Just read this on market watch.I thought this pipeline has been discussed earlier so it looks it will be built.Could this be good news for the canadain oil industry?

SAN FRANCISCO (MarketWatch) — A proposed pipeline stretching from Canada to the United States may contribute to a rise in the nation’s prices for oil, and has the potential to significantly change the landscape of the market.

It’s called the Keystone Gulf Coast Expansion Pipeline Project, or Keystone XL, and a final decision on permit approval for the project is expected to come by the end of the year.

TransCanada

Map of the Keystone Pipeline Project.

“The entire pipeline, when all four phases are done, would deliver 1.3 million barrels a day of crude to the U.S.,” said Terry Cunha, a spokesman for TransCanada Corp. /quotes/zigman/27173 CA:TRP -0.46% , /quotes/zigman/27155/quotes/nls/trp TRP +0.27% , which would construct and operate the system.

Phases 1 and 2 of the Keystone Pipeline Project have been operating for more than a year, but phases 3 and 4 require permit approval, he added.

The pipeline would stretch from Hardisty, Alberta in Canada, crossing six states and serving markets at Cushing, Okla. (the delivery hub for New York Mercantile Exchange-traded crude), Houston and Port Arthur, Texas.

Once completed, the pipeline “will definitely have an effect on the [West Texas Intermediate] crude-oil benchmark posting for use as an index by the big Wall Street investors,” said Bob van der Valk, a petroleum-industry analyst based in Terry, Mont.

A lack of transportation options for oil at Cushing had contributed to a glut of the commodity in storage at the delivery hub, prompting prices for WTI crude, which had previously been used as a global benchmark, to trade significantly lower than Brent crude traded in London.

On Thursday, Nymex crude /quotes/zigman/2084377 CL1Z -0.43% closed up to $93.96 a barrel, while Brent on ICE Futures finished above $112.

“An increase in tar sands [also known as oil sands] and domestic production has caused a bottleneck of crude oil at Cushing,” according to van der Valk. “The WTI contract price has been depressed when compared to its counterpart Brent and no longer reflects global oil supply and demand.”

Keystone XL will not only be transporting Alberta oil-sands crude oil, but also oil from the Bakken formation to Cushing, and in turn, to the U.S. Gulf Coast refineries, he said.

Oil sands in Alberta contain a rich source of heavy crude and the Bakken is also an oil resource — a formation of shale source rock covering parts of North Dakota, Montana and Saskatchewan.

Having a transportation system for oil from these resources to the Gulf would substitute current imports from overseas sources, added van der Valk.

Decreasing reliance

So the pipeline has the potential to help the United States decrease its reliance on offshore imports, which could make domestic supplies more stable.

“Unlike the Middle East and North Africa, there is little country risk of a supply interruption,” said James Williams, an energy economist at WTRG Economics. “We haven’t been at war with Canada since 1812.”

About 20% of oil imports come from the Persian Gulf, and most of that would be cut off temporarily if the Straight of Hormuz was blockaded, he added. Currently, members of the Organization of the Petroleum Exporting Countries account for around 48.5% of our oil imports.

“With the low risk associated with Canada, this is a no-brainer,” commented William