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Keystone XL Oil Pipeline Seeks Pause on U.S. Permit, Pending State Route OK

Facing environmental, political and ultimately market headwinds throughout its years of gestation, TransCanada Corp. on Monday suspended its pending U.S. permit request for a cross-border green light for its controversial $8 billion Keystone XL oil pipeline project.

Late in the day Monday, TransCanada said it had sent a letter to U.S. Secretary of State John Kerry asking the department to pause its review of the Presidential Permit application for the Keystone XL pipeline, and indicating the Calgary, Alberta-based company believes there is "sound precedent" for its action. The request seeks a "pause" in the permit review.

The pipeline giant that has interests throughout North America cited the State Department's pause in its review process last year, pending a Nebraska Supreme Court review that was resolved in TransCanada's favor last January. With a pending seven- to 12-month review of the proposed pipeline route by the Nebraska Public Service Commission (PSC), TransCanada is seeking another pause.

"We are asking the State Department to pause its view based on the fact that we have applied to the Nebraska PSC for approval of its preferred route in the state," said TransCanada CEO Russ Girling. "When the status of the Nebraska pipeline route was challenged last year, the State Department found it appropriate to suspend its review until that [legal] dispute was resolved."

In the letter to Kerry, Kristine Delkus, TransCanada executive vice president/general counsel, said the pause is needed "to allow time for certainty regarding the Nebraska route," permitting the U.S. decision to be made later "based on certainty with respect to the route of the pipeline."

To TransCanada, Keystone XL is a long-sought major new energy artery for moving U.S. Bakken crude oil and Canadian oilsands supplies to U.S. refineries, creating jobs and tax revenues along its route, but to environmentalists vigorously opposing the project it is alleged to be a risky, unneeded energy project threatening sensitive topography in the U.S. heartland.

The Obama administration has continued to waver on the long-sought project (see Shale DailyApril 21, 2014), and Democratic presidential candidate and former Secretary of State Hillary Clinton more recently came out against the project (see Shale DailySept. 24).

It was almost exactly a year ago that the Keystone XL project failed passage in the U.S. Senate by one vote, gaining a 59-41 favorable vote, but failing to get a required 60 ayes. Earlier, the House had passed its version of the bill giving the green light to the project, which has been stalled by the Obama administration for several years (see Shale DailyNov. 19, 2014).

At the beginning of this year the Nebraska Supreme Court ruled that a law granting Gov. Dave Heineman the power to approve the pipeline's route through the state could stand, appearing to give the project new life (see Shale DailyJan. 9).

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