TransCanada seeks Keystone XL delay, taking decision off Obama's hands

The company behind the Keystone XL pipeline has asked for its US permit application to be put on hold – a move that would leave the final decision on the controversial tar sands oil project to Barack Obama’s successor.

In a letter to John Kerry, the secretary of state, the Canadian company said on Monday that it was seeking to suspend the review of its permit application until the resolution of a dispute about its proposed route across the state of Nebraska.

“We are asking State to pause its review of Keystone XL based on the fact that we have applied to the Nebraska Public Service Commission for approval of its preferred route in the state,” said Russ Girling, TransCanada’s chief executive officer, in a statement. “I note that when the status of the Nebraska pipeline route was challenged last year, 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.”

If granted the request would put Keystone XL – which was intended to pump crude from the tar sands of Alberta to refineries on the Texas Gulf coast – into limbo until after the November 2016 elections, allowing Obama to escape one of the most controversial decisions in his in-tray.

Over the years Keystone XL has become a symbol of the greater political struggle surrounding Obama’s efforts to move away from fossil fuels and fight climate change.

The move marks a shift for TransCanada which has spent seven years relentlessly pushing for approval of the project.

But prospects for Keystone XL have been receding over the last year – because of low oil prices, which made the project uneconomical, and amid political shifts in the US and Canada.

There had been growing anticipation that, after years of delay, the State Department was poised to reject the project – although there was no clear signal when that might occur.

The White House earlier on Monday would say only that Obama was expected to render his decision by the time he left the White House.

But in his second term Obama has increasingly admitted doubts about Keystone XL, saying it would create few jobs and would worsen climate change by opening up production from the tar sands.

The future of Keystone XL after Obama leaves the White House is also unclear. The Democratic presidential contenders Martin O’Malley and Bernie Sanders – and more recently Hillary Clinton – have said they oppose the pipeline. The Republican presidential contenders support it.

Keystone XL also lost powerful allies in Canada following defeats for conservative party leaders in provincial and federal elections. Rachel Notley, whose leftwing New Democratic party won election in Alberta last May, has said she does not support the pipeline. Justin Trudeau, Canada’s new prime minister, supports it but has indicated he would not risk souring relations with Obama over it.

TransCanada appeared to take stock of those changes when it backed away from its earlier strategy of seizing lands in Nebraska for the pipeline route. The company said on Monday it expected a decision from the Nebraska Public Service Commission on its proposed route within seven to 12 months.

Keystone XL was designed to pump crude from the Alberta tar sands for 1,700 miles and across six American heartland states to refineries on the Gulf coast.

The project was critical to former Conservative prime minister Stephen Harper’s vision of turning Canada into an “energy superpower”. But Harper’s failure to get the pipelines built that would bring Alberta tar sands crude to market combined with low global oil prices to wreck that vision.

Since the downturn in global oil prices a number of other companies have put their big tar sands projects on hold.

Environmental groups immediately claimed victory for their campaigns against the pipeline.

“TransCanada has admitted that the Keystone XL pipeline cannot pass President Obama’s climate test. This is a victory for the farmers, indigenous peoples and environmentalists that banded together to stand up to big oil,” said Erich Pica, president of Friends of the Earth.

Tom Steyer, the billionaire climate activist, renewed his call on Obama to reject the pipeline. “Today, tomorrow or next year, the answer will be the same: Keystone XL is a bad deal for America, our climate, and our economy,” he said.

But John Hoeven, Republican senator from North Dakota, said the long delays under Obama would have a “chilling effect” on the energy industry.

“It is clear President Obama was going to deny the permit,” Hoeven said in a statement.

“TransCanada had been given every reason to believe its application would be denied by the current administration, despite the protracted review period and multiple favourable findings. Consequently the company itself has been forced to delay the project further, and that’s unfortunate.”

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