A protesterd in in Omaha, Neb., opposes to the Keystone XL pipeline because of environmental reasons.Nati Harnik/The Associated Press
The U.S. Environmental Protection Agency is putting up new roadblocks to TransCanada Corp.'s proposed Keystone XL pipeline, arguing the $7-billion (U.S.) project poses serious environmental risks.
The EPA's intervention signals a looming battle within the administration of U.S. President Barack Obama, who may ultimately be forced to choose between the project's promised jobs and security of crude oil supply, and the environmental risks posed by greater production in Alberta's oil sands.
The State Department - which has announced a set of hearings along the pipeline route this summer - remains committed to reaching a decision before the end of the year, though some analysts suggest the interdepartmental disagreement could delay a final decision until 2012.
In a letter to the State Department, the EPA outlined a lengthy list of concerns about the pipeline project, and argued the State Department's draft environmental impact statement was seriously flawed and required far more work.
Among other things, the U.S. environmental regulator wants a detailed description of efforts by producers and the government of Alberta to reduce greenhouse gas emissions in the oil sands which, as the industry booms, represent the fastest growing source of emissions in Canada.
TransCanada's Keystone XL project would connect Alberta's oil sands with the world's largest refining hub, located along the U.S. Gulf Coast. The pipeline is crucial to oil sands producers' expansion plans, because the Gulf Coast refineries are configured to handle the bitumen, said IHS CERA, a Cambridge, Mass., consultancy.
Secretary of State Hillary Clinton is charged with determining whether the cross-border pipeline is in the U.S. national interest, but the EPA can appeal that decision to President Barack Obama if the State Department does not address its concerns.
"We have a number of concerns regarding the potential environmental impacts of the proposed project, as well as the level of analysis and information provided concerning those impacts," Cynthia Giles, EPA's assistant administrator for enforcement, said in the letter, which was dated Monday and released Tuesday.
The Department of Energy - which had its own concerns about the State Department's initial environmental assessment - has yet to publish its views of the current effort, but may also raise problems.
Ms. Giles said the concerns include potential impacts to groundwater and the Ogallala Aquifer in the event of a pipeline spill, and higher pollution from refineries along the Gulf Coast that will be refining the oil sands bitumen.
"Pipeline oil spills are a very real concern," Ms. Giles said, pointing to recent leaks on the existing Keystone line and a major spill by Enbridge Inc. into Michigan's Kalamazoo River system last summer.
The EPA does not accept the argument that the Keystone XL pipeline itself will have little impact on global greenhouse gas emissions. The agency says a full review must include an estimate of the "social cost of carbon" associated with increased emissions, and consideration of emissions in Alberta from the production of the bitumen, including an assessment of efforts to reduce them.
The State Department, for its part, concluded that if the Keystone XL line is not built, the oil sands production will simply be diverted to other markets, while the Texas refineries will process heavy crudes from offshore.
Backed by Republicans in Congress, the American Petroleum Institute has urged the Obama administration to give speedy approval to the Keystone XL project, saying the construction phase alone could create 20,000 much-needed construction and manufacturing jobs in the U.S.
The API said the State Department's assessment was exhaustive and thorough.
Environmental groups applauded the EPA's intervention.
"With this rating, the EPA is standing up for the people who would be hurt by the Keystone XL pipeline, including Midwest farmers and low-income people around Texas refineries," said Alex Moore, dirty fuels campaigner at Friends of the Earth.
"All eyes are on Secretary of State Clinton. Will she comply with the law and ensure that these impacts are studied or not?"