Obama administration delays decision on Keystone XL oil pipeline

WASHINGTON — A decision on whether to build a pipeline from Canada's oil sands to Texas will be delayed, probably until 2013, to allow time to consider rerouting a section in Nebraska, the State Department announced Thursday.

The requirement for a new environmental impact statement and more public comments means the decision won't be made until after the 2012 elections. Controversy over the pipeline created a headache for the Obama administration, but the delay might not end it.

The proposed Keystone XL pipeline has become a textbook example of an issue that pits environmentalists against energy developers. Environmentalists have made the pipeline a test case of whether President Barack Obama will fight climate change. The pipeline would ensure decades of an increased supply of a form of oil that produces more heat-trapping emissions than conventional oil does because more energy is needed to extract and refine it.

The State Department said the delay was about the environmental impact on Nebraska, not climate change.

Supporters of the pipeline said Obama was missing an opportunity to create construction and manufacturing jobs and that the U.S. needed Canadian oil.

The president said in a statement that he supported the delay "because this permit decision could affect the health and safety of the American people as well as the environment." He added that he'd promote expanded domestic oil production and "a clean energy economy."

The State Department must decide on the permit for the 1,661-mile pipeline because it would cross the U.S.-Canadian border.

Kerri-Ann Jones, an assistant secretary of state, said the new review wouldn't address concerns about increased greenhouse gas emissions from the oil sands. Nor was the pipeline's route over part of the Ogallala aquifer, a vast reservoir beneath the Plains states that's key to regional irrigation, a reason for the delay, she said. The new review will examine only the pipeline's impact on the Sandhills, a large section of north-central Nebraska made up of dunes, wetlands and native grasslands, Jones said.

Environmentalists have faulted the State Department's handling of the issue.

The department let the company that wants to build the pipeline, TransCanada Corp., suggest contractors to help write the environmental impact statement on the project. State Department officials said such a practice was normal and legitimate. The consulting company that wrote the report, Cardno Entrix, found no significant environmental issues and said TransCanada's proposed route was the best choice.

Pipeline opponents charged that the handling of the study, emails between a pipeline lobbyist and a U.S. official at the embassy in Canada and support for the pipeline by a former State Department official showed that the agency had a conflict of interest.

Jones said there was no conflict of interest. She said Cardno Entrix "will be considered as anyone else would be" to write the new environmental impact statement.

Russ Girling, TransCanada's president and chief executive officer, said in a statement that his company wasn't giving up.

"We remain confident Keystone XL will ultimately be approved," he said. "This project is too important to the U.S. economy, the Canadian economy and the national interest of the United States for it not to proceed."

Jack Gerard, the president and CEO of the American Petroleum Institute, the trade association for the oil industry, cited an industry-backed study that found the pipeline would create 20,000 construction and manufacturing jobs over two years.

"With 9 percent unemployment, the president turning his back on these 20,000 jobs is not good news for the American people," he said.

Bill McKibben, an author and environmentalist who organized protests against the pipeline at the White House, including a large one last Sunday, said: "The American people spoke loudly and today the president responded, at least in part." He said that opponents would resume protests if plans for the pipeline went ahead.


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