Canadian pipeline company TransCanada wants to build a pipeline to carry oil from tar sands projects in Alberta, Canada, to refineries along the southern U.S. coast.
Critics say that type of oil poses a significant risk to the environment. Crews with energy company Enbridge in Michigan are cleaning up from an Alberta crude oil spill that occurred more than a year ago when a section of the Lakehead pipeline system burst.
Authorities in Nebraska said the proposed route for Keystone XL runs through the sensitive Sand Hills and the Ogallala aquifer, a source of drinking water for 1.5 million people.
Kerri-Ann Jones, assistant secretary at the Bureau of Oceans and International Environmental and Scientific Affairs, an agency at the U.S. Department of State, said during a conference call with reporters that concerns expressed by Nebraskans were valid.
"We have decided really to focus on looking at alternative routes that would minimize or avoid the Sand Hills," she said.
Additional reviews of the alternative route would likely delay the final decision on the project until after the 2012 presidential elections in the United States.
Environmentalists have pressured the White House to scrap the project. Erich Pica, president of environmental group Friends of Earth, said the State Department's decision to reconsider the route, and the possible delay, was a victory, adding he hoped the "announcement will halt TransCanada's pursuit of this pipeline."
Supporters of Keystone XL say the pipeline would boost the regional economy and energy security. If the United States doesn't want Canadian crude, they say, Alberta producers will likely ship it to China.
The Association of Oil Pipelines notes that roughly 10 percent of the Canadian crude delivered to the United States is from tar sands. Enbridge this week said it was ready to build two pipelines in the United States that would carry Canadian crude.
Russ Girling, president and chief executive officer at TransCanada, said in a statement that, while the delay would have a negative impact on the regional oil sector, his company would continue working on the project.
"We remain confident Keystone XL will ultimately be approved," he said. "This project is too important to the U.S. economy, the Canadian economy and the national interest of the United States for it not to proceed."