TransCanada has agreed to change the route of a controversial proposed oil pipeline so that it doesn't pass through an environmentally sensitive part of Nebraska.

The Canadian-based company announced the decision Monday at a news conference at the Nebraska Capitol.

"I can confirm the route will be changed and Nebraskans will play an important role in determining the final route," Alex Pourbaix, TransCanada's president of energy and oil pipelines, said in a statement about the Keystone XL pipeline.

Pourbaix told a news conference in Lincoln, Neb., that rerouting the pipeline would likely need 50 to 65 extra kilometres of pipe and an additional pumping station.

Pourbaix said the company supports a proposal introduced in the state legislature that, if passed, would ensure the pipeline route would avoid the ecologically sensitive Sandhills area. 

The TransCanada statement said Nebraska's Department of Environmental Quality (DEQ) will work with the U.S. State Department to conduct an environmental assessment to "define the best location for Keystone XL in Nebraska."

 "We will co-operate with these agencies and provide them with the information they need to complete a thorough review that addresses concerns regarding the Sandhills region," the statement said.

Earlier Monday, Speaker of the Nebraska Legislature Mike Flood said this action by TransCanada came after he received confirmation from the U.S. State Department that Nebraska does indeed have the authority to conduct a supplemental environmental impact study.

Flood said that Nebraska's DEQ would follow federal rules.

"There will be public hearings, there will be transparency," he said on the floor of the state legislature. "That's the way the process works and that's the way it will work in Nebraska."

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The TransCanada statement follows the U.S. federal government's announcement last week that it would delay a decision on a federal permit for the project until it studies new potential routes that avoid the Sandhills area and the Ogallala aquifer in Nebraska, a vast underground water supply. Ponds and lakes in the Sandhills region feed the Ogallala aquifer, which provides water to Nebraska and seven other states.

One outspoken environmental group appeared to be unmoved by TransCanada's rerouting decision. Noah Greenwald, a spokesman for the Centre of Biological Diversity, said his group believes the pipeline would still pose an environmental threat. The centre has sued the U.S. State Department to block the project.

"Even with the reroute, we still feel like we can push forward," he said. "We're going to keep up the public pressure on the administration as this moves forward."

Alberta Premier Alison Redford, who is in Washington to talk up Keystone, reiterated Monday that it is important to respect the regulatory process going on in the U.S.

"Through that process, we've seen communities have concerns," she said in an interview with CBC News. "As as result of that, we now see TransCanada, it seems, making some progress with respect to responding to those concerns.

"That's a good process," Redford said. "That's exactly what we need to have in order to ensure that critical infrastructure can continue to be built to benefit both Alberta and the United States.

Opposition to the Keystone pipeline proposal has grown substantially over the past few months with the help of some high-profile opponents like Robert Redford. The decision to delay a ruling on Keystone allows U.S. President Barack Obama to avoid a potentially divisive environmental issue before the 2012 election.

The proposed 2,700-kilometre pipeline would carry crude oil from Alberta to Texas Gulf Coast refineries.

Earlier Monday, Redford said she was confident that the controversial pipeline project would eventually win regulatory approval in the U.S.

With files from Susana Mas and The Associated Press