Nebraska and TransCanada Corp agreed on Monday to find a new route for the stalled Keystone XL pipeline that would steer clear of environmentally sensitive lands in the state.
Under pressure from green groups, the U.S. State Department last week ordered the company to find a new route for the line in a decision that set back the $7 billion, Canada-to-Texas pipeline by more than a year.
The pipeline would deliver 700,000 barrels a day of crude from Alberta's oil sands to Texas refineries. But environmentalists strongly oppose the project, because of the route, concerns about spills and carbon emissions from production of oil sands crude.
In the deal with Nebraska, the state would pay for the new studies to find a route that would avoid the Sandhills region and the Ogallala aquifer, which provides water for millions in the area.
I believe we will put the routing issue completely behind us, said Alex Pourbaix, TransCanada's president of Energy and Oil Pipelines. We have heard and we have listened to the people of the Sandhills.
A U.S. official said the Obama administration looks forward to working with TransCanada and Nebraska lawmakers at it moves forward in gathering the information it needs to make a final assessment.
The process requires a new Environmental Impact Statement for the new proposed route and based on prior projects similar in scope we expect it will take 12 to 18 months to complete, the official told Reuters.
The U.S. State Department still must give the final approval to the project because it crosses an international border. But the Obama Administration will likely not have to deal with the politically charged issue until after the 2012 election because of the time it takes to study a new route.
Nebraska State legislators will vote on the deal on Tuesday, Mike Flood, the legislature's speaker said.
TransCanada is willing to consider a route that sites the pipeline out of the Sand Hills, said Flood.
This is our land. These are our people. We will pay for this. It's the right thing to do.
In Washington to lobby for Keystone, Alberta Premier Alison Redford said the announcement was good news.
It's something I can be more optimistic about now than I could have been this morning, said Redford, emerging from a meeting with House Speaker John Boehner.
But the Republican chairman of the House Energy and Commerce committee, who was part of the meeting in Boehner's office, was less optimistic the deal could lead to a quicker decision.
If they look at rerouting, that takes a long time, committee chairman Fred Upton said. (Additional reporting by Roberta Rampton in Washington,