November 10, 2011 10:57 pm

Keystone decision pushed beyond election

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The Obama administration’s decision on the proposed Keystone XL oil pipeline from Canada to Texas, has been delayed until after next year’s presidential election, after officials said they needed more time to study possible alternative routes.

The delay marks a success for environmental campaigners who have mustered growing opposition to the project, raising concerns about the danger of leaks from the 1,700 mile pipeline, and about greenhouse gas emissions from oil production in the tar sands of Alberta in western Canada.

However, the Canadian government and TransCanada, the company behind the $7bn project, said on Thursday they were still hopeful that the Keystone XL project would ultimately go ahead.

The US state department, which has formal responsibility for approving Keystone XL because it crosses the border, said it needed to assess alternative routes for the pipeline that had not been previously considered, avoiding the environmentally sensitive Sand Hills region of Nebraska.

The department said the review “could be completed as early as the first quarter of 2013.” 

The project is politically difficult for President Barack Obama, because it would create thousands of badly-needed jobs while under construction, but environmental groups have made blocking it the focus of their campaigns in recent months.

Kerri-Ann Jones, an assistant secretary in the state department, said the decision to hold a further review of the pipeline had been based on “a broad range of factors”, particularly concerns raised by the people of Nebraska.

She added: “The White House did not have anything to do with this decision, except we consulted with them once we were moving toward it.”

In a statement, Mr Obama said he supported the department’s move, adding, “We should take the time to ensure that all questions are properly addressed and all the potential impacts are properly understood.”

Joe Oliver, Canada’s natural resources minister, expressed disappointment with the delay, but said he remained “hopeful” that the project would be approved.

“We continue to believe the Keystone XL pipeline will create thousands of jobs and billions in economic growth on both sides of the border”, Mr Oliver said from Tokyo.

TransCanada played down suggestions that the delay would kill the plan, saying it would now talk to the state department “to discuss next steps.”

Russ Girling, TransCanada’s chief executive, said: “This project is too important to the US economy, the Canadian economy and the national interest of the United States for it not to proceed.”

The hold-up is nevertheless likely to bolster plans for alternative export routes from Alberta, both to the US and to Canada’s west coast, for export to Asia.

Tom Wise, vice-president at Purvin & Gertz, an energy consultancy, said: “The oil sands can’t continue to grow if pipeline capacity can’t be developed to get it out”.

According to a recent Purvin & Gertz study, extra capacity will be needed by 2014-16, and even more in the following two years to meet planned production growth.

TransCanada, whose shares slipped 1.8 per cent on Thursday to C$39.85, had hoped to commission Keystone XL by the end of 2013. 

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