TransCanada's plan to build and operate the Keystone XL pipeline has been rejected by US President Barrack Obama's administration, one month before a decision on the project was due. The plan was to build a 1,700-mile pipeline from Canada's oil sands to refineries in Texas, US, carrying heavy crude oil to Gulf Coast refineries.
The US administration has indicated that TransCanada can reapply for the project by submitting an alternate route for the Nebraska leg of the pipeline. The administration said that it did not have sufficient time to obtain the information necessary to assess whether the project, in its current state, is in the national interest.
The deadline for a decision on the project was due on 21 February 2012.
The US has asked the Canadian firm to choose a route that is less environmentally sensitive. TransCanada president and CEO Russ Girling said that his company would reapply for a Presidential Permit and expects a new application to be processed in an expedited manner to allow for an in-service date of late 2014.
"Until this pipeline is constructed, the US will continue to import millions of barrels of conflict oil from the Middle East and Venezuela and other foreign countries who do not share democratic values Canadians and Americans are privileged to have," said Girling.
Possible alternative routes are expected to be identified by Nebraska officials to allow the pipeline to circumvent the Ogallala aquifer, the Midwest's main source of drinking water.
The decision to reject the current pipeline plan was welcomed by environmentalists, who said that the pipeline would have worsened climate change, affected organised labour and endangered drinking water supplies in Nebraska; however, the decision was decried by Republican presidential candidates and lawmakers, and the US oil and gas industry, reports The Washington Post.
The pipeline project was to transport 700,000 barrels of crude per day to refineries on the US Gulf of Mexico coast from oil sands of Alberta, crossing six states.
TransCanada anticipates that if the US expedites a review of its new application, the pipeline project might still be ready in 2014.
According to a US State Department report, the pipeline project would have created up to 6,000 construction jobs during the two years required to build the project.