The company sponsoring the controversial Keystone XL oil pipeline Monday asked the State Department to suspend the review of its federal permit application, a request that could push a final decision on the pipeline beyond President Obama’s tenure in office.
The administration is preparing to reject a cross-border permit for the project aimed at transporting hundreds of thousands of barrels of heavy crude oil from Canada’s oil sands region to Gulf Coast refineries, according to several individuals who have been briefed but spoke on the condition of anonymity because the White House’s decision has not been announced. In asking for a delay, TransCanada could hand the issue, which has come to symbolize the broader battle over how the United States should address climate change, to the next U.S. president.
The Nebraska Public Service Commission is reviewing the pipeline’s route in the state after residents there challenged the state’s approval process for the project, and TransCanada argued in a letter to Secretary of State John F. Kerry that it would be “appropriate” to delay any federal decision until the Nebraska route is settled. The company first applied for a presidential permit seven years ago.
TransCanada’s president and chief executive, Russ Girling, noted Monday that when residents challenged the approval process for the pipeline in Nebraska’s courts, “the State Department found it appropriate to suspend its review until that dispute was resolved. We feel under the current circumstances a similar suspension would be appropriate.” The Nebraska review, the company said, could take between seven and 12 months.
A State Department official said officials were reviewing the letter.
Earlier Monday, White House press secretary Josh Earnest said that “our expectation at this point . . . is that the president will make a decision before the end of his administration on the Keystone pipeline, but when exactly that will be I don’t know at this point.”
At issue is the northern leg of the pipeline, which would stretch 1,179 miles between Hardisty, Alberta, and Steele City, Neb. The administration has approved the project’s southern leg.
Many Republicans and some construction union members welcome the prospect of boosting reliance on a U.S. ally for new supplies of heavy crude, and argue that the pipeline would be cheaper and less hazardous than transporting the oil by rail.
But environmentalists have criticized the project because the extraction and processing of the viscous oil requires more energy than many other oil operations.
Jane Kleeb, a member of Bold Nebraska, a group that opposes the pipeline, wrote in an e-mail Monday that the administration should reject the permit.
“The route in Nebraska has been uncertain for years, the only difference now is TransCanada knows they are about to have their permit rejected so they are scrambling,” she wrote. “President Obama can end all of this uncertainty with a stroke of a pen.”
Obama declared in a speech in June 2013 that he would approve the project only if it “does not significantly exacerbate the climate problem.”
The State Department completed two environmental reviews of the project, ultimately concluding it would not contribute to global carbon output unless oil prices dipped to between $60 and $70 a barrel. At that point, extracting oil-sands crude would be much less profitable and the increased cost of shipping the crude by rail instead of the pipeline could persuade companies to shelve big projects.
Conventional crude oil prices are now below $50 a barrel, and the price is lower for the bitumen wrung from oil sands. Many big projects expanding output are in development, but oil companies such as Royal Dutch Shell, Statoil and Teck Resources have put others on hold, citing price and the lack of transportation. On Thursday, Shell said it would take a $2 billion write-off for its Carmon Creek oil-sands project in Alberta.
Backers of the pipeline, including Sens. John Hoeven (R) and Heidi Heitkamp (D) of North Dakota, issued statements Monday saying the administration had effectively killed the project.
“It is clear President Obama was going to deny the permit,” Hoeven said. “The costly delay has prevented the company from proceeding on a new pipeline that would have brought oil from Canada and the Bakken to U.S. refineries and jobs and revenue to local communities.”
Steven Mufson contributed to this report.