TransCanada Corp. said Monday it will find a new route for its controversial Keystone XL oil pipeline around the water-sensitive Sandhills area in Nebraska, and to that end, it is supporting legislation proposed in the state legislature to develop a new route for the portion of Keystone that would cross the state.

Since the U.S. State Department decided last Thursday to delay a decision on the proposed pipeline from Western Canada to the U.S. Gulf of Mexico region to sort out routing problems in the Sandhills, TransCanada has scrambled to make changes that it hopes will salvage the $7 billion, 1,700-mile project, albeit on a delayed schedule (see Shale Daily, Nov. 15).

TransCanada said if the newly proposed state law is passed in a special session of the Nebraska legislature, which was convened earlier this month, Keystone can move forward and avoid passing through the Sandhills, where environmentalists and residents contend that groundwater is found very close to the surface and could be contaminated by a pipeline leak.

A letter from Assistant Secretary of State Kerri-Ann Jones to the Nebraska legislature has signaled the federal department’s support for the state’s role in rerouting a portion of Keystone, according to a report Tuesday in the Los Angeles Times.

The Times reported that TransCanada and Nebraska lawmakers had reached an agreement to work together, along with the State Department, on alternative routes. The Canadian energy company said it intends to work with the Nebraska Department of Environmental Quality and the State Department on an assessment to “define the best location” for Keystone in the state.

TransCanada’s Alex Pourbaix, president for energy and oil pipelines, said the proposed state legislation “respects the concerns of Nebraskans and supports the development of Keystone.” Pourbaix pledged to cooperate and provide information for the joint state-federal “thorough review that addresses concerns regarding the Sandhills.”

Ranchers concerned about possible contamination of the Ogallala aquifer, which lies under the Sandhills and parts of several other states, would reportedly be satisfied by a rerouting taking the pipeline farther to the east in Nebraska, but the environmental opponents appear to not want the pipeline built for larger environmental concerns.

Those opponents allege that production of the Canadian tar sands oil deposits in Alberta carries one of the worst carbon footprints of any kind of fossil fuel production. They are essentially against increased Canadian tar sands production and subsequent export into the United States.