UPDATE 6-U.S. will not pause Keystone review; Obama expected to reject

(Adds comments from Senator Hoeven and analyst)
By Valerie Volcovici
WASHINGTON, Nov 4 (Reuters) - The United States formally
denied a request on Wednesday to pause the review of the
proposed Keystone XL oil pipeline, a decision expected to lead
to the project's rejection by the Obama administration.
TransCanada Corp 's TRP.TO 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.
"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 (N:FE) 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.