TransCanada Corp. (Calgary) has sent a letter to the U.S. Department of State refuting assertions in a Feb. 2 letter from the U.S. Environmental Protection Agency (EPA) on the State Department’s final supplemental environmental impact statement (FSEIS) for the Keystone XL pipeline. “TransCanada disagrees with any suggestion that the Department of State has not fully and completely assessed the environmental impacts of Keystone XL,” said Russ Girling, TransCanada’s president and CEO. “We also reject the EPA’s inference that at lower oil prices, Key­stone XL will increase the rate of oil sands production and greenhouse gas emissions. This conclusion is not supported by the conclusions drawn in the FSEIS or by actual market prices and production rates since TransCanada first applied for Keystone XL in 2008.”

The EPA letter alleges that “until ongoing efforts to reduce greenhouse gas emissions associated with produc­tion of the oil sands are more successful and widespread, the final SEIS makes clear that, compared to reference crudes, development of the oil sands crude represents a significant increase in greenhouse gas emissions.” Trans­Canada underscored that a more meaningful comparison should be to heavy crude oils from Mexico, Venezuela, and Saudi Arabia that Keystone would actually displace, rather than EPA’s comparison to a basket of reference crudes that includes predominantly light, low-greenhouse gas crudes. The oil that would flow through the pipeline to Gulf Coast refineries will be both from the light oil plays in the Bakken and also heavy oil from Canadian oil sands.

TransCanada also took issue with EPA’s asser­tion that the FSEIS concluded construction of Keystone XL could change the economics of oil sands development and result in increased production and greenhouse gas emissions if oil prices remain low. “This statement does not accurately reflect what State concluded,” said Trans­Canada. “The dominant drivers of oil sands development are more global than any single infrastructure project. Oil sands production and investment could slow, or accelerate, depending on oil price trends, regulations, and technologi­cal developments. But the potential effects of those factors on the industry’s rate of expansion should not be conflated with the more limited effects of individual pipelines.”

TransCanada added that, looking forward, oil production in both Canada and the U.S. is forecast to continue to grow, and much of the growing production is being transported by rail. Rail loading capacity in west­ern Canada has increased from 200,000 bbld in 2013 to a projected 1 MMbbld by the end of this year. In the U.S., Bakken rail movement of crude oil increased from 200,000 bbld in 2008 to 800,000 bbld in 2014. Short- and medium-term fluctuations in oil prices do not sig­nificantly impact whether the oil sands will be developed. When TransCanada filed its initial application for the project in 2008, oil prices were in the $40/bbl range. Since then, prices have ranged between $110/bbl and $39/bbl. “Even with price volatility, oil has been making its way to market,” Girling concluded. “Oil sands and U.S. Bakken production are both up by one million barrels per day since 2008. So it is clear that building or not building Keystone XL will not cause production to go up or down, nor does the pipeline significantly exacerbate the problem of GHG emissions.”