The controversial Keystone XL oil pipeline has suffered a major setback, with President Obama's Jan. 18 announcement that the State Dept. denied a permit for the $7-billion project. But the pipeline's supporters say that it is too soon to call the project dead.

TransCanada, the Calgary-based energy company that wants to build the pipeline, says it will reapply for a U.S. permit. In addition, GOP congressional leaders, furious at the administration's decision, say they will push to ensure that the pipeline eventually gets built.

“All options are on the table,” House Speaker John Boehner (R-Ohio) told reporters shortly after the president issued his announcement. "This fight is not going to go away," Boehner added.

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Obama left the door open for another application to be filed. But he said that the administration had no choice but to deny the current permit application because the State Dept. did not have enough time to perform an environmental review of the project. Lawmakers included a provision requiring an expedited, 60-day review of the pipeline in a bill enacted on Dec. 23, which also extended a payroll-tax cut.
 
Russ Girling, TransCanada’s president and CEO, said in a statement that his firm “remains fully committed to the construction of Keystone XL." He added, "Plans are already under way on a number of fronts to largely maintain the construction schedule of the project.” Girling also said that he anticipates that a new application "would be processed in an expedited manner to allow for an in-service date of late 2014."

The pipeline would stretch from Alberta through Midwestern states to the Gulf of Mexico.

Many construction groups and labor unions want to see the pipeline constructed. Steve Hall, American Council of Engineering Companies vice president for government affairs, calls the administration's move a "very disappointing decision, given what this project would do in terms of creating jobs and contributing to more energy self-sufficiency."

Terry O' Sullivan, Laborers' International Union of North America president said: “The score is job-killers, two; American workers, zero. We are completely and totally disappointed. This is politics at its worst.”

Oil industry officials and GOP leaders also offered withering criticism of the White House action. Calling Obama’s decision “an abdication of responsibility,” Jack Gerard, American Petroleum Institute president and CEO, said, “How can you say you’re for creating jobs, and reject the largest shovel-ready project in America today?”

Boehner said he would work with other lawmakers to develop legislation in the coming weeks and months to get the project back on track. He said the project has bipartisan support. House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) said he wants Secretary of State Hillary Clinton to testify before his panel next week about the Keystone decision.

But environmental groups were quick to endorse the president’s decision. Frances Beinecke, president of the Natural Resources Defense Council, said, “Rather than bringing America energy security, the pipeline would have transported dirty Canadian tar sands oil through America's heartlands—for export to other countries.”

Congressional Democrats, such as Rep. Henry Waxman (D-Calif.), ranking member of the Energy and Commerce Committee, and Senate Environment and Public Works Committee Chairman Barbara Boxer (D-Calif.), also praised the administration for rejecting the permit.