Keystone XL delay: U.S. plans to review proposed route for pipeline: reports

Media reports say the U.S. State Department is considering a new route for TransCanada’s proposed Keystone XL pipeline, a decision that could delay the $7-billion project for months, if not kill it outright.

Several U.S. news outlets, including the Washington Post and the New York Times, say State is poised to reassess the proposed route for the pipeline that would pump millions of barrels of northern Alberta oilsands crude through six U.S. states to refineries on the Gulf Coast.

The new review would delay the permit process for Keystone XL for a year or more.

A State Department spokesman refused to confirm the reports, which suggest an announcement could come later Thursday.

“We don’t have anything to announce at this time,” Mark Toner told the daily news briefing. “When we do have something to announce … we’ll certainly let you know.”

However, Sen. Bernie Sanders — an independent from Vermont who has spearheaded Democratic opposition to the pipeline in Congress — issued a statement that appeared to treat the news as a foregone conclusion.

“I welcome today’s announcement that the State Department has decided to delay a decision on this project in order to further review its potential impacts,” he said.

For months, Keystone XL has been the target of angry protests on both sides of the Canada-U.S. border and a major source of consternation for U.S. President Barack Obama.

Of particular concern to environmentalists is the current proposed route over the Ogallala aquifer in Nebraska, a key source of drinking water for millions on the Great Plains.

The pipeline has become a flashpoint of fierce debate about renewable sources of energy versus fossil fuels and America’s ongoing dependency on foreign oil, sparking ever-larger and louder protests in the United States.

A decision by the State Department to reconsider the pipeline’s route would means Obama can dodge a political bullet since he won’t have to decide whether to approve the project until after next November’s presidential election.

The White House was reportedly becoming increasingly concerned that the Canadian pipeline would cost Obama much-needed votes in the election. Environmentalists within his liberal base had vowed to stay home if he gave Keystone XL the green light.

TransCanada, however, has long been opposed to changing the route. In an interview this week with The Canadian Press, a senior company executive said Keystone XL could be delayed for years if the route has to be changed.

Such a route change would force Keystone XL to go through environmental and wildlife studies all over again, said Alex Pourbaix, president of energy and oil pipelines for TransCanada Corp. (TSX:TRP).

So far, the environmental review process has taken more than three years.

“There’s no doubt that if we were asked to do that, I think it would a minimum of a one- to two-year delay,” he said.

Most studies can only take place during the summer, further prolonging the process.