Keystone XL start welcomed by Obama

Barack Obama speaks at the White House Monday. | AP Photo

The rapid response underscores the political sensitivity of the pipeline and Obama's balancing act. | AP Photo

By DARREN GOODE | 2/27/12 2:07 PM EST

President Barack Obama "welcomes" the news that TransCanada will start building the southern portion of the Keystone XL pipeline, even as the White House continues to take shots for not approving the entire 1,700-mile route.

The rapid response from White House spokesman Jay Carney underscores the political sensitivity of the proposed pipeline and Obama's balancing act. The White House is trying not to anger its liberal base by approving the pipeline, but at the same time is publicly saying TransCanada should keep working on an alternative route through Nebraska.

Obama "welcomes today's news" from TransCanada, Carney's statement added. "As the president made clear in January, we support the company's interest in proceeding with this project, which will help address the bottleneck of oil in Cushing that has resulted in large part from increased domestic oil production, currently at an eight year high. Moving oil from the Midwest to the world-class, state-of-the-art refineries on the Gulf Coast will modernize our infrastructure, create jobs and encourage American energy production."

TransCanada also has sent a letter to the State Department stating the company plans to soon file a presidential permit application for the Keystone XL project from the U.S.-Canada border in Montana to Steele City, Neb. The company would supplement that application once an alternative route is found in Nebraska that avoids the state's Sandhills region.

Obama in January rejected granting a permit to the pipeline because work continues on finding that alternative route. Obama blamed his denial on his having to meet a 60-day deadline Republicans included in a must-pass short-term extension of the payroll tax cut in December.

"House Republicans forced a rejection of the company's earlier application in January, by not allowing sufficient time for important review or even the identification of a complete pipeline route," Carney said Monday. "But as we made clear, the president's decision in January in no way prejudged future applications. We will ensure any project receives the important assessment it deserves and will base a decision to provide a permit on the completion of that review."

"Our application will include the already reviewed route in Montana and South Dakota," TransCanada President and CEO Russ Girling said in a statement. "The over three year environmental review for Keystone XL completed last summer was the most comprehensive process ever for a cross-border pipeline. Based on that work, we would expect our cross-border permit should be processed expeditiously and a decision made once a new route in Nebraska is determined."

GOP energy strategist Mike McKenna said Monday's announcement "makes the president appear reasonable. After all, now he only has concerns about the Nebraska segment." He added: "Emphasis on the word 'appear.' It is, after all campaign season."

TransCanada said it expects the Cushing-to-Texas section of the pipeline to be online by late 2013, but the company also has to contend with an eminent domain lawsuit in Texas. A Texas county judge Friday dissolved a temporary restraining order blocking TransCanada from crossing a northeast Texas farm, AP reported.

350.org founder Bill McKibben, who has led the fight against the pipeline, cited the eminent domain issue in criticizing Monday's development.

"Even though this doesn't bring new oil in from the tar sands, we stand with our allies across the region who are fighting to keep giant multinational corporations from condemning their lands," he said. "This fight is uniting people, from environmentalists to tea partiers, in all kinds of ways."

Alex Guillén contributed to this report.

This article first appeared on POLITICO Pro at 1:59 p.m. on February 27, 2012.