U.S. to delay Keystone XL decision

The U.S. State Department said Friday it was extending the government comment period on the Keystone XL pipeline, likely postponing a final decision on the controversial project until after the Nov. 4 midterm elections.

Prime Minister Stephen Harper's Office expresses 'disappointment' with decision

Approval for the proposed extension of the Keystone XL pipeline, which would carry oil from Alberta to refineries on the Gulf of Mexico, has become a cross-border political and environmental flashpoint issue between the U.S. and Canada. (The Associated Press)

The U.S. State Department announced on Friday it is extending the government comment period on the Keystone XL pipeline, a move that likely postpones a final decision on the controversial project until after the Nov. 4 mid-term elections.

U.S. President Barack Obama has said he will make a final decision on whether to allow the pipeline connecting Canada's oil sands region to Texas refiners and several government agencies had been given until the end of May to weigh in. This had raised expectations of a final decision by mid-year.

However on Friday officials cited uncertainty stemming from a dispute in Nebraska over the proposed route of the pipeline as reason to keep the federal agency comment period open longer, throwing into doubt the timing of a project that has been awaiting a U.S. permit for more than five years.

"The Permit process will conclude once factors that have a significant impact on determining the national interest of the
proposed project have been evaluated and appropriately reflected in the decision documents," the State Department said.

Move likely to infuriate Canadian politicians

The State Department added it was "not starting over," but wanted to give agencies more time to weigh in.

A spokesperson with Prime Minister Stephen Harper's office expressed dismay at the delay.

We are disappointed that politics continue to delay a decision on Keystone XL.- Statement for Prime Minister's Office

"We are disappointed that politics continue to delay a decision on Keystone XL," a statement from the Prime Minister's Office said. "This project will create tens of thousands of jobs on both sides of the border, will enhance the energy security of North America, has strong public support, and the U.S. State Department has, on multiple occasions, acknowledged it will be environmentally sound."

Canadian politicians have grown increasingly irate over delays.

Alberta Premier Dave Hancock expressed frustration about "yet another delay" in the approval process of an issue he argued has been debated thoroughly enough.

"Keystone XL has been rigorously studied. We believe the project is in North America’s best interest as it provides energy security, jobs and a dependable energy source from an environmentally responsible and democratic friend and ally," Hancock said in a statement.

TransCanada's president and CEO Russ Girling called the delay "inexplicable" in an email to CBC News.

Girling said the project was being held back by special interest groups and paid activists who are jeopardizing North American energy security.

"Another delay is inexplicable," he said. "After more than 2,000 days, five exhaustive environmental reviews and over 17,000 pages of scientific data, Keystone XL continues to languish."

He added that "not building Keystone XL is a lose, lose, lose scenario any way you look at it."

Democrats urge decision from Obama

The delay will have sweeping consequences across Canada's oil industry, threatening to prolong the deep discounts on cash crude prices for producers such as Suncor Energy Inc. and Cenovus Energy Inc., while aiding
oil-by-rail developers like Gibson Energy and Canexus Corp that are racing to fill a gap left by a lack of export pipeline capacity.

Some in Obama's own party will also likely be upset by the move. Just a week ago, 11 Democratic senators, many facing tough November races, urged the president to make a decision by May 31.

A dispute over the proposed route of the pipeline has stalled the project in Nebraska, and officials were expected to cite that uncertainty in its announcement on Friday justifying the delay.

By linking Canadian fields to refiners in the Gulf Coast, the 1,900-kilometre Keystone XL pipeline would be a boon
to an energy patch where oil sands are abundant but lead to more carbon pollution than many other forms of crude.

Keystone's foes say that burning fossil fuels to wrench oil sands crude from the ground will worsen climate change, and that the $5.4-billion pipeline, which could carry up to 830,000 barrels a day, would only spur more production.

With files from CBC News