Keystone bill faces defeat in U.S. Senate: Harry Reid

Protests against Keystone pipeline

WASHINGTON — The U.S. Senate could vote as early as Thursday on a plan to take quick action on the Keystone XL crude oil pipeline, a bid that will likely be defeated by Democrats but that gives its Republican supporters an opening to criticize President Barack Obama's energy policies.

Obama put the $7 billion project on hold pending further environmental review. Republicans argue the pipeline, which would ship oil from Canada and northern U.S. states to Texas, would create jobs and improve energy security at a time of surging gasoline prices.

The Republicans' Keystone amendment to a highway funding bill would need 60 votes to pass, meaning at least 13 Democrats would have to vote in favor of the measure for it to advance.

Senate Majority Leader Harry Reid told reporters on Thursday he believes the plan will be defeated.

Some Democratic senators have spoken in support of TransCanada's pipeline in the past. Obama has called some Democratic senators to ensure they would vote against the Republican plan, a White House official said.

Republicans have sought to make Keystone an issue in the November presidential and congressional elections, linking Obama's delay to rising gasoline prices.

"At a moment when millions are out of work, gas prices are sky-rocketing and the Middle East is in turmoil, we've got a president who's up making phone calls trying to block a pipeline here at home. It's unbelievable," said Senate Minority Leader Mitch McConnell.

Obama has supported construction of the southern leg of the pipeline, and his administration will assess a new route around an environmentally sensitive area of Nebraska once it has been identified, White House spokesman Clark Stevens said.

"Once again, Republicans are trying to play politics with a pipeline project whose route has yet to be proposed," Stevens said.

DEMOCRATS PROPOSE TO BLOCK EXPORTS

The Republican amendment is among 30 measures - many of them energy related - to 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.

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.

Senators will also vote on a proposal from Democratic Senator Ron Wyden that would block exports of oil from the pipeline, as well as refined products made from the oil.

Senator John Hoeven of North Dakota, who has championed the Republican plan to advance the pipeline, said the Democratic alternative would be too restrictive.

"That amendment will block this project, let there be no confusion," Hoeven said on the Senate floor.

Refiners need to be able to export some fuel products that are not widely used in the United States, otherwise their costs - and gasoline prices - would rise, he said.

Wyden told Reuters 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."

Wyden's Keystone amendment will give Democratic senators a plan to support to show they are also concerned about rising gasoline prices, said Whitney Stanco, an energy policy analyst with Guggenheim Securities.

"By offering an alternative, Democrats are hoping to prevent either measure from reaching the 60-vote threshold," Stanco said in an email to clients.