TransCanada asks U.S. to delay Keystone XL pipeline review

TransCanada Corporation has asked the U.S. State Department to pause its review of the presidential permit application for the Keystone XL pipeline.

The company sent a letter to Secretary of State John Kerry on Monday, saying it believes there is sound precedent for making the request to pause the review.

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That adds a new wrinkle to one of the biggest Canada-U.S. political irritants of recent years, involving a proposed pipeline from Alberta to Texas.

TransCanada's letter asks the U.S. government to delay its decision on a border-crossing permit, pending the resolution of a dispute in Nebraska over the route.

If heeded, the request could potentially have two major implications: First, it could spare the company a potential rejection from U.S. President Barack Obama. It could also delay the issue beyond the 2016 U.S. election, making it a campaign issue and placing the file in the hands of a future administration.

Surprise twist

The request is a stunning turn of events for the project, which would carry nearly one-quarter of all Canadian oil exports. Until recently, the company and the Conservative government had been pleading for approval.

"We are asking [the State Department] to pause its review of Keystone XL based on the fact that we have applied to the Nebraska Public Service Commission for approval of its preferred route in the state," Russ Girling, TransCanada's president and chief executive officer, said in a statement.

"I note that when the status of the Nebraska pipeline route was challenged last year, the State Department found it appropriate to suspend its review until that dispute was resolved. We feel under the current circumstances, a similar suspension would be appropriate."

Girling said TransCanada made the decision to apply to the Nebraska Public Service Commission following legal challenges in the state over the constitutionality of the statute under which then-governor Dave Heineman approved the route in 2013.

TransCanada said the route approval by Nebraska would take seven to 12 months to complete.

Delay likely strategic

The decision by TransCanada was likely made for strategic reasons, said Michal Moore, an expert on the oil and gas industry with the University of Calgary School of Public Policy.

Since no progress was being made, the company likely wanted to wait until Obama leaves office, in January 2017.

'With this pause in place, they literally can re-create the project or reimagine it and certainly revisit it in the presence of a new president.'- Michal Moore, University of Calgary School of Public Policy

"With this pause in place, they literally can re-create the project or reimagine it and certainly revisit it in the presence of a new president," Moore said. "They've at least got some negotiating room later on, no matter who's elected president."

Keystone XL is an $8-billion project that would carry U.S. and Canadian oil to American refineries.

A new federal government was recently elected in Canada, oil is below $45 a barrel, and a U.S. presidential election is a year away. All of that seems to lead to the logical conclusion that the company wants to wait for more favourable climate, both economically and politically, said David Gantz, who teaches international trade law at the University of Arizona.

Gantz noted that Hillary Clinton, widely thought to be the front-runner to win the Democratic nomination for president, came out against the pipeline in September.

"You can be fairly sure that Mrs. Clinton will maintain her opposition to XL, and you can be almost equally sure that whoever is the Republican nominee … will be in favour of it," Gantz said.

"If I were in the Obama administration, I would say, 'Well, there is no big hurry in making this decision, so let's continue to put it off for a while.' I think that makes logical sense from their point of view."

TransCanada spokesman Mark Cooper told CBC News the company simply wants the State Department to wait until the application has been approved by Nebraska.

"Our focus is not on various political machinations of what or what not the president may or may not do in timing," Cooper said. "Our focus remains on continuing to demonstrate that the project is in the interests of the United States. Something that we believe clearly has been shown scientifically. We've said many times, if it's judged on its merits, it will be approved. If it's judged on science over symbolism, it'll be approved."