below $75 per barrel a likely scenario. With oil hovering around $50 per barrel and projected to remain low for the near future, the calculation over whether Keystone XL is a driver of carbon emissions could change, the EPA suggested.
The call echoes environmental groups who say that Keystone XL would spur oil sands development by reducing transportation costs. That would mean the 1,700-mile pipeline is a driver of greenhouse gas emissions, opponents argue.
“President Obama has all the information he needs to reject Keystone XL, and today’s comments from EPA make us more confident than ever that he will continue to build on his incredible climate leadership by rejecting this dirty and dangerous pipeline once and for all,” said Tiernan Sittenfeld, senior vice president of government affairs with the League of Conservation Voters.
The EPA comments could lend to another analysis that would further delay a decision on the project, noted Kevin Book, managing director with consulting firm ClearView Energy Partners.
“State is likely to make long-term infrastructure decisions using long-term oil price projections — but the [EPA’s] arguments could create additional headwinds for the project,” Book said.
In general, the comments praised some of the updates the State Department made to a draft environmental review that the EPA had called “inadequate.” It said the revision noted oil sands produced 17 percent more carbon emissions than conventional crude. State also updated the range of carbon emissions Keystone XL might add to the atmosphere to a low of 1.3 million metric tons to a high of 27.4 metric tons.
“Until ongoing efforts to reduce greenhouse gas emissions associated with the production of oil sands are more successful and widespread, the final [Supplemental Environmental Impact Statement] makes clear that, compared to reference crudes, development of oil sands crude represents a significant increase in greenhouse gas emissions,” Giles said.
Keystone XL opponents say the pipeline would contribute to climate change, and have urged the president to reject it. The project’s supporters say it will increase jobs and strengthen energy security. The State Department says the project would create 42,100 direct and indirect jobs during a two-year construction phase, leaving 35 permanent positions afterward.
