EPA wants Keystone XL reevaluated in light of low oil prices

February 4, 2015 | By Doug Peeples

The Environmental Protection Agency (EPA) has called for a second look at the controversial Keystone XL pipeline because today's low oil prices could have "implications" that would change previous assessments of the projects impacts, particularly greenhouse gas emissions. EPA is referring to earlier studies and assessments made by the State Department when oil prices were higher than they are today.

EPA's judgment that a review was needed came in the form of a letter dated February 2 from an EPA official addressed to two State Department officials regarding State's earlier assessments.

Needless to say, EPA's call for a review of assessments made when oil prices were higher did not sit well with Keystone officials and supporters in the oil industry.

Louis Finkel, executive vice president for the American Petroleum Institute, was quoted in a UPI report with his observation: "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."

The heavier oil KXL would carry into the U.S. from Canada is more carbon-intensive than typical crude, meaning more greenhouse gas emissions.

Referring to the State Department assessments, referred to as the Department of State's Final Supplemental Environmental Impact Statement (SEIS), and current low oil prices, the EPA letter said the final SEIS determined that at long-term oil prices of $65 to $75 per barrel, the added expense of shipping by rail (as opposed to transporting by pipeline) "could have a substantial impact on oil sands production levels -- possibly in excess of the capacity of the proposed project."

The letter continued "In other words, the Final SEIS found that at sustained oil prices within this range, construction of the pipeline is projected to change the economics of oil sands development and result in increased oil sands production, and the accompanying greenhouse gas emissions, over what would otherwise occur. Given large declines in oil prices and the uncertainty of oil price projections, the additional low price scenario included in the Final SEIS should be given additional weight during decision making, due to the potential implications of lower oil prices on project impacts, especially greenhouse gas emissions."

Environmentalists, of course, were pleased with the EPA letter because it supported their long-standing concerns. The Senate passed a bill to approve the pipeline last week and the House is expected to vote on it next week.

For more:
- read the full text of the EPA letter

http://www.fierceenergy.com/story/epa-wants-keystone-xl-reevaluated-light-low-oil-prices/2015-02-04