David Daniel found his piece of paradise on 20 acres in east Texas, complete with a hardwood forest of oak, hickory and elm and three spring-fed creeks that burble year-round.

“I drink out of the creeks. It’s that clean,” says Daniel, a carpenter who built a house for his family on the land.

He sees his refuge in peril. A proposed oil pipeline “would cut my property in half and tear up the wetlands,” says Daniel, who has rallied fellow U.S. landowners against the $6 billion project.

In this David vs. Goliath tale, what happens in Winnsboro, Texas, may hinge on events thousands of miles away. Unrest in the Middle East could affect whether the Obama administration allows a 1,661 -mile underground pipeline carrying a controversial form of heavy crude oil to slice through the United States from Alberta, Canada, to the Gulf Coast.

Because the pipeline crosses a U.S. border, it needs a permit from the State Department, which pleased the project’s critics last week by announcing it would further study the environmental impact. The department said it plans to issue a draft of that review next month and make a final decision by year’s end.

“The nation’s energy security does play a role in the decision-making process,” says department spokeswoman Nicole Thompson.

The privately funded project, known as Keystone XL, would expand an existing 2,154-mile pipeline that runs from Hardisty, Alberta, to Steele City, Neb., and then east to Patoka, Ill. The expansion would snake southeast through Montana, South Dakota, Nebraska, Kansas, Oklahoma to oil refineries near Houston.

TransCanada, a Calgary-based company, would use it to move oil or tar sands. This crude, mixed with sand, is mined or drilled deep beneath the subarctic forests of western Canada where herds of wild caribou roam.

Environmental groups, including the Sierra Club, say the production of tar sands destroys boreal or northern forests, emits higher levels of greenhouse gases than drilling for conventional oil, won’t solve U.S. energy needs and could cause toxic pipeline accidents.

TransCanada and other proponents, including many GOP leaders in Congress, say the pipeline is safe, would create thousands of jobs and reduce U.S. dependence on unstable foreign oil sources. They say that if the U.S. doesn’t take the tar sands, China will.

Secretary of State Hillary Rodham Clinton angered environmentalists in October when she told an audience in San Francisco that State was “inclined to” grant a permit. Since then, she’s been more circumspect.

“I am generally supportive of receiving more oil from Canada,” Clinton told a Senate appropriations committee this month. Yet she hastened: “Since my department bears the ultimate responsibility for making a recommendation on the pipeline, I am not able to express an opinion.”

President Obama said nothing about the pipeline during a news conference last month at the White House with Canadian Prime Minister Stephen Harper, who described his country as “the largest, the most secure, the most stable and the friendliest supplier” of U.S. energy.

Does the U.S. need it?

The project comes at a difficult time for the Obama administration, which has committed itself to developing clean energy sources. Yet as gas prices soar, more Americans are concerned about energy costs and supportive of increased oil drilling than they were a year ago, a Gallup poll this month shows.

The Keystone extension would boost the system’s capacity from 591,000 barrels per day to nearly 1.3 million barrels per day, but its impact is difficult to predict, according to a lengthy report commissioned by the U.S. Department of Energy and released in December. The extra 500,000 barrels from Canada (another 200,000 would come from U.S. states) represent a fourth of crude oil imports from that country in December, 2010, according to DOE data.

“A lot depends on how other pipeline companies react,” says Martin Tallett, president of EnSys Energy, an international oil consulting firm that wrote the DOE report. He expects that if Keystone is nixed, other pipelines will be built, some possibly to export tar sands to growing Asian markets.

Tallett says the existing Keystone pipeline has enough capacity until at least 2020 to move tar sands into the Midwest, but he says it gets bottle-necked there. “The system desperately needs more capacity to get crudes from the middle of the country to the Gulf Coast,” he says.

“Keystone XL makes sense,” he says, because it would also move oil produced in Montana, Nebraska, Oklahoma and Texas to the Gulf. He says it would reduce the current oversupply in the Midwest, which has depressed oil prices there. He explains that relieving the congestion could temporarily increase the region’s prices until the system re-balances itself

“Opponents want to stop oil sands production,” but barring this project won’t do that, says TransCanada’s spokesman Shawn Howard. “It will just find different routes to different markets,” he says, adding the U.S. will lose out on a secure oil source.

Canada supplies far more crude oil to the U.S., most of it tar sands, than any other country. Mexico is second, followed by Saudi Arabia, Venezuela, Nigeria and Iraq.

“We really don’t need this pipeline,” says Susan Casey-Lefkowitz, director of international programs for the Natural Resources Defense Council. She says it makes it easier to move oil around the United States but won’t reduce U.S. dependence on foreign oil. To do that, she says, the U.S. needs to promote smart growth, public transit, electric cars and higher vehicle fuel efficiency. “It’s not a given this oil would otherwise go to China,” Casey-Lefkowitz says, adding that Canada’s native peoples would likely oppose a new pipeline to the West Coast.

Environmental risks?

In a report last month, the NRDC and other environmental groups said the pipeline would carry a raw form of tar sands — diluted bitumen — that’s highly corrosive and boosts the risk of pipeline failures that could contaminate groundwater. It would cross the Ogallala Aquifer in Nebraska, one of the world’s largest freshwater aquifers. They say bitumen has already caused more pipeline spills than conventional oil and point to one of more than 840,000 gallons last July into Michigan’s Kalamazoo River. The spill covered a 30-mile stretch of river and floodplains, where oil-soaked waterfowl and dead fish were found.

“It left a black corridor of goo,” says Stephen Hamilton, a professor at Michigan State University who works at a nearby biological field station. He says Enbridge, a Calgary-based company that owns the 1969 pipeline, did an “excellent” cleanup job but long-term impacts are unclear. “We can’t get away from pipelines, until we get away from oil, but we need to find a way to make them safer,” Hamilton says, citing a lack of U.S. inspectors.

Pipelines are the safest way to transport crude oil, and tar sands is “no more corrosive than any other heavy oil,” says Travis Davies of the Canadian Association of Petroleum Producers.

“We’re investing $13 billion into a pipeline system,” says TransCanada’s Howard of the entire Keystone network. “Why would we put a product into it that would destroy it? It doesn’t make any business sense.”

Tallett says tar sands is acidic and more corrosive than conventional crude oils but the industry is used to handling it.

Howard says no breaks have occurred in Keystone’s existing pipeline, completed last year. He says it also carries tar sands but, having been approved before the 2010 oil spills in the Gulf of Mexico and the Kalamazoo River, it elicited little controversy.

“We’re not buying land or taking it from people” but paying for easement rights, Howard says. He says landowners can keep the money even if the project isn’t approved. Many U.S. states consider pipelines to be in the public interest and allow their operators to use eminent domain to acquire use of land.

Sue Luebbe, whose family owns a large ranch near Stuart, Neb., says TransCanada threatened eminent domain if she didn’t sell easement rights and falsely told her neighboring ranchers had already sold theirs.

“We don’t threaten them” but explain the process, Howard says. He says he can’t discuss Luebbe’s case because of confidentiality.

Daniel says TransCanada put pipeline markers on his property without permission. Howard says that was unintentional.

After 19 months of negotiation, in which the company first offered him $2,440 for easements that would clear-cut 1.4 acres of his land, Daniel says he agreed to a $13,970 payment last March.

“I figured they were going to take my property no matter what,” he says, adding he was told the pipeline already had its U.S. permit.

At that time, there was little environmental outcry so he started a grassroots group, “Stop Tarsands Oil Pipelines.” He says he’s using the money he got for the project to help fund the fight against it.