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UPDATE 1-Studying new Keystone US route may take 12-18 months
Wed Nov 9, 2011 4:13pm GMT
WASHINGTON Nov 9 (Reuters) - The United States may decide within weeks whether to pursue a new route for the Keystone XL Canada-to-Texas pipeline, a move that could delay a final decision beyond the 2012 U.S. election, a U.S. official said on Wednesday.
U.S. President Barack Obama's decision on the pipeline is being scrutinized by environmentalists who oppose the project and by proponents, who say it would create jobs, the central issue in his 2012 re-election campaign.
As a result, TransCanada Corp.'s proposed $7 billion pipeline may become a political hot potato for the administration. Some of Obama's liberal supporters have strongly opposed the project and the president risks alienating this important constituency ahead of the November 2012 election if his administration approves it.
Further delay on the project, which is already about a year behind schedule following an extended U.S. government review process, could roil oil markets.
Asked how long evaluating a new route might take, the U.S. official who spoke to Reuters said "the best judgment is somewhere between a year and 18 months." He said the timeframe was based on past experience and was not a precise estimate.
"Generally speaking it takes a year to 18 months," he said, saying it could happen faster but was unlikely to be completed in less than a year.
Traders are counting on Keystone's 700,000 barrel-per-day capacity to relieve a build-up of crude in the U.S. Midwest, which does not have enough pipelines to ship growing Canadian output to Gulf Coast refineries for use around the United States.
TransCanada Chief Executive Russ Girling warned recently that another extended delay in the regulatory process would lead oil shippers and refiners to abandon support for the project, rendering it uneconomic to build.
(Reporting by Arshad Mohammed, editing by Will Dunham and Bill Trott)