12/17/2011 10:38 EST | Updated 02/16/2012 05:12 EST

Keystone Pipeline: U.S. Senate Pressures Obama To Approve

Flickr: shannonpatrick17
WASHINGTON - The U.S. Senate has approved a budget legislation that contains a provision demanded by the Republicans to pressure President Barack Obama into approving construction of a Canada-to-Texas oil pipeline.

The Republicans have cited the 2,735-kilometre Keystone XL pipeline as an example of a project that could put people back to work.

Obama recently announced that he was postponing a decision on the pipeline until after the 2012 elections to allow for more time to study the environmental ramifications of the proposal.

An agreement reached by Senate leaders Friday night and approved during a rare Saturday session would require Obama to decide within 60 days whether to grant a permit for the pipeline.

But the legislation also allows Obama to decide not to do so if he determines that the pipeline is "not in the national interest."

One senior administration official said the president would almost certainly refuse to grant a permit. The official was not authorized to speak publicly.

TransCanada Corp. (TSX:TRP), the Calgary-based energy giant that wants to build the pipeline, issued a guarded statement on Saturday saying it "respects" the discussion that has occurred in Washington in recent weeks.

"We look forward to learning in the coming days how this latest development will affect the ultimate approval process for our project," said Russ Girling, TransCanada’s president and chief executive officer.

"What today’s vote indicates is that the majority of Congress supports the benefits Keystone XL will bring to the United States."

The pipeline would carry oil from Western Canada to Texas Gulf Coast refineries, passing through Montana, South Dakota, Nebraska, Kansas and Oklahoma. The project is expected to create up to 20,000 jobs.

Also approved Saturday was a two-month extension of a cut in the Social Security payroll tax and jobless benefits for the long-term unemployed.

Democratic and Republican leaders went with just a short extension after failing to agree on big enough spending cuts to pay for a full-year renewal of the payroll tax cut.

The two percentage point tax cut affects 160 million taxpayers. The weekly jobless payments average about $300 for millions of people who have been out of work for six months or more.

In a statement, White House communications director Dan Pfeiffer indicated Obama would sign the two-month extension measure.

The statement made no mention of the pipeline.

With files from The Canadian Press

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