(Adds quotes from Senator Hoeven on potential challenges,
Canada's Prime Minister Trudeau, U.S. state department official)
By Timothy Gardner and Jeff Mason
WASHINGTON, Nov 6 (Reuters) - U.S. President Barack Obama on
Friday rejected the proposed Keystone XL oil pipeline from
Canada in a victory for environmentalists who campaigned against
the project for more than seven years.
"The pipeline would not make a meaningful long-term
contribution to our economy," Obama told a press conference. He
said it would not reduce gasoline prices, and shipping "dirtier"
crude from Canada would not increase U.S. energy security.
The denial of TransCanada Corp 's TRP.TO more than 800,000
barrels per day project will make it more difficult for
producers to develop the province of Alberta's oil sands. It
could also put the United States in a stronger position at
global climate talks that start in Paris on Nov. 30 in which
countries will aim to reach a deal to slow global warming.
U.S. Secretary of State John Kerry, who determined the
pipeline was not in the country's interest before Obama's final
decision, said approving Keystone "would significantly undermine
our ability to continue leading the world in combating climate
change."
Keystone XL would have linked existing pipeline networks in
Canada and the United States to bring crude from Alberta and
North Dakota to refineries in Illinois and, eventually, the Gulf
of Mexico coast.
TransCanada first sought the required presidential permit
for the cross-border section in 2008 but the proposal provoked a
wave of environmental activism that turned Keystone XL into a
rallying cry to fight climate change. Blocking Keystone became a
litmus test of the green movement's ability to hinder fossil
fuel extraction in Canada's oil sands.
"This is a big win," said Bill McKibben, co-founder of the
environmental group 350.org which helped make Keystone a symbol
of a movement to slow global oil output. Obama's decision "is
nothing short of historic, and sets an important precedent that
should send shockwaves through the fossil fuel industry."
TransCanada and other oil companies said the pipeline would
have strengthened North American energy security, created
thousands of construction jobs and helped relieve a glut of oil.
But since 2008 the United States has experienced a domestic
drilling boom which has boosted oil production 80 percent and
contributed to a slump in U.S. oil prices CLc1 from above $100
a barrel to about $44.
CANADA-U.S. RELATIONSHIP
Newly sworn in Canadian Prime Minister Justin Trudeau, a
supporter of Keystone, voiced disappointment but said the
Canada-U.S. relationship "is much bigger than any one project."
urn:newsml:reuters.com:*:nO8N0WT00Z
TransCanada Chief Executive Russ Girling said the company
would review its options to potentially file a new application
for a pipeline to bring oil sands crude to the United States.
"Today, misplaced symbolism was chosen over merit and
science, rhetoric won out over reason," he said in a statement.
A senior U.S. State Department official left open the
possibility TransCanada could seek a different decision under
another U.S. administration, telling reporters: "for the State
Department to reconsider the application at any time, the
company would have to reapply."
TransCanada had asked the Obama administration on Monday to
pause the review in a move seen by many as an attempt to
postpone a decision until a new U.S. president took over in
2017. urn:newsml:reuters.com:*:nL1N12X2K2 TransCanada shares fell 5.2 percent on the
Toronto stock exchange on Friday to C$42.90.
All the Democratic U.S. presidential candidates, including
front runner Hillary Clinton, oppose the pipeline while most
Republican candidates are in favor.
Friday's rejection was a loss for Republicans on Capitol
Hill who in January had made Keystone their top issue of the new
Congress. They passed a bill that would have allowed Congress to
decide on the pipeline, legislation Obama vetoed.
Senator John Hoeven, a Republican of oil-producing North
Dakota, said TransCanada would be able to challenge the decision
under international trade agreements such as NAFTA or the World
Trade Organization.
Obama's decision will have a "chilling effect" on any
company considering building energy infrastructure, which could
leave the United States at risk in the long term of not having
the pipelines it needs, Hoeven said in an interview.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic: http://graphics.thomsonreuters.com/15/keystone/
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>