Obama ends seven-year saga: rejects TransCanada’s Keystone XL pipeline

Shot to heart of Canada's oil sands industry.

US President Barack Obama has rejected Canadian energy giant TransCanada’s(TSX, NYSE:TRP) application to build the Keystone XL pipeline, capping this way a seven-year saga that became one of the biggest environmental flashpoints of his presidency.

The decision, reported by The Wall Street Journal but not yet officially confirmed, comes on the heels of the rejection of TransCanada's request to pause the review of the proposed Keystone XL oil pipeline, a decision expected to lead to the project's rejection by the Obama administration.

President Barack Obama and Secretary of State John Kerry are expected to address the media later today.

In 2008, TransCanada first applied for a permit application to build the 1,897km (1,179-mile) pipeline, which would carry 800,000 barrels of crude a day from Alberta o Steele City, Nebraska, where it could join an existing pipeline.

The company spent at least $2.5 billion on the project, whose total cost if built would have been at least $10 billion due to delays and increased permitting costs.

The rejection of Keystone is nothing but bad news for Canada’s economy. Oil sands production has been increasing steadily and is set to rise further as new projects come on stream, in spite of the fall in oil prices. At the same time, existing pipelines to take oil out of Alberta are already close to full capacity.

For environmentalists, including top Democratic donors, the decision represents a victory as they spent heavily in hopes of defeating the project, which they say would have drastically increased emissions blamed for global warming.

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