Obama Admin Said to Reject Keystone Pipeline

The Obama administration will likely announce rejection of TransCanada Corp. (TRP)’s Keystone XL pipeline later today or tomorrow, according to two people familiar with the matter.

The rejection will probably come from the State Department which has been charged with reviewing the project and a joint statement will come from some of the larger unions and environmental groups in support of the decision, according to the person who spoke on the condition of anonymity before an announcement.

The administration will let TransCanada submit a new application for an alternate pipeline route, said a person familiar with the administration’s plans.

Labor unions and Republican lawmakers have urged President Barack Obama to approve the pipeline, which would carry 700,000 barrels of crude oil a day from Canada’s Alberta oil sands to refineries along the U.S. Gulf of Mexico coast, because they argue that it will create jobs and help the nation become more energy independent. Environmentalists have opposed the project, saying it will contribute to greenhouse-gas emissions and endanger drinking water supplies in Nebraska. They have staged demonstrations outside the White House and some vowing to withhold financial support to Obama’s presidential campaign if he approves the pipeline.
‘Big Oil’

Wendy Abrams, who raised from $50,000 to $100,000 for Obama in 2008, according to the Center for Responsive Politics, had said rallying her friends around the president would be hard if he approved the pipeline. She said Obama has since shown that he’s not “in the pocket of Big Oil.”

She said if Obama rejects the pipeline, “it’s going to be tough” on him “either way because the energy folks that have money to be made, will spend a ton of money on ads and it’s a one-way street because the environmental groups don’t have the billions to spend on ads defending their position.”

Obama’s administration in November delayed approving the project until after the 2012 election, saying it wanted to study an alternate route that would take the pipeline away from environmentally sensitive areas. Congress last month set a 60- day deadline for the administration to issue a pipeline permit.

Obama’s jobs council yesterday called for an “all-in” approach, urging an expansion of oil and gas drilling and an acceleration of projects including pipelines.

“We should allow more access to oil, natural gas and coal opportunities on federal lands,” the year-end report by the President’s Council on Jobs and Competitiveness said.