White House kills Keystone pipeline plan, but open to new route

WASHINGTON — The Obama administration on Wednesday denied a presidential permit for construction of the $7 billion Keystone XL pipeline, saying a proper environmental review could not be conducted in time to meet a 60-day deadline set by Congress to rule on the controversial oilsands project.

But Calgary-based TransCanada, the company behind the 2,700-kilometre pipeline, will be given the option of making a new application that includes an alternative route for Keystone XL that avoids environmentally sensitive areas in Nebraska.

The unfolding drama over Keystone XL's fate follows weeks of political gamesmanship between the White House and Republicans in Congress.

In December, the GOP won passage of legislation that required President Barack Obama to make a decision on the pipeline within 60 days.

Obama on Wednesday called Prime Minister Stephen Harper, who told the president he was "profoundly disappointed" with the decision, according to a news release from the prime minister's office.

"He indicated to President Obama that he hoped that this project would continue given the significant contribution it would make to jobs and economic growth both in Canada and the United States," said the statement from Andrew MacDougall, associate director of communication in the PMO. "The prime minister reiterated to the president that Canada will continue to work to diversify its energy exports."

Obama, in a statement issued by the White House, said he agreed with the State Department's conclusion that the pipeline was not in the national interest.

"Earlier today, I received the secretary of state's recommendation on the pending application for the construction of the Keystone XL pipeline. As the State Department made clear last month, the rushed and arbitrary deadline insisted on by congressional Republicans prevented a full assessment of the pipeline's impact, especially the health and safety of the American people, as well as our environment.

"As a result, the secretary of state has recommended that the application be denied. And after reviewing the State Department's report, I agree," Obama said.

"This announcement is not a judgment on the merits of the pipeline, but (on) the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people," Obama added. "I'm disappointed that Republicans in Congress forced this decision, but it does not change my administration's commitment to American-made energy that creates jobs and reduces our dependence on oil.

"Under my administration, domestic oil and natural gas production is up, while imports of foreign oil are down. In the months ahead, we will continue to look for new ways to partner with the oil and gas industry to increase our energy security — including the potential development of an oil pipeline from Cushing, Oklahoma to the Gulf of Mexico — even as we set higher efficiency standards for cars and trucks and invest in alternatives like biofuels and natural gas.

"And we will do so in a way that benefits American workers and businesses without risking the health and safety of the American people and the environment."

salberts@postmedia.com

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