President Obama assured protesters yesterday that he understood their concerns about a proposed Canada-U.S. oil pipeline amid reports that his administration may delay a decision on the TransCanada project until next year.

Obama said "no decision had been made" about Keystone XL as 14 members of Congress called for an investigation of the State Department's environmental review of the project, which would roughly double the amount of Canadian crude coming into the United States.

The multiple action underscored the tension surrounding Keystone XL, as State must weigh whether to grant the $7 billion TransCanada pipeline a cross-border permit. It would deliver a form of oil that is more carbon-intensive to produce than traditional forms of oil, a fact that sparked climate change protests at the White House and the Canadian House of Commons earlier this year.

Supporters of the project say it would wean the United States off of foreign oil, create jobs and matter little in terms of climate change, considering Canada releases about 2 percent of global emissions.

The new questions about a delay, reported by Reuters via an unnamed U.S. "official," also put the fate of the entire project in doubt, considering its dependence on existing oil shipping agreements. The news organization reported the official as saying the department may miss the year-end deadline.

Delivery contracts at risk

"A delay in Keystone XL [additional review] may threaten contractual deadlines in 2014 to deliver Canadian crude oil to Gulf Coast refineries," TransCanada spokesman Terry Cunha told ClimateWire yesterday.

The shipping agreements are important because they provide financing for the proposal, said Anthony Swift, a policy analyst at the Natural Resources Defense Council.

Without the agreements, there could be a push to consider alternative pipeline proposals, including one to build a pipeline from Cushing, Okla., to Texas, analysts said.

That could relieve an oil bottleneck in Cushing, but it also could dampen the projected level of production in the oil sands region of Alberta, considering that producers there are currently counting on Keystone XL. The overall carbon dioxide emissions of the oil sands depend on production levels in Alberta, since the greenhouse gas profile of oil-sands crude is the same as those of other types of oil once it is in a vehicle (ClimateWire, July 25).

"Adding a million barrels of capacity daily to move tar sands crude would send a huge signal to financial markets," said Swift. "It is a signal that other projects elsewhere wouldn't send."

Neb. could add another delay

Earlier this week, Nebraska Gov. Dave Heineman (R) called a special session of the state Legislature to address concerns about oil pipelines, in a move that also could delay Keystone XL's construction if state lawmakers pass new rules rerouting the oil line.

Cunha said, though, that that speculation about a delay was "nothing new," adding that "we expect a decision by year end."

Meanwhile, the politics over the pipeline ramped up yesterday.

Before making comments on the project at a speech in Denver, Obama was heckled by activists holding a 5-foot banner reading, "Stop the Keystone Project."

This time last year, Secretary of State Hillary Rodham Clinton raised ire in the environmental community by suggesting that her department was "inclined" to approve the pipeline.

The letter from three U.S. senators and 11 representatives of the Democratic caucuses cited prior press reports about links between TransCanada lobbyists and the Obama administration and raised concerns that the State Department used Cardno Entrix, a former TransCanada client, to help with the environmental review process.

Sent to State's Office of Inspector General, the letter called for a new investigation to ensure a "thorough, unbiased" review of the project, including its impact on climate change.

"It is imperative that the State Department process be free of actual or apparent conflicts of interest, and that the process fully meets both the letter and spirit of all federal laws, including but not limited to the National Environmental Policy Act," the lawmakers wrote.