Keystone work can start, TransCanada says

TransCanada Corp. says construction on its controversial Keystone XL pipeline from Alberta to Texas — except for a stretch through Nebraska — may begin within months.
The Keystone XL project will extend TransCanada Corp.'s Keystone pipeline that carries oil from northern Alberta to refineries in the United States. (TransCanada Corp.)

TransCanada Corp. says construction on its controversial Keystone XL pipeline from Alberta to Texas — except for a stretch through Nebraska — may begin within months now that U.S. President Barack Obama has signed a bill that forces his administration to make a decision on the project within 60 days.

"This bill allows construction work to take place in five of the six states where the route is confirmed," TransCanada spokesman Shawn Howard said Friday.

A provision compelling the Obama administration to make a quick decision on Keystone XL was tacked onto tax-cut legislation, the subject of intense wrangling in Congress in recent days.

Rather than using his presidential veto power, Obama signed the bill on Friday.

Pipeline opponents say the bill will likely backfire, and could kill the project. They argue that 60 days isn't long enough to undertake that review, so Obama has no choice but to reject Keystone XL.

However, the Keystone XL project has already been studied extensively and TransCanada had previously expected it would receive the required State Department and presidential approvals by the end of this year.

Instead, the State Department said in November it was delaying its decision on Keystone XL past the 2012 presidential election to allow more time to study a new route through Nebraska to avoid ecologically sensitive areas.

Howard said a roughly 100-kilometre stretch through Nebraska is the only part of the pipeline route that needs to be worked out, and U.S. regulators take no issue with the rest of it.

"It's not overriding some environmental review that has to take place. It's not changing that review. This bill was carefully crafted, it respected that," he said.

Debate over Keystone XL has become such a "political football" that Ralph Glass, with oil and gas consulting firm AJM Deloitte, said he wouldn't be surprised if Obama found some other way to avoid making a decision before 2012.

The issue put the president in a tough spot; if he approves the pipeline, he risks alienating his environmentally minded Democratic base and if he rejects it, he risks angering Americans eager to see the pipeline's economic benefits.

Obama could make his approval contingent on receiving further environmental study, or add some other caveat, Glass said.

"I think a decision right now has nothing to do with whether it's economically viable or environmentally too sensitive. I think it's all about votes, and I think somehow they're going to find a way to delay it," he said.