A final evaluation by Nebraska environmental officials is expected during early January regarding TransCanada Corp.’s alternative route for its proposed Keystone XL oil pipeline to avoid environmentally sensitive areas in the Sand Hills region of the state.

Expectations among state and pipeline company officials are that by the end of this month or early February, Gov. Dave Heineman will have completed his review of the alternative route and sent it on for inclusion in the pending Keystone application at the U.S. State Department.

TransCanada still hopes to have a final decision by the State Department before the end of the first quarter, allowing it to proceed with the controversial northern portion of its proposed $7 billion, 1,700-mile project from Alberta, Canada to the refineries in the Gulf of Mexico region of Texas and Louisiana.

The Nebraska Department of Environmental Quality (DEQ) evaluation and Heineman’s subsequent review will result in a recommendation being forwarded to the State Department to cover the portion of Keystone XL that is slated to traverse Nebraska.

“We are now waiting for the DEQ to issue its final report on our proposed rerouting,” said a TransCanada spokesperson. “Essentially, it looks at our proposal to avoid the Sand Hills, so we’re hoping there will be a report sent to the governor as soon as possible.

“The route in Nebraska is really the only outstanding piece in terms of anything that has changed in the project since our reapplication to the State Department for presidential permits. The last we heard from State is that they were ready to make a decision some time in the first quarter this year.”

Nebraska’s legislature last year gave Heineman additional authority regarding the proposed pipeline route, but that authority is being challenged by a group of landowners in a federal district court in a pending case. An attorney representing some of the landowners told news media Wednesday the governor should wait until the court has issued a final ruling this summer before taking any action on the proposed pipeline route.

However, indications currently are that Heineman intends to take action after the DEQ report and recommendation are issued.

Opponents of TransCanada’s proposed pipeline have continued an Internet-based campaign, Bold Nebraska, against Heineman, accusing him of flip-flopping on whether the pipeline could traverse his state, first agreeing with the Obama administration’s decision to deny an import permit and then changing his mind.

At the center of the dispute is the Ogallala Aquifer in Nebraska Sand Hills, a major freshwater resource for 20% of the nation’s irrigated farmland. Heineman earlier had publicly opposed an pipeline route through the aquifer and said further environmental review was needed. Subsequently, he expressed his support for the pipeline (see Shale Daily, Feb. 10, 2012).

In early December, Mark Mills, senior fellow with the Manhattan Institute for Policy Research, said he believes the fate of the northern portion of the multi-billion-dollar Keystone XL oil pipeline from western Canada to the Gulf of Mexico (GOM) in the hands of the Obama administration will be the bellwether this coming year, determining if the U.S. technology-driven abundance of hydrocarbons is going to be cashed in as part of a North American-wide energy transformation (see Shale Daily, Dec. 10, 2012).