TransCanada backs new route for stalled U.S. pipeline

MONTREAL — Pipeline operator TransCanada Corp. said it would back the rerouting of a controversial US-Canada oil pipeline, after the Obama administration delayed its final decision on the project.

The company said it supported legislation in the US state of Nebraska that would ensure the Keystone XL pipeline does not pass through the state's Sand Hills area, which features important wetlands and a sensitive ecosystem.

"I am pleased to tell you that the positive conversations we have had with Nebraska leaders have resulted in legislation that respects the concerns of Nebraskans and supports the development of the Keystone XL pipeline," said Alex Pourbaix, TransCanada's president for energy and oil pipelines.

"I can confirm the route will be changed and Nebraskans will play an important role in determining the final route."

Pourbaix said the proposed legislation "is a critical step" in moving the project forward.

Last week, the US administration said it would study an alternate route for the pipeline to bring petroleum from Canada's western oil sands to the Gulf of Mexico, saying a final decision may not come until 2013 -- after next year's presidential elections.

After months of wrangling, the State Department said it needed more time to assess its environmental implications.

The department said its move was based on specific concerns about the Sand Hills area of Nebraska, which is along the proposed pipeline route from Canada's Alberta province to refineries in Texas.

On Thursday, US officials said it was "reasonable to expect" that its review process "could be completed as early as the first quarter of 2013" -- after President Barack Obama bids for re-election in November 2012.

The project puts two of Obama's goals -- energy independence and cutting back on greenhouse gas emissions -- at odds. It also pits environmentalists and labor, both usually key Democratic Party supporters, against each other.

Alberta Premier Alison Redford, in Washington to meet US officials about the project, hailed the latest news on the efforts to find a new route.

"I think it's good news today, it's different circumstances than we had last week," she said.

"It's something I can be more optimistic about now than I could have been this morning, as we all could have been this morning," Redford said.

"So, back on track? I think that in terms of the regulatory process, while it had slowed down, I didn't feel we were off track. So we'll say that we're optimistic still."

In Nebraska, state Senator Mike Flood said a public hearing on the change would be held this week and welcomed the new effort, saying, "It respects our citizens, it moves the route and it defines state policy into the future."

Environmental activists have made the pipeline a rallying cause, claiming an accident along the 1,700-mile (2,700-kilometer) pipeline would be disastrous for aquifers in central US Great Plains states.

The route proposed by TransCanada would pass through the US states of Montana, South Dakota, Nebraska, Kansas and Oklahoma before ending up in Texas.

Others oppose the project because exploiting the tar sands requires energy that generate a large volume of greenhouse gases.

In its long-awaited environmental impact statement on the project, the State Department said in August that the pipeline would be safer than most current oil transportation systems.

Obama said he supported the decision to "seek additional information" before deciding whether to give the go-ahead to the $7 billion project, which is part of the broader $13 billion Keystone pipeline system.