The State Department said yesterday that it would conduct an extra environmental review of a controversial $7 billion pipeline project dearly sought by oil companies but bitterly opposed by green groups.

The Keystone XL pipeline would nearly double U.S. imports of crude from the Canadian oil sands if it wins the State Department permit for which it first applied more than two years ago. But the draft environmental review released by the department last year came under fire from U.S. EPA, which charged the agency with failing to fully consider the pipeline's effects on emissions and wetlands, and even raised concerns among Republicans in Nebraska who sought more study of how Keystone XL would affect their state's ecologically sensitive Ogallala Aquifer.

The department's announcement that it would seek public comment in mid-April on a supplemental environmental impact statement (EIS) for Keystone XL, then, registered as something of a victory for environmentalists who condemn the pipeline plan as a spur for continued U.S. oil dependence.

Nevertheless, green groups responded cautiously to the schedule for consideration sketched out by the Obama administration, which the State Department said would include a public meeting in Washington, D.C., ahead of a final decision on the pipeline's permit bid before the end of the year.

Alex Moore, fuels campaigner for Friends of the Earth, said that he hoped the extra review would not amount to a supplemental EIS "in name only."

"To do this job right, the State Department must analyze the air pollution and oil spills that can be expected from this pipeline, as well as explore alternative routes that avoid the Ogallala Aquifer," Moore said via e-mail. "If they don't, they will have a lot of angry ranchers to deal with."

Susan Casey-Lefkowitz, international program director at the Natural Resources Defense Council, echoed that sentiment in a statement warning that the extra review "of pipeline impacts needs to be carefully done."

"The law points to some very thorough analysis required for a supplemental environmental impact statement and frankly, this timeline seems unrealistic within that context," she added.

The vast oil sands resources being tapped by Canada are a potent draw for Republicans and the oil industry, where the pipeline is viewed as a way to secure imported crude without bearing the brunt of Middle Eastern instability. The American Petroleum Institute deemed the extra EIS "unwelcome news" in a statement but indicated continued hope for Keystone XL's approval by citing the potential for "regulatory certainty" provided by the added environmental assessment.

"This much-studied and much-needed pipeline would provide a critical link to our largest energy supplier, Canada, and its vast resources of nearby and available crude oil," API President Jack Gerard said. "It is past time for the administration to approve this important infrastructure investment."

Consumer Energy Alliance Vice President Michael Whatley, whose group includes oil and gas companies as well as the U.S. Chamber of Commerce, said he was "disappointed that they've announced another set of delays" for the pipeline.

"I'll give State credit, because they've done a really good job of looking at all the issue sets they need to be looking at in terms of making a determination" on Keystone XL, Whatley said in an interview.

Aligning with recent calls from Republicans to secure the pipeline's permit, Whatley cited the rising price of gas as an impetus "to get these resources on the table now and to have these jobs created now."

The pipeline's sponsor, Calgary, Alberta-based TransCanada Corp., estimates that upward of 13,000 jobs would be created by allowing the project to go forward. Set to run more than 1,700 miles through six U.S. states en route to refineries on the Gulf Coast, Keystone XL would come on line in 2013, according to TransCanada.

In the interim, however, the State Department's process is just one hurdle that the project must clear. Green advocates, concerned landowners and other critics in Nebraska are pushing for state policymakers to prohibit the construction of pipelines in sensitive areas -- a designation that could include the Ogallala and force a rerouting of the project.

Sen. Mike Johanns (R-Neb.), who lodged his own request for an extra EIS last year, called State's announcement "the right thing to do," putting his concerns in perspective by describing the protection of the aquifer as his central priority (E&ENews PM, Oct. 15, 2010).

"I believe there are better options to protect the Ogallala Aquifer," Johanns said in a statement, adding that he is a supporter of pipelines. "I am pleased that our state helps move much needed crude oil to refineries. My objection to the Keystone XL pipeline stems from sloppy routing and incomplete analysis."