A U.S. payroll tax bill, containing a provision requiring President Barack Obama to make a decision on the controversial Keystone XL pipeline project in 60 days, has passed the American Senate.

The U.S. president said he was "pleased" with it.

"This is spending money that also benefits families and businesses and the entire economy," Obama said during a news conference midday Saturday. He did not comment on the XL issue.

Earlier in the day, the Senate passed the bill that would renew Social Security payroll tax cuts to 160 million people and extend weekly payments to the unemployed who have been out of work for six months or more.

Several government agencies, including the  Department of Defence, Environmental Protection Agency and Labour Department, could have shut down this weekend as their funding was exhausted without the bill.

The bill is expected to go before the Republican-dominated House for a vote on Monday.

The most contentious part of that bill is the $7-billion Keystone pipeline, which would run 2,673 kilometres to Texas from Alberta, carrying up to 830,000 barrels of crude a day from northern Alberta to refineries in Oklahoma and the Gulf Coast in Texas.

Environmentalists are concerned about the pipeline, which would pass over the Ogallala aquifer. The aquifer supplies drinking water to about two million people in Nebraska and seven other states.

There were also initial concerns about the pipeline going through the environmentally sensitive Sandhills area of Nebraska. TransCanada relented and said it would move that route, adding up to 65 kilometres to the pipeline.

Last month, Obama delayed a decision on the project until after November 2012's presidential election.

The president could still have some wriggle room — delaying a final decision, pending an environmental impact study of an alternative route, which would take more than a year to complete. The State Department has also advised that a shortened deadline would leave insufficient time to assess the Nebraska route alteration.

Those backing the pipeline underline it would cement security in the North American energy supply while creating thousands of jobs and economic benefits for the communities along the pipeline’s path.

A recent study by the University of Calgary suggested building oil pipelines to new markets would boost Canadian economic growth by $131 billion between 2016 and 2030.