Washington (Platts)--26Feb2013/439 pm EST/2139 GMT

Because of the influence of environmental groups, the Obama administration will likely reject the Keystone XL pipeline, a Republican member of Congress said Tuesday in Washington.

"Some think it is a 50-50 proposition," US Representative Lee Terry said. "But the environmental movement has made it their No. 1 issue and has put the White House in a predicament. I just don't think the administration will approve it."

Speaking before the Natural Gas Roundtable, the Nebraska Republican said Secretary of State John Kerry had opposed the pipeline when he was a Democratic senator from Massachusetts. Now it is Kerry's responsibility to present recommendations to the president, Terry said. The State Department is required by law to make a national interest determination on the pipeline.

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The proposed 1,700-mile pipeline system would carry tar sands from Canada's Alberta province to US refineries along the Gulf of Mexico. The Keystone XL segment would run 850 miles from Hardisty, Alberta, to Steele City, Nebraska, carrying up to 700,000 b/d initially and up to 830,000 b/d after planned pumping upgrades.

On another matter, Terry said he supports proposals to export US-produced liquefied natural gas because he believes natural gas producers can meet US industrial, commercial and residential demand.

"We have an incredible surplus of gas. There is a lot we can do with it," he said. "If there is enough that can be exported and used somewhere else, then as a free market person I can't put up a barrier" to exports of gas.

On another issue, Terry said financiers and producers have told him their greatest concern regarding future natural gas production is uncertainty over possible federal regulation of hydraulic fracturing, the technique that has unlocked oil and gas reserves from shale formations.

"When you have a number of federal agencies looking into fracking, that causes uncertainty," he said. "People know when a federal agency is looking at something; they are looking to regulate it in some way."

Terry said the House Energy and Commerce Committee, of which he is a member, "is looking at a proposed bill that would just say the states have the explicit jurisdiction over fracking. The states are in the best position to know what the specific regulations should be."

--Rodney White, rodney_white@platts.com
--Edited by Jason Lindquist, jason_lindquist@platts.com

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