03/07/2012 11:13 pm ET Updated May 08, 2012

Keystone Pipeline: Senate To Vote On Competing Plans

* Senator says exports of oil, fuels could hurt U.S.

* Competing Republican amendment would approve Keystone

* Both amendments face uphill battle to pass

By Roberta Rampton

WASHINGTON, March 7 (Reuters) - The U.S. Senate could vote as early as Thursday on competing plans for the future of the Keystone XL crude oil pipeline as part of a highway funding bill, Majority Leader Harry Reid said on Wednesday.

Reid, a Democrat, said he reached an agreement with Republican leaders in the Senate that will allow debate on a Republican bill to approve TransCanada's $7 billion project to bring Canadian oil sands to Texas refineries, along with a Democratic plan to ban exports from the pipeline.

The Keystone amendments are two of 30 measures that could be voted on in coming days as the Senate pushes to renew funding for highways and other infrastructure projects, slated to run out at the end of March.

Both amendments face an uphill battle attracting the 60 votes that Reid said would be required for their passage in the 100-member Senate. But they will provide a chance for fresh debate on the controversial project, which President Barack Obama put on hold pending further environmental review.

Republicans have sought to make the Keystone delay an issue in the November presidential election, and the recent increase in U.S. gasoline prices has bolstered arguments by pipeline supporters that oil coming from Canada would bolster U.S. energy security.

The pipeline would carry crude from Canadian oil sands to Texas refineries, and would also pick up U.S. crude from North Dakota and Montana along the way.

A Republican amendment, championed by Senator John Hoeven of North Dakota, would sidestep the need for presidential approval and allow Congress to approve the project. But any bill containing such a measure would still require Obama's signature.

Last year, U.S. exports of refined products like diesel exceeded imports of such fuels for the first time since 1949, the U.S. government said, crediting strong world demand and increased supplies from Canada and North Dakota.

Democratic Senator Ron Wyden proposed an alternative on Wednesday that would ban exports of oil from the pipeline as well as refined products made from the oil.

Wyden said he believed booming U.S. oil and gas production gave the United States a competitive advantage that could be lost if exports were allowed without more analysis.

"I am increasingly concerned about the export of American energy," Wyden told Reuters. "We have seen this dramatic shift in our energy policy and it's kind of like we're on autopilot to start exporting," he said in an interview.


Wyden said his amendment "puts teeth" into claims the pipeline would boost U.S. energy supplies.

"You see all over television, commercials and enormous sums of money spent by the advocates who constantly keep talking about how this is going to strengthen domestic energy security," Wyden said. "This amendment guarantees that."

The vast majority of the fuel made from Keystone oil would stay in the United States, said Ryan Bernstein, an aide to Hoeven, who said the Democratic proposal would be a setback for the pipeline, if it passes.

Some refined products such as high-sulfur diesel and petroleum coke need to be sold outside the country, where there are markets for them. Keeping them inside the United States would increase the costs of the project and could lead to higher gasoline prices, Bernstein said.

Wyden said his amendment would allow for broad presidential waivers for exports in cases where they were truly needed.

It would also require that U.S. iron and steel be used in the pipeline to create more U.S. jobs.

His plan would keep the presidential permitting process, rather than handing the authority to Congress, but would add a 90-day deadline for a decision on the pipeline once all environmental reviews were complete.

Republicans in the U.S. House of Representatives have passed the energy portion of their transportation bill, which would grant Keystone a permit. A similar proposal for a ban on oil and fuel exports failed in the House.

TransCanada Corp has said it will split the $7 billion project in two and build the southern leg between the Cushing, Oklahoma storage hub and Texas refineries.