TransCanada, the Canadian pipeline developer, will shift the route of its planned oil pipeline out of the environmentally sensitive Sandhills area of Nebraska. Speaking at a news conference at the Nebraska Capitol, company officials said TransCanada would agree to the new route for the Keystone XL pipeline, a move the company previously claimed was not possible, as part of an effort to push through the proposed $7bn (£4bn) project. They expressed confidence the project would be approved.

Alex Pourbaix, TransCanada's president for energy and oil pipelines, said rerouting the Keystone XL line would require about 30 to 40 additional miles of pipe and another pumping station. The exact route has not been determined, but Pourbaix said Nebraska would play a key role in deciding it.

The announcement follows the federal government's decision last week to delay a decision on a permit for the project until it studies other potential routes that avoid the Sandhills area and the Ogallala aquifer as the proposed pipeline carries crude oil from Canada to Texas Gulf Coast refineries.

Debate over the pipeline has drawn international attention focused largely on Nebraska, because the pipeline would cross the Sandhills an expanse of grass-strewn, loose-soil hills and part of the Ogallala aquifer, which supplies water to Nebraska and seven other states.

Company officials had claimed that moving the route was impossible because of a US state department study which found the Sandhills route would leave the smallest environmental footprint.

Pourbaix said he was confident a new route would also avoid the parts of the aquifer that sit closes to the surface, which was a major concern cited by environmentalists and the region's landowners. He said moving it out of the Sandhills area should ease many of the concerns posed by landowners.

"We do remain confident that we could have built a safe pipeline through the original route that was approved by the state department," Pourbaix said earlier this year. "At the same time, it has always been a priority of TransCanada to listen to our stakeholders. We're confident that collaborating with the state of Nebraska will make this process much easier."

The final federal decision on the pipeline will could take 12 to 18 months, a state department official said on Monday.

Delaying the decision on the pipeline disappointed many in Canada, where it was seen as a signal that the country must diversify its oil exports away from the US and toward Asia.

The Canadian prime minister, Stephen Harper, said he made it clear in a weekend meeting with President Barack Obama that the nation would step up its efforts to sell oil to Asia since the decision was delayed, and would keep pushing the US to approve the project.

"This highlights why Canada must increase its efforts to ensure it can supply its energy outside the US and into Asia in particular," Harper said, adding that he emphasised the pipeline would mean economic growth on both sides of the border.

Business and labour groups who support the project say the environmental criticism is overblown, and based more on opposition to oil than the project itself. They say the project will create construction jobs, although the exact number is disputed.

Environmentalists and some Nebraska landowners fear the pipeline would disrupt the region's loose soil for decades, harm wildlife, and contaminate the aquifer.

The speaker of Nebraska's legislature, Mike Flood, said the state would conduct its own environmental assessment to determine a route that avoids the Sandhills region and other ecologically sensitive areas. The Nebraska department of environmental quality will oversee the process, with collaboration from the US state department.

Noah Greenwald, a spokesman for the Centre of Biological Diversity, said his group remained opposed to the pipeline and believed it posed a serious environmental threat. The centre is one of three environmental organisations that have sued the US state department, seeking a judge's order to block the project. "Even with the reroute, we still feel like we can push forward," Greenwald said. "We're going to keep up the public pressure on the administration as this moves forward."

The Nebraska state governor, Dave Heineman, had called a special legislative session to seek a legal and constitutional solution to the pipeline debate. But the session's stated goal to enact oil pipeline legislation lacked a clear consensus about what, if anything, state officials ought to do.

The Malcolm, Nebraska, state senator, Ken Haar, an outspoken pipeline critic, was pleased with the announcement. "It's good for the people of Nebraska; it's good for TransCanada," he said.

(AP / The Guardian, 15/11/2011)