Washington (Platts)--7Jun2011/226 pm EDT/1826 GMT

The US Environmental Protection Agency has urged the Department of State to extend its review of TransCanada's proposed Keystone XL pipeline, arguing regulators have not adequately measured the project's potential harm to air quality or sensitive areas along the route.

In comments released by the agency Tuesday, EPA recommended better analysis of oil spill risks, further scrutiny of alternative routes and more work on how to diminish potential impacts to communities near the pipeline.

The $13 billion project would carry Canadian oil sands about 1,660 miles from Alberta to refineries along the Texas Gulf Coast.

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"Pipeline oil spills are a very real concern, as we saw during the two pipeline spills in Michigan and Illinois last summer," said the letter by Cynthia Giles, EPA's assistant administrator for enforcement and compliance.

Giles was referring to last year's leaks on Enbridge Energy Partners' systems. She added that two leaks in the past month on TransCanada's original Keystone Pipeline underscored the need to carefully consider the expansion route and the company's plans for preventing and detecting spills.

"We remain concerned that relying solely on pressure drops and aerial surveys to detect leaks may result in smaller leaks going undetected for some time, resulting in potentially large spill volumes," Giles said.

EPA recommended that State require TransCanada to increase the number of shutoff valves in places where the pipeline passes close to the water table or to sensitive areas such as the Ogallala Aquifer, which spans most of Nebraska.

"If a spill did occur, the potential for oil to reach groundwater in these areas is relatively high given shallow water table depths and the high permeability of the soils overlying the aquifer," Giles said. "In addition, we are concerned that crude oil can remain in the subsurface for decades, despite efforts to remove the oil and natural microbial mediation."

The agency also wants more information from TransCanada about what chemical diluents it expects to add to the crude to reduce viscosity in the line. A draft environmental review issued by the State Department in April said that "the exact composition may vary between shippers and is considered proprietary information."

Giles pointed to Enbridge's July 2010 spill in Marshall, Michigan, where high benzene levels detected in the air prompted a voluntary evacuation of the area.

State announced late Monday that it would schedule another round of public comment before making a decision on the application by the end of the year. It said it would host public meetings in each of the five states -- Montana, South Dakota, Nebraska, Oklahoma and Texas -- along the pipeline's proposed route. Another meeting will be held in Washington.

The department's next step is to issue a final environmental impact statement, which starts a 90-day clock during which other federal agencies, including EPA and the Department of Energy, will have another chance to weigh in on the project.

State said the road show would happen in the first month of the 90-day review.

--Meghan Gordon, meghan_gordon@platts.com