WASHINGTON – The Canadian government has accused a U.S. federal agency of a dishonest intervention in the Keystone XL pipeline debate, voicing its displeasure in a combative diplomatic letter.
Ambassador Gary Doer said the Environmental Protection Agency used out-of-date data, worst-case scenarios, and erroneous comparisons in its submission on the pipeline.
“One is left with the conclusion that there has been significant distortion and omission to arrive at the EPA’s conclusion,” Doer wrote in a letter sent to Secretary of State John Kerry, the cabinet member in charge of the file.
The missive was released as the pipeline saga opened a new chapter Wednesday: the U.S. Congress passed a pro-Keystone bill for the first time, setting the stage for a possible showdown with the Obama administration.
Doer urged the administration to consider the project on its merits — and treat the EPA claims with skepticism.
He began his letter with an observation that the EPA derived its greenhouse-gas emission calculations from a study in 2005 — which he noted was two years before iPhones existed.
Just as smartphones improved, so did oilsands technology, Doer said.
He said the EPA also selected the highest emissions scenario from among four studies considered by the State Department; assumed the pipeline would flow at capacity over 50 years; assumed it would transport only Canadian oil; and “most egregiously” calculated it would only displace light, lower-polluting Saudi crude.
In reality, Doer said, it would provide Gulf Coast refineries with a substitute for heavier crude oil from Mexico and Venezuela — which he said have emission levels comparable with Canada’s oilsands.
He said the EPA also “chose rather conveniently” not to examine data from the last two years showing exports by rail have increased in the absence of a pipeline, and that it also “chose to ignore that Canada, an ally,” has greenhouse-gas reduction targets, unlike every other oil supplier to the U.S.
The State Department is expected to soon complete its review into whether a cross-border permit should be granted to the long-delayed oil pipeline from Canada.
The EPA had challenged a favourite talking point of pipeline proponents: that the State Department’s own internal analysis had concluded that Keystone wouldn’t hurt the environment. The environmental agency said the figures might not be relevant anymore, given the change in oil prices.
The spat comes just as two major developments unfold.
One is Congress passing pro-Keystone legislation, which President Barack Obama has called constitutionally invalid and promised to veto. Also, a decision through the standard regulatory process is expected soon from the Obama administration — although no date has yet been set for a final decision.
Obama’s opponents made it clear they’ll keep pressing him on the pipeline: “The president is standing with a bunch of left-fringe extremists and anarchists,” said the top Republican in the House, John Boehner. “The president needs to listen to the American people and say, ‘Yes, let’s build the Keystone pipeline.'”
Like Doer, TransCanada Corp. also complained about the EPA intervention.
TransCanada (TSX:TRP), the Calgary-based company planning to build the US$8-billion conduit, wrote to the State Department to say it believes the EPA’s assessment is off base.
“TransCanada disagrees with any suggestion that the Department has not fully and completely assessed the environmental impacts of the proposed project,” CEO Russ Girling wrote in a letter.
“In addition, TransCanada rejects the EPA inference that at lower oil prices, the project will increase the rate of oilsands production growth and accompanying greenhouse gas emissions.”
The State Department’s approval of the project is required because the pipeline crosses the Canada-U.S. border.
Keystone XL would connect with TransCanada’s existing Keystone network, which delivers crude to the U.S. Midwest and Gulf Coast. It would provide a more direct route to the Gulf by cutting diagonally from the Saskatchewan-Montana border to Steele City, Neb.
In its letter, the EPA said the State Department should give more weight to a “low price scenario” outlined in last year’s environmental impact statement, which said sustained low oil prices at US$65 to US$75 a barrel could make oilsands producers more sensitive to transportation costs.
Girling didn’t buy that logic.
“We don’t believe that any single pipeline will cause production of oil to accelerate or decelerate,” he told reporters on a conference call Wednesday, adding the cost of pipe versus rail is not the “primary driver” for oilsands output.
“There’s many other factors that go into that decision making for producers, be it technology, oil prices, operating costs and all those kinds of things which are constantly moving.”
— With files from Lauren Krugel in Calgary