Nebraska Ruling Could Grant Obama Breathing Space On Keystone

Environmentalists could also try to delay approvals of terminals to export liquefied natural gas, potentially blocking part of the climate action plan Obama introduced last year to help create a global market for U.S. gas.

"Politically it raises the cost of the president's approving the permit, at least before the state issues are resolved," said Robert McNally, president of Rapidan Group, an oil consultancy, who was an energy advisor to former President George W. Bush.

The Nebraska ruling "gives Obama an excuse to punt the decision past the election," said McNally, who believes Obama will eventually approve Keystone to improve U.S. energy security and maintain relations with Canada.

NEBRASKA DELAYS

Nebraska judge Stephanie Stacy struck down a state law on Wednesday that allowed Governor Dave Heineman to approve the Keystone pipeline's path through the state.

TransCanada may now have to submit an application to the Nebraska Public Service Commission, and the agency's decision could take seven months or more. Stacy's ruling has also been appealed by the state's attorney general on behalf of Governor Dave Heineman, but it is uncertain how long the legal process will take.

The White House referred questions about the Nebraska ruling to the State Department.