The U.S. State Department gave a vote of confidence to the Keystone XL pipeline on Friday, saying in a report that it has no major environmental objections to the construction of the megaproject.

The report says development of the massive pipeline to move oil from Alberta to refineries on the U.S. Gulf Coast won't significantly increase the rate of oil extraction and release an unacceptable level of greenhouse gases.

That had been a key hurdle standing in the way of the project's approval. Calgary-based TransCanada has been seeking approval for the 1,800-kilometre, $7-billion project for several years.

Canadian Natural Resources Minister Joe Oliver welcomed the report's findings and said he hoped for a speedy approval of the project.

Transcanada Keystone XL pipeline pipes

A final decision may not come for several months, but this study is seen as a critical step in determining whether the project will go ahead. (Canadian Press)

"This is the fifth federal study on the environmental impact of the Keystone XL pipeline. Each previous one has stated that building Keystone XL would not adversely affect the environment," Oliver said.

He noted that the report says that not building the project would actually lead to the release of as much as 28 to 42 per cent more greenhouse gases, because of energy consumed moving the same volume of oil via other means, such as by rail, trucks or barges.

"The benefits to the U.S. and Canada are clear. We await a timely decision on this project," Oliver said.

Long project

Friday's report is a step closer toward final approval, but far from the final one.

The State Department has yet to rule on whether the project is in America's best interest for non-environmental reasons and there is no date set for that ruling. Beyond that, ultimately the approval for the project will rest with the White House, which has yet to OK the deal. Obama sent the plan back to the State Department for further study before the last presidential election in 2011.

"Approval or denial of any one crude oil transport project … is unlikely to significantly impact the rate of extraction in the oilsands or the continued demand for heavy crude oil at refineries in the United States," the report says.

The report calls for a 90-day comment period, where stakeholders and interested parties are asked to comment on the report's environmental assessment of the project.

The Canadian government and other backers of the project welcome the report's conclusions. Alberta Premier Alison Redford called the report "an important step toward approval of a pipeline that will build our economic partnership with our friends in the U.S. and help foster North American energy security and independence."

The American Petroleum Institute CEO Jack Gerard declared the report had put environmental concerns to rest.

“Five years, five federal reviews, dozens of public meetings, over a million comments and one conclusion ─ the Keystone XL pipeline is safe for the environment,” said Gerard.

“This long-awaited project should now be swiftly approved. It’s time to put thousands of Americans to work," he added. 

But the pipeline's many opponents are already vowing to redouble their efforts to see that it's ultimately halted.

Tim Gray of Canadian group Environmental Defence said the U.S. should be dealing with carbon pollution rather than building pipelines.

"The bottom line is that it will never be easy to build a pipeline anywhere in North America. The opposition to the pipeline is strong in Canada too," Gray said. 

Opposition mounting

There's already a lawsuit in Nebraska to prevent the governor from forcing landowners to allow the pipeline on their property. And there's a State Department internal investigation into conflict-of-interest allegations against contractors who worked on the report, but had also done past work for pipeline builder TransCanada Corp.

Project opponents made it abundantly clear that they wouldn't be deterred.

"In addition to the fact that [the report authors] ignored the science, interagency criticism, basic economics of the industry and TransCanada's own recent admission that the pipeline is the key to opening up the tarsands, the fact that a foreign oil company and foreign government were given critical intelligence ahead of everyone else tells you all you need to know about how useless this [report] is," an adviser to billionaire Keystone opponent Tom Steyer told The Canadian Press on Friday.

Shares of TransCanada rose slightly on the news, just over one per cent in the minutes after the release of the report.

TransCanada CEO Russ Girling welcomed the decision, saying the pipeline capacity the company can sell in advance is all spoken for. TransCanada emphasized the enhanced security of the pipeline compared to shipping oil by rail, which many of its customers are doing.

"From a safety perspective, this will be the safest pipeline built to date in the U.S. From that perspective, this pipeline is in the national interest of the U.S," Girling said in a teleconference.

"Keystone XL has been shown time and time again to be the safest way to transport North American oil, to get oil to refineries in the Midwest and the Gulf Coast. It will have a minimal impact on the environment and it will not exacerbate environmental emissions," he said.