Keystone XL pipeline: Company to sue over rejection

A depot used to store Keystone pipes in North Dakota Image copyright Reuters

TransCanada, the company behind the disputed Keystone XL pipeline project, has filed a formal request to sue the US government for damages.

The pipeline, which was designed to carry oil from Canada to refineries in the US, was rejected by US President Barack Obama last November.

It would have allowed for an increase in the supply of oil from the oil sands in Alberta in Canada.

But President Obama said it was not in the "national interests" of the US.

The pipeline's construction has been hotly disputed for more than seven years, with environmentalists saying it would do irreparable damage.

The Canadian National Energy Board approved the Keystone XL pipeline in March 2010, but because it would have run across the US/Canada border, the project required a presidential permit before construction.

There is already a Keystone pipeline running from Alberta to refineries in Illinois and Texas, but the new pipeline would have followed a more direct route to Steele City in Nebraska.

TransCanada made its intention clear in January to recover costs through arbitration. It is filing its claim for $15bn in damages under North American Free Trade Agreement (NAFTA) provisions.

Supporters of the Keystone XL pipeline said it would create thousands of jobs during its construction period and help decrease America's dependence on oil from the Middle East. They also argued that more oil on the market would lead to lower fuel prices for consumers.

But President Obama rejected those claims and said it would not create jobs in the long term.