U.S. President Barack Obama announced he accepted a recommendation from the U.S. State Department to deny TransCanada's application for construction of the Keystone XL pipeline.
TransCanada wants to build the pipeline to carry oil from tar sands projects in Alberta to refineries along the southern U.S. coast. This, the company said, would uncork a bottleneck at a major oil hub in Cushing, Okla., that exists because of a lack of pipeline capacity.
Obama blamed Republican opponents for imposing an "arbitrary" deadline for the pipeline decision. Republicans inserted a measure into a bill extending payroll tax benefits that gave Obama until Feb. 21 to make a decision. This, said the White House, gave his administration little time to review the project effectively.
Russ Girling, president and chief executive officer at TransCanada, said the company anticipated the decision but was moving ahead anyway to keep the project on schedule.
"We will reapply for a presidential permit and expect a new application would be processed in an expedited manner to allow for an in-service date of late 2014," he said.
Girling said until Keystone XL is built, the United States will continue to get "millions of barrels of conflict oil" from unsavory regimes.
Critics of Keystone XL expressed concern over the potential environmental effects of oil from tar sands projects in Alberta.
The Canadian government, in response to Obama's decision, said it would look to Asian markets to diversify its economy.