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 TransCanada Corp's request to the State Department for a delay was
seen by many as an attempt to postpone the decision until after
President Barack Obama left office and a new president more friendly
to the plan took over in 2017.
The White House declined to comment on the State Department's
decision.
Secretary of State John Kerry has not given a timeline for making a
recommendation on the $8 billion project.
"The secretary believes that, out of respect for that process and
all the input that has gone into it, that it is the most appropriate
thing to keep that process in place, to continue the review," State
Department spokesman John Kirby told a news conference on Wednesday.
The State Department must issue a recommendation because the project
crosses the border with Canada.
Since it was proposed seven years ago, the pipeline has been the
heart of a struggle between environmentalists opposed to oil sands
development and defenders of fossil fuels.
 The nearly 1,200-mile (2,000-km) pipeline would carry 830,000
barrels a day of mostly Canadian oil sands crude to Nebraska en
route to refineries and ports along the U.S. Gulf Coast.
Senator John Hoeven, a Republican from North Dakota who has been a
major proponent of the project, believes Obama will turn down the
project before the climate change summit in France in December.
“The administration basically holds this project up for seven years
as a way to defeat through delay,” Hoeven said. “Now the company
asks for a year delay to complete the work in Nebraska, and the
Obama administration says no. That clearly shows that they intend to
turn down the project.”
Even if Obama kills Keystone, Hoeven believes the project will be
approved quickly on its merits if a Republican takes over the White
House in 2017.
All the Democratic presidential hopefuls, including front-runner
Hillary Clinton, oppose the project, while most of the Republican
presidential candidates support it.
Newly elected Canadian Prime Minister Justin Trudeau, who was sworn
in on Wednesday, has supported the Keystone XL pipeline, while
pledging to improve Canada's climate change record.
TransCanada said it respects the State Department's decision and
will continue to press for approval.
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"The fundamental question remains: Do Americans want to continue to
import millions of barrels of oil every day from the Middle East and
Venezuela or do they want to get their oil from North Dakota and
Canada through Keystone XL? We believe the answer is clear and the
choice is Keystone XL," said TransCanada spokesman Mark Cooper.
TransCanada's shares closed up 1.5 percent at C$45.10 on Wednesday.
Like many politicians, analysts are also expecting the U.S.
government to reject the project.
"Conventional wisdom seems to have it that the pipeline is going to
get denied, but who knows whether that's right or wrong," said
Steven Paget, an analyst at FirstEnergy Capital in Calgary. "At this
point it is completely mired in legal and regulatory issues, and
their attempts to pause the review to work out those issues have
been denied."
Environmental groups quickly praised the State Department move and
urged Obama to follow up by quickly rejecting the pipeline.
"Now that he’s called TransCanada for delay of game, it's time for
President Obama to blow the whistle and end this pipeline once and
for all," said Jamie Henn, communications director of 350.org, one
of the most vocal anti-Keystone activist groups.
(Additional reporting by David Alexander and Roberta Rampton in
Washington; Nia Williams and Mike Desouza in Calgary; Editing by
Lisa Shumaker and Matthew Lewis)
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