A new report says the Keystone XL pipeline would pose negligible impact to Nebraska, clearing a significant hurdle to move unconventional sources of Canadian oil from oil sands to the Gulf Coast, said David Tameron, senior analyst, Wells Fargo Securities.

The TransCanada (NYSE: TRP) pipeline was previously rejected over environmental concerns.

The “pipeline has cleared a significant hurdle,” Tameron said Jan. 7. “We expect the report could be the catalyst for some volatility in the WCS-WTI differential, but should have no significant impact on equities.”

Construction and operation of Keystone XL is expected to have “minimal environmental impacts in Nebraska,” the state’s Department of Environmental Quality (NDEQ) said in a final report issued Jan. 4. The report also said that during the operational phase of the proposed pipeline the Nebraska reroute would not “significantly affect regional or national air quality.”

However, NDEQ found that hazardous materials such as lubricant, fuels, oils and other materials commonly found on a construction site could cause environmental damage to local surface and groundwater supplies vegetation and wildlife in the event of an accidental release.

The report had no recommendation on the proposed 194.5-mile alternative route to avoid the Sandhills region, which had been cited as the environmentally sensitive area that prohibited construction of the northern portion of the pipeline, Tameron said. The southern portion has already been approved.

Nebraska Gov. Dave Heineman has 30 days to review the report before making a recommendation to the U.S. State Department.

In January 2012, President Obama killed the pipeline on the recommendation of the secretary of state, citing concerns about health and safety and environment impact.

A March 2012 Gallup poll found that 57% of adults thought the pipeline should be approved, including 81% of Republicans and 44% of Democrats.

TransCanada reapplied to construct the 1,179-mile Keystone from Alberta to Nebraska. TransCanada has said it anticipates approval of the Presidential Permit application ? which is required because the pipeline crossed the U.S./Canadian border ? in the first quarter of 2013. The company plans to invest more than $1 billion in Nebraska infrastructure related to the 36-inch diameter pipeline.

TransCanada noted that the NQEQ found:

? Construction of Keystone XL will result in $418.1 million in economic benefits and support up to 4,560 new or existing jobs in Nebraska.

? The project will generate $16.5 million in taxes from pipeline construction materials and is expected to yield up to $13 million in local property tax revenues in its first full year of valuation.

? Normal operation of the pipeline is expected to have no effect on ground or surface water quality or use along the pipeline route in Nebraska.

“In the unlikely event of a spill from the pipeline, impacts on water resources would be localized and would not impact the Ogallala Aquifer as a whole,” the company said.

NDEQ said Keystone has committed to the state funding for a public liaison, liability insurance and private well testing

The company’s original Keystone Pipeline began operating in 2010, and has delivered more than 350 million barrels of oil to refineries in the U.S. Midwest without incident. Keystone XL is designed to carry about 830,000 barrels of oil from Alberta, Montana and North Dakota to Steele City, Neb.

In 2011, TransCanada paid more than $2.3 million in state and local taxes here in Nebraska on its original Keystone pipeline. “In 2012, the tax bill we will pay in Nebraska is expected to be two to three times more than in 2011,” TransCanada said in a news release.

“The State Department will have the final word on the project. In our view, the project remains possible and some indications suggest that the administration could ultimately support the project,” Tameron said.

The report was a review by NDEQ that included extensive public input gathered during a seven-month public comment period.

“The re-route ensures Keystone XL will have minimal environmental impact by avoiding the area defined as the Nebraska Sandhills, crossing fewer miles of threatened and endangered species habitat and considerably fewer miles of erodible soils,” said Russell Girling, TransCanada’s president and chief executive officer. “It also moves the route to the down-slope side of two wellhead protection areas.”

TransCanada has said the pipeline has “overwhelming support” from American and Canadian producers and U.S. refiners who have signed 17- to 18-year contracts to ship oil.