Obama rejects Canada-to-U.S Keystone XL pipeline

WASHINGTON (Reuters) - U.S. President Barack Obama on Friday rejected the proposed Keystone XL oil pipeline from Canada in a victory for environmentalists who have campaigned against the project for more than seven years.

"The pipeline would not make a meaningful long-term contribution to our economy," Obama told a press conference. He said the pipeline would not reduce gasoline prices for drivers, and shipping "dirtier" crude from Canada would not increase U.S. energy security.

The denial of TransCanada Corp's more than 800,000 barrels per day project will make it more difficult for producers to develop the province of Alberta's oil sands. It could also put the United States in a stronger position for global climate talks in Paris that start late this month in which countries will aim to reach a deal to slow global warming.

Keystone XL would have linked existing pipeline networks in Canada and the United States to bring crude from Alberta and also some from North Dakota to refineries in Illinois and, eventually, the Gulf of Mexico coast.

TransCanada first sought the required presidential permit for the cross-border section in 2008 but the proposal inspired a wave of environmental activism that turned Keystone XL into a rallying cry to fight climate change. Blocking Keystone became a litmus test of the green movement's ability to hinder fossil fuel extraction in Canada's oil sands.

"This is a big win," said Bill McKibben, the co-founder of 350.org, an environmental group. "President Obama’s decision to reject Keystone XL because of its impact on the climate is nothing short of historic, and sets an important precedent that should send shockwaves through the fossil fuel industry."

TransCanada and other oil companies said the pipeline would have strengthened North American energy security, created thousands of construction jobs and helped to relieve a glut of oil in the country's heartland.

But since 2008 the United States has experienced a drilling boom boosting oil production 80 percent and contributing to a slump in domestic oil prices from above $100 a barrel to about $44.

(Reporting by Jeff Mason and Timothy Gardner; writing by Timothy Gardner; Editing by Lisa Lambert and James Dalgleish)