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Part of Keystone pipeline to go ahead, company says

MSNBC panelists debate whether or not the pipeline is a "no-brainer."

The company behind the controversial Keystone oil pipeline between Canada's Alberta oil fields and the United States on Monday said it would start construction of a southern leg while studying ways to address environmental concerns in the key central portion.

The central stretch has been blocked by the U.S. State Department due to its potential impact in Nebraska, where Republicans as well as Democrats have raised concerns.


TransCanada Corporation said it intends to apply in the near future for approval of the central section once it works out an alternative route. "We would expect our cross border permit should be processed expeditiously and a decision made once a new route in Nebraska is determined," TransCanada President Russ Girling said in a statement issued by the company

In the meantime, the company noted Monday, the section from Cushing, Okla., to the Texas Gulf Coast will be built. The $2.3 billion section should be in service by late 2013, it stated, and will help to move crude oil backed up in Cushing.

The section north of Nebraska is currently being built and the entire $7 billion pipeline, if approved, would stretch 1,700 miles.

The project has become a lighting rod over energy policy, with Republicans claiming that President Barack Obama is undermining efforts to secure oil and natural gas from friendly sources.

Republicans earlier passed a bill that imposed a Feb. 21 deadline to approve or deny the project, but the Obama administration is waiting for Keystone's alternative before it makes a decision.

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The Obama administration had suggested development of an Oklahoma-to-Texas line to alleviate an oil glut at a Cushing storage hub.

White House press secretary Jay Carney said Obama welcomed the announcement.

"Moving oil from the Midwest to the world-class, state-of-the-art refineries on the Gulf Coast will modernize our infrastructure, create jobs, and encourage American energy production," Carney said in a statement. "We look forward to working with TransCanada to ensure that it is built in a safe, responsible and timely manner, and we commit to take every step possible to expedite the necessary federal permits."

TransCanada itself noted that the Obama administration had not ruled out the pipeline. "Reapplying for the Keystone XL permit is supported by words used in President Obama's statement January 18, 2012 when he said the denial of the permit was not based on the merits of the pipeline but rather on an imposed 60-day legislative timeline to make a decision on the project," it stated.

The overall project stalled at the State Department level in January as environmental objections over the pipeline's route and increased development of the Alberta oil sands boiled over, raising difficult political problems for Obama as the election year got under way.

Environmental groups have fought the pipeline tooth and nail, arguing that it would increase pollution from Canada's oil sands production and that jobs estimates are inflated.

The State Department is involved because the project would cross into the U.S. from another country.

Reuters and The Associated Press contributed to this report.

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