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The Keystone XL pipeline has sparked widespread controversy over its environmental cost. (Karen Bleier/AFP/Getty Images)
The Keystone XL pipeline has sparked widespread controversy over its environmental cost. (Karen Bleier/AFP/Getty Images)

U.S. talks on Keystone route could push project past 2012 election Add to ...

The $7-billion Keystone XL pipeline, which would run from the Alberta oil sands through the United States to refineries in the Gulf Coast, could face delays as the U.S. State Department considers rerouting the project, media reports said Tuesday.

The State Department is weighing the concerns of Nebraskans and public officials who say TransCanada’s current plans pose serious environmental risks – a move that could push the final decision past the 2012 presidential elections, the Wall Street Journal and Bloomberg said, citing anonymous government sources.

TransCanada’s chief executive, Russ Girling, said in an interview Tuesday with the Wall Street Journal that his company couldn’t wait indefinitely for a final decision. He said some Gulf Coast refiners have contracts that expire in 2012 and 2013, and they need assurances the project will be able to provide crude oil.

But a spokesperson for TransCanada refused to speculate on what the delays meant for the Keystone project’s viability.

“If we hear something definitive from a named official on the record, we would then comment,” said James Millar in an e-mailed statement to The Globe and Mail. “We have taken our guidance from the Department of State over the last three years as it is their review process and will continue to do so.”

TransCanada has said the pipeline would create 20,000 jobs in the United States.

“If Keystone dies, Americans will still wake up the next morning and continue to import 10 million barrels of oil a day. Much of that oil will flow from repressive nations, without the benefit of thousands of jobs and long-term energy security,” Mr. Millar said. “That would be a tragedy.”

The pipeline has become a political challenge for the Obama administration. A decision in favour of the project would anger environmentalists, a core Obama constituency, ahead of the 2012 election. But rejecting the project, which many of the pipeline’s backers say would create much-needed jobs in a recession, could send voters to the Republican camp.

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