In Major Twist, TransCanada Asks US to Pause Keystone XL Review

In a surprise move that could have a political ripple effect in two countries, the company behind the controversy-plagued Keystone XL pipeline has asked the U.S. government to temporarily suspend its application.

Monday's request from TransCanada Corp. adds a new dimension to one of the biggest Canada-U.S. political irritants of recent years, potentially making the pipeline a 2016 U.S. election issue to be settled by the next president.

In a letter to U.S. Secretary of State John Kerry, the Calgary-based company suggested the administration should withhold its decision while the Nebraska portion of the route remains disputed.

It represented a major turn of events for an already-epic, years-long battle, since replicated in similar fights across the continent over other pipelines to export Canada's land-locked oilsands bitumen.

"TransCanada believes that it would be appropriate at this time for the State Department to pause in its review of the Presidential Permit application for Keystone XL," said the letter.

"This will allow a decision on the permit to be made later based on certainty with respect to the route of the pipeline."

It's an about-face in the company's message. Until recently, it would have been unimaginable for TransCanada or its government backers in Ottawa to be requesting a delay, given their repeated demands for immediate approval of a project that would carry nearly one-quarter of all Canadian oil exports.

With opposition on multiple fronts, opponents say, the company obviously hopes to step back and return to the fray under more favourable conditions, not unlike a military tactical retreat.

The Nebraska political activist who organized ranchers against the project urged President Barack Obama to ignore the company's request and reject the pipeline now.

"They are doing this for one reason -- TransCanada hopes a Republican gets into office because they all said they would approve (it)," Jane Kleeb said in an email.

"TransCanada is facing a loss, they know it. So this is their last chance to try and save their project."

Obama could decide this year

Its short-term political prospects seem dim indeed. Obama has repeatedly expressed skepticism. His supporters overwhelmingly expect him to reject it. All the major Democratic presidential candidates also oppose it.

But the pipeline has widespread backing among Republicans. A delay now would almost inevitably punt the issue into the next presidency. Republican candidate Marco Rubio has already said he hopes to work with Canada's next prime minister on the issue.

For prime minister-designate Justin Trudeau, a delay could also affect his new government. He's spoken repeatedly about improving relations with the Obama administration and working with it on climate change.

A delay could offer a reprieve from an early sore point. A pause on Keystone virtually guarantees the initial Obama-Trudeau encounters could focus on other topics, as they cross paths several times this month at the G20, APEC, and Paris climate summits. There's a big question mark, however, hanging over this delay request.

The U.S. government hasn't yet responded. In fact, just a few hours earlier Monday, a White House spokesman was signalling a decision during Obama's final term.

"Our expectation at this point... is that the president will make a decision before the end of his administration," Josh Earnest told reporters.

"It's possible (it could happen this year). It's also possible it could happen next year."

The delay idea was billboarded entirely by the company.

And it featured a hairpin-sharp plot twist. In a reversal of roles befitting this seven-year soap opera, the company is now basing its request on a precedent that infuriated it not too long ago.

In early 2014, the U.S. announced a delay. It said it couldn't make a decision on granting a cross-border permit for the pipeline route, because the route was tied up in litigation in Nebraska.

The company and the Canadian government fumed at that. The route is no longer being fought in court. It's back to being reviewed by Nebraska's arm's-length public-services commission.

And the company is now citing what happened in 2014 as a custom: "The company believes there is sound precedent," it said in a statement, "for making this (delay) request."