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The Obama administration on Wednesday denied a presidential permit for construction of the $7-billion Keystone XL pipeline, ruling that a proper environmental review could not be conducted before a 60-day deadline set by the U.S. Congress to rule on the controversial oilsands project.
But Calgary-based TransCanada Corp., the company behind the 2,700-kilometre pipeline, has been given the option of making a new application — and company officials confirmed they will propose an alternative route for Keystone XL that avoids environmentally sensitive areas in Nebraska.
In a statement released Wednesday afternoon, the U.S. State Department said its decision was “predicated on the fact that the Department does not have sufficient time to obtain the information necessary to assess whether the project, in its current state, is in the national interest.”
It added, however, that “denial of the permit application does not preclude any subsequent permit application or applications for similar projects.”
TransCanada first applied more than three years ago for a permit to build Keystone XL, designed to transport 830,000 barrels a day of crude oil from northern Alberta to refineries on the Gulf Coast of Texas.
Russ Girling, TransCanada’s CEO, said the company hopes the State Department will use existing information from previous environmental reviews to make a decision on the new Keystone XL permit in an “expedited manner.”
Girling said he believes a new pipeline permit can be approved in time to put Keystone XL into service by late 2014.
“This outcome is one of the scenarios we anticipated. While we are disappointed, TransCanada remains fully committed to the construction of Keystone XL,” Girling said.
TransCanada said it would complete a proposal for a new pipeline route by September or October.
But Kerri-Ann Jones, an assistant secretary of state, told reporters there was no guarantee of a speedy decision on a new Keystone XL proposal.
“If TransCanada comes in with a new application, it will trigger a completely new process,” Jones said in a conference call with reporters.
“We do have guidelines that would allow us to use information that is out there . . . but we would also have to look at this as a completely new application.”
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