U.S. government rebuffs TransCanada: No pausing KXL pipeline review

WASHINGTON – The U.S. government delivered some unwanted news to the company behind the Keystone XL pipeline Wednesday, informing TransCanada Corp. that it was rejecting its request for a delay in evaluating the project.

The answer came in a letter to TransCanada (TSE:TRP) two days after the Calgary-based company raised eyebrows with its unexpected demand for a timeout in the controversy-plagued process.

“We’re not required to pause it based on an applicant’s request. There’s no legal basis to do that,” said State Department spokesman John Kirby, describing the letter sent to the company.

“We have told TransCanada that the review process is going to continue, and when it’s over, then and when we have something to talk about, we’ll do so.”

The pipeline would carry almost one-quarter of all Canada’s oil exports, but it needs a permit to cross the U.S. border to be connected with the southern leg that’s already flowing to Gulf of Mexico refineries.

That company request came as a surprise, given that the company and its allies in the Harper government in Ottawa had spent years urging speedy approval.

The about-face was interpreted by the administration as a political move — aimed at increasing its chance of approval under a possible future Republican administration.

Given the repeated negative comments President Barack Obama has made about the pipeline, he’s widely expected to reject a request for a border permit. His potential Democratic successors have all expressed opposition.

The Democratic party even blasted TransCanada in a fundraising letter this week, a sign that the Canadian oil project could become a partisan issue at the centre of a protracted debate between Democrats and Republicans in the 2016 election campaign.

The Keystone saga not only cast a shadow over Canada-U.S. relations, but also inspired new fights against other pipelines. An oil company recently shut down a project in Alberta, blaming market conditions and also the potential shortage of infrastructure to move Canada’s land-locked bitumen.

In spite of all that opposition, oil exports have continued to rise. Recently published figures in the U.S. show that its intake of Canadian oil has jumped once again since last year, despite the noise over Keystone.

The company denies that any political calculations were behind its sudden request for a delay. In a statement Wednesday, the company repeated its arguments: pipelines are cleaner than train transport, previous State Department reports agree with their math and Keystone would create thousands of jobs.

As for the rejection of its delay request, the company said very little.

“We respect the decision,” said spokesman Mark Cooper.