President Barack Obama denied a permit for TransCanada Corp. (TRP)’s Keystone XL oil pipeline and will let the company file a revised route that avoids an environmentally sensitive area in Nebraska.

The decision by the State Department today was praised by environmentalists, who said the pipeline would add to U.S. greenhouse-gas emissions, and was decried by the U.S. oil and gas industry and Republican lawmakers, who had pushed President Barack Obama to approve the project as a way create jobs.

Obama acted before a Feb. 21 deadline Congress set after Obama in November postponed a decision while a revised Nebraska route is reviewed. TransCanada said the 1,661-mile (2,673- kilometer) project would carry 700,000 barrels of crude a day from Alberta’s oil to refineries on the U.S. Gulf of Mexico coast, crossing six U.S. states and create 20,000 jobs.

“I’m disappointed that Republicans in Congress forced this decision, but it does not change my administration’s commitment to American-made energy,” Obama said today in a statement. “We will continue to look for new ways to partner with the oil and gas industry to increase our energy security.”

TransCanada fell 47 cents to $41.27 at 3:24 p.m. in New York, and earlier today touched $39.74.

Canada Backs Pipeline

Canada will continue to support TransCanada Corp. (TRP)’s plans to build the Keystone XL pipeline, Canadian Foreign Minister John Baird said, adding that it is in the best interests of both Canada and the United States.

“The Department of State recommended to President Obama that the presidential permit for the proposed Keystone XL Pipeline be denied and, that at this time, the TransCanada Keystone XL Pipeline be determined not to serve the national interest,” according to an e-mailed statement. “The president concurred.”

The denial of the permit application doesn’t preclude any subsequent permit applications for similar projects, according to the State Department’s statement.

Environmentalists said the pipeline will add to greenhouse- gas emissions tied to climate change and endanger drinking water supplies in Nebraska. They have staged demonstrations outside the White House and vowed to withhold financial support to Obama’s presidential campaign if he approves the pipeline.

‘Oil Spills’

“The entire purpose of the pipeline is to move Canadian oil to the crude refineries in the Gulf so that it can be shipped overseas,” Jeremy Symons, a National Wildlife Federation vice president, said today in a phone interview. “If the pipeline is built, Canada gets the jobs, China gets the oil and American families get the oil spills.”

Protests in Nebraska and at the White House focused on the risks of a spill tainting the Ogallala aquifer in the state’s Sand Hills region. TransCanada has discussed alternate routes with state officials that would pose less risk to drinking-water supplies.

“We’re glad Keystone hasn’t been approved, but we’d like to see the pipeline rejected outright,” said Noah Greenwald, endangered species program director for the Center for Biological Diversity, in a phone interview. He said producing petroleum from oil sands releases more greenhouse gases and requires more water than conventional oil production.

‘Big Oil’

Wendy Abrams, who raised from $50,000 to $100,000 for Obama in 2008, according to the Center for Responsive Politics, had said rallying her friends around the president would be hard if he approved the pipeline. She said Obama has since shown that he’s not “in the pocket of Big Oil.”

She said Obama’s decision to reject the pipeline makes it tough on him “either way because the energy folks that have money to be made, will spend a ton of money on ads and it’s a one-way street because the environmental groups don’t have the billions to spend on ads defending their position.”

The decision was “politically motivated” and will make the U.S. more dependent on foreign nations “that don’t share our interests,” U.S. Chamber of Commerce President Thomas Donohue said today. The decision shows job creation is not a high priority for Obama, he said.

“The president’s decision sends a strong message to the business community and to investors: keep your money on the sidelines, America is not open for business,” Donohue said. “By placing politics over policy, the Obama administration is sacrificing tens of thousands of good-paying American jobs in the short term, and many more than that in the long term.”

Read More: http://www.bloomberg.com/news/2012-01-18/obama-administration-is-said-to-reject-transcanada-s-keystone-xl-pipeline.html