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The Calgary Herald

US Delays Decision on Tarsands Pipeline

Dina O'Meara

Water used in the extraction process is dumped into pools in the northern Alberta oil sand fields. Federal agencies now have until mid-December to comment on the $7-billion Keystone XL project, which would flow bitumen from Alberta to refineries in the U.S. Gulf Coast. (AFP/File/David Boily)

The U.S. State Department has bowed to pressure from environmental
and political lobbies, giving federal agencies until the end of the
year to decide if a massive bitumen pipeline from Canada is in the
national interest.

TransCanada Corp.' s contentious Keystone XL
project has been challenged by groups in the U.S. decrying Alberta's
oilsands operations as environmentally unsound.

Monday's move
gives federal agencies three more months to comment on the $7-billion
project, which would flow bitumen from Alberta to refineries in the
U.S. Gulf Coast.

The original directive was for federal agencies
to weigh in on whether the pipeline was in the national interest by
Sept. 15, the same time analysis of an environmental impact study will
be released.

"After further consultation with those agencies,
the department has extended the time for all consulted federal agencies
to provide their views to the department until 90 days following
issuance of the final EIS.," the agency said on its website.

national need and environmental approvals are necessary before
Secretary of State Hillary Clinton issues the presidential permit
required to allow the expansion.

TransCanada said the 90-day
delay, half of which was built in to its construction plans as risk,
will give it more time to emphasize the benefits of bringing Alberta
oil to the U.S.

"I think that what we are seeing here is a
discussion that will ultimately come back to the premise of the
project, and that is the importance of North American energy security,"
said Robert Jones, vice-president of the Keystone project. "As we get
an opportunity to explain the issues around energy security, we're very
confident that people will recognize the overall benefit of the
project for North America."

The State Department's announcement
Monday comes on the heels of efforts by groups critical of the

The effect of a massive oil spill in the Gulf of Mexico
has heightened scrutiny of all oil projects, Jones noted.

time lag between environmental results and a national needs assessment
often occurs, he said, conceding the new order would delay construction
by at least six weeks. He could not comment on how the delay would
affect project costs.

Phase 1 of the Keystone pipeline started
flowing 435,000 barrels of oilsands crude a day to refineries in
Illinois July 1. The extension would bump up deliveries to Gulf
refineries to 510,000 bpd by 2013.

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