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A woman holds a placard during a protest outside of the White House against the building of the proposed Keystone XL oil pipeline on January 10, 2015 in Washington, DC.MANDEL NGAN/AFP / Getty Images

Slumping oil prices could provide U.S. President Barack Obama with the excuse he appears to want to reject TransCanada Corp.'s Keystone XL pipeline.

The Obama administration is expected to resume its efforts to determine whether approval of Keystone XL would be in the U.S. national interest, now that the Nebraska Supreme Court has upheld the legality of the state's approval process for the current route. A key test in that national interest determination – as outlined by the President himself – is whether the pipeline project would result in greater greenhouse gas (GHGs) emissions from oil producers.

TransCanada – as well as the Alberta and federal governments – have taken comfort in the State Department's own review that concluded the construction of the Keystone XL pipeline won't increase GHGs. Alberta Premier Jim Prentice pointed to that conclusion again Friday in commenting on the Nebraska court ruling.

But that analysis was conducted at a time of high crude prices. The State Department also considered a low-oil-price scenario and, in that case, the cheaper transportation costs associated with Keystone XL would help maintain production – and therefore emissions – in the oil sands. Critics have now seized on that scenario to argue that the government's own review shows the project fails Mr. Obama's emissions test.

"Certainly, the oil price issue is something we've been working to profile," said Danielle Droitsch, with the Natural Resources Defense Council in Washington.. "It's something we're pushing pretty hard with the administration right now. The very scenario that they acknowledged has come to pass."

When the State Department analysis was released a year ago, North American benchmark crude, West Texas Intermediate, was trading above $90 (U.S.) a barrel. On Friday, it closed at $48.21.

Mr. Obama has sounded increasingly skeptical about the benefits of Keystone XL – challenging Republican claims that it would be a significant job-creator and rejecting claims it would benefit American consumers. With his dismissal of the project's oft-touted benefits, its risks loom larger, Ms. Droitsch said.

The President has vowed to veto the legislation now making its way through Congress, which would approve the pipeline. But TransCanada remains hopeful that he would approve the project on its merits, or that Congress would find a way to overcome his veto or attach the bill to a "must-have" piece of legislation.

In the final environmental impact statement released a year ago, State Department consultants concluded approval of the pipeline was immaterial oil sands production because the crude would find its way to market through other – albeit sometimes more expensive – means. But they also considered a low-price scenario and came to a strikingly different conclusion.

"Oil sands production is expected to be most sensitive to increased transport costs in a range of prices around $65 to $75 per barrel," it said. "Assuming prices fell in this range, higher transportation costs could have a substantial impact on oil sands production levels … Prices below this range would challenge the supply costs of many projects, regardless of pipeline constraints, but higher transport costs could further curtail production."

TransCanada chief executive Russ Girling said lower crude prices certainly make the Keystone XL project more attractive to producers in Canada and in the U.S. Bakken who are looking for the most cost-efficient transportation to refining markets. The company has spent more than $2.5-billion (Canadian) on the proposed pipeline already, and is hoping to win presidential approval before late winter or early spring in order to take advantage of the summer construction season.

Mr. Girling said low-oil prices have not reduced the need for Keystone XL. On the contrary, TransCanada has 100 per cent of its original contracts still in place and producers are keen to reduce their transportation costs in order to increase per-barrel revenue, or netback.

But the construction of a single pipeline will not increase production or consumption on crude oil in North America, he insisted.

At the same time, few analysts expect crude prices to stay below $75 (U.S.) for more than a few years – at most – and the State Department scenario was based on a long-term price.

"At the end of the day, a pipeline doesn't promote production or consumption," he said. "Prices in the marketplace do that, and as long as it is economic to produce the oil, it will get produced. And it will move to market by less efficient means."

Follow Shawn McCarthy on Twitter: @smccarthy55Opens in a new window

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