By Kevin O'Hanlon and Ethan Lou
LINCOLN, Nebraska/CALGARY, Alberta (Reuters) - Nebraska regulators approved a route for TransCanada Corp's (TO:TRP) Keystone XL pipeline through the state on Monday, lifting the last big regulatory obstacle for the long-delayed project that U.S. President Donald Trump wants built.
The 3-2 vote by the Nebraska Public Service Commission helps clear the way for the pipeline linking Canada's Alberta oil sands to refineries in the United States, but is likely to be tied up for years in court challenges by opponents who say the project is an environmental risk.
"We are going to fight like hell to make sure this pipeline never gets built," said Jane Kleeb, the head of anti-pipeline Bold Nebraska, a political advocacy group.
The commission's approval was not for TransCanada's preferred route, but for a more costly alternative that would add five miles of pipeline along with an additional pumping station and transmission lines.
TransCanada Chief Executive Officer Russ Girling said in a statement that the company will review the commission's decision and assess how it will affect the cost and schedule of the project. The company's stock rose 1.3 percent after the vote to C$63.35.
The proposed line has been a lightning rod of controversy since it was first advocated nearly a decade ago with environmentalists making the project a symbol of their broader fight against fossil fuels and global warming. Business groups and Trump, a Republican, said it could boost the economy.
Alberta province Premier Rachel Notley cheered the commission's decision, saying the pipeline "will mean greater energy security for all North Americans."
The administration of former U.S. President Barack Obama, a Democrat, considered the project for years before rejecting it in 2015 on environmental grounds.
But Trump swiftly reversed that decision after coming into office this year, handing TransCanada a federal permit for the pipeline in March and arguing the project will lower fuel prices, boost national security, and create employment. Trump has said Keystone XL would create 28,000 jobs nationwide. But a 2014 State Department study predicted just 3,900 construction jobs and 35 permanent jobs.
Trump's decision placed the pipeline's fate into the hands of the obscure regulatory body in Nebraska, the only state that had yet to approve the pipeline’s route. Permits along Keystone XL's path have already been approved in Canada, Montana and South Dakota.
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Opposition to the line in Nebraska has been driven mainly by a group of around 90 landowners whose farms lie along the proposed route. They have said they are worried spills could pollute water critical for grazing cattle, and that tax revenue will be short-lived and jobs will be temporary.
Rancher Randy Thompson stood in the hearing room after the decision and shook his head. "Common sense has gone out the window on this project," he said.
Just days ago, TransCanada's existing Keystone system spilled 5,000 barrels in South Dakota and pipeline opponents said the spill highlighted the risks posed by the proposed XL expansion.
The company said last week's spill was contained and being cleaned up.
The project could be a boon for Canada, which has struggled to bring its vast oil reserves to market. But there are questions about demand for the pipeline after a surge in drilling activity in the United States.
"Considering the growth of oil output in the U.S. ... the economics of importing the heavy crude from Canada is not fully justified," said Chirag Rathi, director at business consultancy Frost and Sullivan in Texas.
TransCanada has said it has received adequate support to make the pipeline viable. But it has yet to announce results of its open season to gauge interest among shippers, which closed at the end of October.
Zachary Rogers, refining and oil markets research analyst at Wood Mackenzie, said if the line is built the biggest winners will likely be Alberta's oil companies, which have been struggling for years to expand their markets.
"Assuming Keystone XL gets built, the biggest winners will likely be West Canadian producers," he said.