TransCanada, the company trying to build the Keystone XL pipeline, has split off a domestic pipeline from the one that crosses a national border, moving to begin work on a pipeline from Cushing, Oklahoma to Port Arthur, Texas. The segment from Canada down to Cushing, however, will need a separate permit application and could take years to get approval. But the White House seems on board for the Cushing-to-Port Arthur segment, which does not require State Department approval:

The move by TransCanada would alleviate the glut of oil at Cushing, a major terminal, and address one of the main reasons for building the controversial Keystone XL pipeline. Plans for the segment of pipeline crossing the U.S.-Canada border would come “in the near future” the company said [...]

In a statement Monday, White House spokesman Jay Carney said Obama welcomes TransCanada’s plans for the southern pipeline segment, and he pledged that the new application for the cross-border section would receive a thorough assessment.

“We support the company’s interest in proceeding with this project, which will help address the bottleneck of oil in Cushing that has resulted in large part from increased domestic oil production, currently at an eight-year high,” Carney said of the section from Oklahoma to the Gulf of Mexico. “Moving oil from the Midwest to the world-class, state-of-the-art refineries on the Gulf Coast will modernize our infrastructure, create jobs, and encourage American energy production.” Carney said the administration would “take every step possible to expedite the necessary federal permits” for the segment.

A small part of the cause of the run-up in gas prices has been refinery shutdowns. I don’t think facilitating this small amount of domestic oil supply to the refineries will make a huge difference, but there are job-creation elements to this. TransCanada claims that the project will create 4,000 jobs.

This will not allow for the transport of tar sands oil from Canada in any way, although it will help shale oil from North Dakota and elsewhere in the Midwest to get to market. In fact, it makes the Keystone project a little less vital, because the domestic infrastructure to get Midwest oil to the refineries will already be in place. And of course, TransCanada will have to admit to less job creation coming from the Keystone project.

I wouldn’t call this a setback for environmentalists necessarily, other than the fact that oil economy infrastructure generally delays a transition to a post-carbon economy that will preserve the planet.