UPDATE 3-Oil's price plunge could raise Keystone carbon footprint -EPA

Tue Feb 3, 2015 3:00pm EST
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(Adds comments from White House and TransCanada)

By Timothy Gardner and Valerie Volcovici

WASHINGTON Feb 3 (Reuters) - Oil prices have dropped so low that the Keystone XL pipeline could play a bigger role in the development of Canada's oil sands and raise greenhouse gas emissions, Obama administration environmental regulators said.

The U.S. Environmental Protection Agency's comments in a letter to the State Department give weight to President Barack Obama's view that the controversial pipeline should not be approved if it significantly increases carbon pollution. The letter, sent on Monday, was released on Tuesday.

The EPA implied that oil prices, which have more than halved since the summer, mean that shipping Canadian oil to the United States would not be economical unless the pipeline was built.

The State Department, which is evaluating the project because the TransCanada Corp pipeline would carry oil from a foreign country, is expected to make a recommendation to Obama soon, after reviewing comments from the EPA and other federal agencies.

Obama will make the final decision on Keystone, which has been pending for more than six years. He has said the project should not be approved if it substantially raises emissions linked to climate change.

The EPA said more attention should be paid to the "potential implications of lower oil prices on project impacts, especially greenhouse gas emissions." The White House had no comment on whether the letter shows the project fails Obama's climate test, noting the State Department's approval process was ongoing.

In January 2014, the State Department's environmental review of Keystone XL concluded that it would not affect the rate of oil sands development or significantly raise emissions because rail cars would carry the oil to U.S. markets even if the pipeline was not built.   Continued...