(Adds official, industry comments)
By Patrick Rucker
WASHINGTON, April 18 The Obama administration
further delayed its decision on the controversial Keystone XL
pipeline project on Friday, with no conclusion now likely until
after the U.S. mid-term elections in November.
President Barack Obama has said he will have the final say
on whether to allow the pipeline connecting Canada's oil sands
region to Texas refiners, and several government agencies had
been given until May to weigh in. This had raised expectations
of a final decision by mid-year.
But the State Department said on Friday it was extending
that agency comment period, citing a need to wait until the
Nebraska Supreme Court settles a dispute over what path the $5.4
billion TransCanada Corp project should take.
"That pipeline route is central to the environmental
analysis for the project and if there are changes to the route
it could have implications," a senior State Department official
The legal process will likely continue past November and
might stretch into next year, meaning more delays for the
politically-charged issue that has been on the drawing board for
more than five years.
By linking Canadian fields to refiners in the Gulf Coast,
the 1,200-mile (1,900-km) pipeline would lift an energy patch
where heavy oil is abundant but that is reached only by burning
vast amounts of fossil fuels.
The oil industry agues projects like Keystone can reduce the
United States' reliance on Middle East oil while partnering with
one of the country's closest political allies, Canada.
Delaying Keystone means "the United States will continue to
rely on suspect and aggressive foreign leaders for the eight to
nine million barrels of oil that is imported every day,"
TransCanada Corp chief executive Russ Girling said.
But Keystone opponents - among them environmentalists who
make up a part of Obama's political base - say consuming carbon
fuel to wrench oil sands crude from the ground will worsen
climate change and the pipeline meant to carry up to 830,000
barrels a day will only spur more production.
They expect Obama to reject the project and so fulfill a
committment to battling climate change.
OBAMA'S OWN PARTY
Stakes in the dispute have increased as Obama leads his
party into the mid-term elections. Republicans, seeking to
bolster their hold over the House of Representatives and take
control of Congress by winning a majority in the Senate, have
portrayed Obama as depriving Americans of thousands of jobs by
delaying the decision.
"Clearly he wants to get this past the mid-terms," said
Senator John Hoeven, a Republican of North Dakota, of the fresh
delays. "I'm not convinced that's a good strategy. Because
people are going to see it for the political decision that it
Environomentalists were heartened by Friday's move, which
they said left more time to mobilize public opposition.
"Millions of Americans have taken a stand against Keystone,
and my hope is that's making the Obama administration think
twice," said Bill Snape of the Center for Biological Diversity
which helped organize a share of the 2.5 million comment letters
received by the State Department.
Several lawmakers, though, said they would waste no time
pushing for a Keystone approval through Congress.
"I plan to use my power as chair of the Senate Energy
Committee to take decisive action to get this pipeline permit
approved," said Democratic Senator Mary Landrieu, who faces
reelection in her energy-producing state of Louisiana.
Friday's move will upset some others in Obama's own party.
Just a week ago, 11 Democratic senators, many facing tough
November races, urged him to make to make a decision by May 31.
The move is likely to infuriate Canadian politicians who
have grown increasingly irate over delays.
Canadian Prime Minister Stephen Harper's office was
"disappointed that politics continue to delay a decision," his
In the near-term, delaying Keystone XL is likely to rattle
the Canadian oil sector.
Oil sands producers already sell their crude at a discount
due in part to a transportation shortage that has hit producers
such as Suncor Energy Inc and Cenovus Energy Inc
. But more pipeline delays could aid oil-by-rail
developers like Gibson Energy and Canexus Corp
that are racing to fill a gap left by a lack of export pipeline
The Nebraska dispute is rooted in a state law that would
have fast-tracked approval of the route and muffled landowner
objections. That law has been challenged in state court.
(Additional reporting by Timothy Gardner in Washington, Scott
Haggett in Calgary and Randall Palmer in Ottawa; Editing by
Sandra Maler and Frances Kerry)