Setback for Keystone XL could affect second major oil sands pipeline

TransCanada's Keystone XL pipeline has been delayed in what appears to be a politically motivated decision. The US State Department, which oversees the permit-granting process for projects of this kind, has ordered TransCanada to find a different route for the controversial pipeline, one that avoids the environmentally sensitive Sand Hills area of Nebraska, which sits atop a major aquifer.

The delay will ensure that President Obama does not have to make his final decision on the project until well after next year's presidential election, assuming that he is still president. The State Department denies interference from the White House in reaching its decision.

While some of those who favour the project fear that this delay could end it, saying that refiners in the US will not wait and will find other sources of oil, others are confident that the project is too big and too important to the economies of both Canada and the US to abandon it now.

Opponents of the pipeline are celebrating what they see as a victory. Rick Smith of the Environmental Defense group said the US Keystone announcement has sent an important message: Canada must get serious about controlling tar sands pollution and transitioning to a clean energy economy.

Speaking for the Canadian government, Natural Resources Minister Joe Oliver said they were disappointed but remained hopeful and called the oil sands a "stable, secure and ethical source of energy for the world."

Another major pipeline project in the works, Engridge's Northern Gateway pipeline across the Rocky Mountains to the west coast, is also facing stiff opposition for reasons similar to those that have derailed Keystone. The $5.5 billion project would deliver 500,000 barrels of oil a day to tankers in BC for shipment to Asia. Hearings concerning the Northern Gateway proposal begin in January, and thousands have registered to speak about it. Environmental groups as well as native groups have already indicated that they do not want the pipeline. With public opinion seemingly on the side of the anti-pipeline forces, Northern Gateway could be in for a bigger fight than Enbridge had anticipated.