Keystone Pipeline Review Contractor Defends Independence

Pipe is stacked at the southern site of the Keystone XL pipeline on March 22, 2012 in Cushing, Oklahoma. U.S. President Barack Obama is pressing federal agencies to expedite the section of the Keystone XL pipeline between Oklahoma and the Gulf Coast.
National Journal
Ben Geman
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Ben Geman
March 5, 2014, 6:04 a.m.

HOU­S­TON — The con­sult­ing firm that craf­ted the State De­part­ment’s en­vir­on­ment­al re­view of the Key­stone XL pipeline is de­fend­ing the com­pany’s in­de­pend­ence amid green-group al­leg­a­tions that its work was hobbled by con­flicts of in­terest.

The of­fi­cial with En­vir­on­ment­al Re­sources Man­age­ment de­clined to dis­cuss the Key­stone XL re­view spe­cific­ally, not­ing that would re­quire State De­part­ment per­mis­sion.

But Fred­die Hos­pedales, glob­al head of mar­ket­ing, said broadly that the com­pany’s work with oil and nat­ur­al gas in­dustry cli­ents does not erode its in­de­pend­ence when as­sess­ing pro­jects.

“It is a bit like be­ing an aud­it­or of banks, of things like that. You need to un­der­stand how the bank­ing sys­tem works,” he told re­port­ers on the side­lines of the IHS CER­AWeek en­ergy con­fer­ence in Hou­s­ton. “The same prin­ciple ap­plies in this. We are an in­de­pend­ent as­sessor.”

The State De­part­ment’s fi­nal en­vir­on­ment­al re­view re­leased in late Janu­ary con­cluded that the pro­ject is un­likely to cause a big in­crease in green­house-gas emis­sions.

The find­ing is a blow to en­vir­on­ment­al groups that con­tend oth­er­wise and are bat­tling the pro­posed pipeline. The fed­er­al re­view of the pro­posed pipeline is on­go­ing.

Hos­pedales said that to ana­lyze the im­pacts of oil and gas pro­jects and how to mit­ig­ate them, a deep un­der­stand­ing of the in­dustry is re­quired. “Where you have those ex­perts com­ing from is from oil and gas in­dus­tries, as most of our people are,” Hos­pedales said.

His com­ments come a week after the State De­part­ment’s in­spect­or gen­er­al con­cluded that the State De­part­ment had fol­lowed its con­flict-of-in­terest guidelines in se­lect­ing ERM.

The in­spect­or gen­er­al looked at top­ics in­clud­ing an ERM ana­lyst’s past work with Key­stone XL de­veloper Tran­sCanada and work of ERM’s sub­si­di­ar­ies with the com­pany. None of that work in­volved Key­stone.

More broadly, crit­ics have flagged ERM’s mem­ber­ship in the Amer­ic­an Pet­ro­leum In­sti­tute, which is an in­dustry lob­by­ing group that’s strongly push­ing for Key­stone’s ap­prov­al, and its work for oth­er pet­ro­leum-in­dustry cli­ents.

However, the in­spect­or gen­er­al re­port agreed with State De­part­ment law­yers who con­cluded that this did not cre­ate con­flicts of in­terest that should have dis­qual­i­fied ERM from its work on the Key­stone re­view.

Asked Wed­nes­day about ERM’s mem­ber­ship in the Amer­ic­an Pet­ro­leum In­sti­tute, Hos­pedales said, “I think the in­spect­or gen­er­al re­sponse last week was pretty clear in what it says.”

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