Obama set to reject Keystone oil pipeline

The Obama administration was poised on Wednesday to reject the Keystone crude oil pipeline, according to sources, a decision that would be welcomed by environmental groups but inflame the domestic energy industry.

The administration could make its announcement on TransCanada’s Keystone XL pipeline late on Wednesday or on Thursday, a source familiar with the matter told Reuters. TransCanada Corp. shares slid more than 3 percent after the news.

“We’re expecting the pipeline to be rejected,” the source said.

TransCanada’s planned 1,700-mile pipeline has become a potent symbol in the battle over of the future of U.S. energy policy.

With environmental groups concerned about carbon emissions from oil sands production, the administration in November delayed a decision on a presidential permit for the project until 2013.

But lawmakers that support the project were able to attach a measure to a tax-cut law passed at the end of last year that set a February deadline for a decision on whether the project is in the national interest.

The pipeline has placed the Obama administration in the middle of a dispute between two key parts of its voting block: green groups who oppose the pipeline over concerns about climate change and some unions who back the project because of the jobs they believe it would create.

The administration has said it needs more time to consider alternative routes for the pipeline, which originally was planned to traverse sensitive habitats and a crucial water source in Nebraska.
Copyright 2011 Thomson Reuters.

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