TransCanada asks State Department to suspend long-running review of Keystone XL

WASHINGTON — TransCanada Corp. is asking the State Department to halt its review of Keystone XL indefinitely, potentially delaying a final decision on the proposed pipeline until a new president takes office.

The pause, requested in a letter from the Calgary-based company to the State Department, adds new uncertainty to the controversy over the proposed pipeline, which would provide a new outlet for oil sands crude in Alberta.

Keystone XL would transport diluted bitumen from Alberta oil sands projects over some 1,179 miles (and three states) to the midwest, ultimately providing it a new pathway to Gulf Coast refineries configured for heavy crude.

TransCanada’s move follows the company’s Oct. 5 request for a Nebraska Public Service Commission review of the pipeline’s proposed route through the state, amid legal challenges over the constitutionality of a Nebraska law allowing Keystone XL’s path to be OKed three years ago. The Public Service Commission review is expected to take seven months to a year — so TransCanada’s requested delay could easily push a final decision on the project until after the 2016 elections.

The State Department, which is vetting Keystone XL because it would cross the U.S.-Canada border, previously has postponed major decisions on the proposed pipeline while state reviews were underway.

“TransCanada believes that it would be appropriate at this time for the State Department to pause in its review of the presidential permit application for Keystone XL,” said Executive Vice President Kristine Delkus in a letter to Secretary of State John Kerry. Delkus said the requested pause “will allow a decision on the permit to be made later, based on certainty with respect to the route of the pipeline.”

The requested delay also comes amid widespread expectations that the Obama administration would reject the $8 billion project. Plummeting crude prices also have stifled growth in Alberta’s oil sands, with Shell and other companies halting projects to extract the hydrocarbon bitumen from the region.

Related: Oil sands pipelines may be running out of room

“It is clear President Obama was going to deny the permit,” said Sen. John Hoeven, R-N.D. “TransCanada had been given every reason to believe its application would be denied by the current administration, despite the protracted review period and multiple favorable findings. Consequently, the company itself has been forced to delay the project further, and that’s unfortunate.”

Pipeline foes accused TransCanada of trying to delay the process in hopes that a Republican with a more favorable view of Keystone XL would be elected to the White House next year.

Nebraska activist Jane Kleeb has insisted that Obama can reject the pipeline at any time.

“TransCanada wants to add multiple years in the process and they are doing this for one reason: TransCanada hopes a Republican gets into office because they all said they would approve the pipeline,” Kleeb said. “TransCanada is facing a loss, they know it. So this is their last chance to try and save their project.”

Tiernan Sittenfeld, senior vice president of government affairs for the League of Conservation Voters, said it would be “absurd” for the State Department to suspend TransCanada’s permit application at this point.

“This is nothing more than another desperate and cynical attempt by TransCanada to build their dirty pipeline someday if they get a climate denier in the White House in 2017,” Sittenfeld said.

Obama previously has said his support for Keystone XL is contingent that it “does not significantly exacerbate” greenhouse gas pollution. The president also has questioned the number of jobs expected to spring from the project and suggested that most of the oil that would be carried by Keystone XL would be exported.

On Oct. 20, following national elections in Canada that ushered in new Liberal Party leadership, a State Department spokesman said Kerry was still reviewing the project. The State Department, which did not immediately respond to a request for comment, has declined to give a specific timeline for a Keystone XL permit decision.

Even if the Obama administration rejected Keystone XL, TransCanada could reapply once a new president takes office.

Keystone XL advocates say the project would deepen the United States’ energy ties with a friendly ally, support American jobs and provide a reliable supply of heavy crude to Gulf Coast refineries.

Critics say the pipeline would unleash the development of Canada’s oil sands, by giving the bitumen extracted in Alberta a cheaper, easier route to Gulf Coast refineries, instead of more costly rail transport. Because the bitumen is typically extracted through open-pit mining and energy-intensive steam-assisted techniques, environmentalists say it produces more carbon dioxide emissions over its entire life cycle, from production to eventual combustion.

Keystone XL is one of several proposed pipelines to transport oil sands crude that have faced stiff opposition. Others include Enbridge’s Northern Gateway, which would carry 525,000 barrels of oil per day from Alberta to British Columbia, and TransCanada’s Energy East, which would deliver 1.1 million barrels of oil per day from Alberta to Canada’s East Coast.

Keystone XL advocates said the long limbo over the pipeline — and TransCanada’s request for a timeout — has a chilling effect on developers of other energy infrastructure projects.

The project has become a flash point in a larger fight over fossil fuels and climate change.

Sen. Heidi Heitkamp, D-N.D., said “a basic infrastructure expansion project” had been conflated “into the foremost emotional and overly politicized issue as it relates to our country’s energy policy.”

“Halting a basic infrastructure expansion project will not make this country more energy efficient or independent, but it does set a foreboding precedent about our ability to achieve those goals,” Heikamp said. “If we are serious about reducing our dependence on foreign oil and one day achieving our goal of energy independence, it is absolutely crucial that we immediately cease from legislating on emotion alone and finally get to work.”

TransCanada has already built a 487-mile-long leg of the project that runs 487 miles from Cushing, Okla., to Nederland, Texas. But the border-crossing northern leg has been in varying stages of review since the company proposed it in 2006.