Obama confronted by Keystone protesters in Denver

U.S. President Barack Obama, confronted by environmental protesters in the Midwest, insisted Wednesday that his administration has not made any decision on TransCanada's proposed Keystone XL.

Assures demonstrators no decision yet on pipeline deal

U.S. President Barack Obama speaks at the University of Colorado Denver Downtown Campus on Wednesday. The president was confronted by protesters rallying against the Keystone pipeline project during his stop in the city. (Susan Walsh/Associated Press)

U.S. President Barack Obama, confronted again by environmental protesters while on a campaign-style swing through the Midwest, insisted Wednesday that his administration has not made any decision on TransCanada's proposed Keystone XL.

Obama was in Denver, making an appearance at the University of Colorado, when a protester yelled that he should block the $7-billion project to transport Alberta oilsands crude through six American states to Gulf Coast refineries.

"I know your deep concern about it," he told the protester after pausing in his speech. "We will address it."

The president's comments came amid reports that the U.S. State Department, scheduled to rule on whether to green-light Keystone XL by the end of the year, might delay its decision.

Delays can be every bit as damning to a project like Keystone XL as the outright demise of the pipeline, said Mark Lewis, a pipeline law specialist at Bracewell and Giuliani LLP in Washington.

'Death by a thousand cuts'

"It's like death by a thousand cuts," Lewis said in an interview.

"The producers need to get their product to market. If this is delayed, and if there's another project being built to move their product to the West Coast, then producers may commit their product to that project. There's a limited amount of product, and delay in Keystone could cause the market to move elsewhere."

The U.S. environmental movement has been galvanized by the pipeline debate, using it as a springboard to a larger ideological battle over the need for Americans to end their appetite for fossil fuels and embrace renewable sources of energy.

The opposition has spread to U.S. Congress as several Democratic lawmakers have urged Secretary of State Hillary Clinton to block the project because of a federal approval process they have described as hopelessly tainted.

On Wednesday, another group of 14 lawmakers — Democrats and an independent — took the fight to the U.S. inspector general. In a letter to Harold Geisel, they urged his office to launch an investigation into the State Department's conduct as it's assessed the proposed pipeline.

Investigation pending

"Given the significant economic, environmental, and public health implications of the proposed pipeline, we believe that it is critical that the State Department conduct thorough, unbiased reviews of the project," their letter read.

In a separate dispatch to Obama, the senators — led by independent Bernie Sanders of Vermont and Tennessee Democrat Steve Cohen — urged the president to hold off on approving the pipeline until the completion of the investigation they've asked for from Geisel.

The State Department's final decision on the pipeline is expected by the end of the year. It's responsible for determining the fate of Keystone XL because it would cross an international border if approved.

Environmentalists claim the fix is in, partly because one of Calgary-based TransCanada's key lobbyists, Paul Elliott, worked for Clinton's unsuccessful bid for the Democratic presidential nomination in 2008.

They point to emails recently released by the State Department following freedom-of-information requests that suggest a cosy relationship between Elliott and some department officials. In one particularly friendly email exchange, a State Department employee working at the U.S. Embassy in Ottawa cheers on Elliott's attempts to win approval for the pipeline.