Keystone oil pipeline bill fails in Senate

WASHINGTON (Reuters) - U.S. Senate Democrats on Thursday defeated a Republican proposal to take quick action on the Keystone XL crude oil pipeline, in a vote that will give Republicans more ammunition to criticize President Barack Obama’s energy policies on the campaign trail.

Protestors rally in front of the Lamar County courthouse where landowner Julia Trigg Crawford is set to go to court in a battle with TransCanada over the trenching of her private property for the Keystone pipeline in Paris, Texas February 17, 2012. REUTERS/Mike Stone

TransCanada’s $7 billion project has been supported by some Democrats in the past, but Obama took the unusual step of calling some senators personally and asking them to vote against the proposal, drawing immediate fire from Republican leaders.

The measure needed 60 votes to pass, but fell four short.

Obama put the project on hold earlier this year pending further environmental review. Republicans argue the pipeline, which would ship oil from Canada and northern U.S. states to Texas, would create jobs and improve energy security at a time of surging gasoline prices. The project will take more than two years to build after winning all approvals.

By proposing the amendment, Republicans sought to wrest the approval process from Obama’s control. They have also used the proposal to highlight his decision ahead of November presidential and congressional elections, linking his delaying of the pipeline project to rising gasoline prices.

“At a moment when millions are out of work, gas prices are sky-rocketing and the Middle East is in turmoil, we’ve got a president who’s up making phone calls trying to block a pipeline here at home. It’s unbelievable,” said Senate Minority Leader Mitch McConnell.

Obama has supported construction of the southern leg of the pipeline, and his administration will assess a new route around an environmentally sensitive area of Nebraska once it has been identified, White House spokesman Clark Stevens said.

“Once again, Republicans are trying to play politics with a pipeline project whose route has yet to be proposed,” Stevens said.

The Keystone amendment was among 30 measures - many of them energy-related - being voted on as the Senate pushes in coming days to renew funding for highways and other infrastructure projects, slated to run out at the end of March.

Earlier, the Senate also defeated proposals to expand the area available for offshore oil drilling and extend the time for manufacturers to phase in new pollution regulations set by the Environmental Protection Agency for industrial boilers.

But the Keystone amendment attracted the most attention. The pipeline would carry crude from Canadian oil sands to Texas refineries and would also pick up U.S. crude from North Dakota and Montana along the way.

With a 34-64 vote, senators also defeated a proposal from Democratic Senator Ron Wyden that would have blocked exports of oil from the pipeline, as well as refined products made from the oil.

Senator John Hoeven of North Dakota, who had championed the Republican plan to advance the pipeline, said the restrictions in the Democratic alternative would have blocked the project.

Additional reporting by Thomas Ferraro; editing by Mohammad Zargham