Amid Low Oil Prices, EPA Requests New Review of Keystone's Environmental Impact

by | February 4, 2015 AT 11:00 AM

By Sean Cockerham

The Environmental Protection Agency is calling on the State Department to rethink its conclusion that construction of the Keystone XL pipeline would have minimal impact on climate change, saying the pipeline could significantly increase greenhouse gases.

Environmental groups celebrated the EPA's comments Tuesday, arguing they give President Barack Obama what he needs to block the pipeline.

"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," Tiernan Sittenfeld, senior vice president of the League of Conservation Voters, said in a statement.

Keystone XL would tap the Canadian oil sands in Alberta and ship the crude 1,179 miles toward refineries on the Gulf Coast. The southern leg of the pipeline runs 487 miles from Cushing, Okla., to Texas and is already built.

The thick Alberta crude, known in its natural state as bitumen, creates more planet-warming gases than other sources of oil. The State Department, in its environmental review, estimated that the crude produces 17 percent more carbon emissions than average sources of oil used in America and up to 10 percent more than other heavy oil coming from Venezuela and Mexico.

The State Department concluded in January 2014 that the pipeline wouldn't worsen global warming. According to its report, Keystone XL wouldn't affect development of the oil sands _ and therefore global warming _ because the oil would get to market by rail or other pipelines whether it's built or not.

"Approval or denial of any one crude oil transport project, including the proposed project, is unlikely to significantly impact the rate of extraction in the oil sands," according to the State Department review.

Indeed, oil companies got tired of the six-year wait for Keystone XL approval and have increasingly been shipping crude oil by rail.

However, the State Department's report came at a time of high oil prices, before the recent historic collapse changed global energy markets.

The State Department's report raised the possibility that if oil prices fell into the $65 to $75 a barrel range for an extended period, rail could become too expensive for shipping the Canadian crude, making Keystone vital for developing the oil sands.

Oil is now down to around $50 a barrel.

"Given the recent variability in oil prices, it is important to revisit these conclusions," EPA Assistant Administrator Cynthia Giles wrote in a letter to the State Department that was made public Tuesday.

She wrote that the State Department's own work shows that, compared with other sources of crude oil, "development of oil sands crude represents a significant increase in greenhouse gas emissions." So if it turns out the oil sands can't be developed without Keystone XL, the pipeline will lead to increased greenhouse gas emissions that contribute to climate change, she wrote.

The American Petroleum Institute charged that the EPA was making a "political play," to further delay a pipeline that has been on hold for more than six years.

"Suggesting that the drop in oil prices requires a re-evaluation of the environmental impact of the project is just another attempt to prolong the KXL review," said Executive Vice President Louis Finkel.

The State Department is in the midst of reviewing whether the Keystone XL pipeline is in the national interest, and asked EPA and other agencies to weigh in.

Congress passed a bill last week seeking to force Obama to approve the pipeline, but the president said he'd veto the legislation and make a decision on the project after the State Department finished its work. Obama said in a 2013 speech that "the pipeline's impact on our climate will be absolutely critical in determining whether this project will go forward."

White House press secretary Josh Earnest wouldn't comment on the EPA's letter Tuesday.

"The president has laid out his own clear criteria about how he believes the project should be evaluated," Earnest said.

(Anita Kumar contributed to this report.)

(c)2015 McClatchy Washington Bureau