The pipeline system that now ends in Oklahoma would extend the pipes to allow Canadian crude oil extracted from oil sands to flow to the Gulf of Mexico, CNNMoney.com reported Thursday.
The U.S. State Department is expected to submit an environmental impact statement on the project early next year.
The oil sands areas of Canada are about the size of Texas, but the heavy oil requires heating to allow it to flow through standard drilling procedures or it can be mined, like coal.
The mining system also requires heat to separate the oil from the sand, adding up to an increase of carbon dioxide emissions of 5 percent to 30 percent compared to most oil production.
The pit required to mine oil in oil sands areas could also be the size of Rhode Island, CNNMoney.com reported.
"We see this as a disaster on many levels," said Ryan Salmon, energy policy adviser at the World Wildlife Fund.
"At the site itself, you're looking at basically wholesale destruction of the ecosystem," he said.
Environmental groups recently concluded a $500,000 advertising effort opposing the project.
But some reason that extraction would continue, anyway, as China is willing to purchase the oil if the United States does not.