The Obama administration has put on hold its most contentious environmental decision – whether to approve the Keystone XL pipeline – in a move likely to delay any action on the controversial project until after November’s midterm elections.



The State Department announced on Friday it would “provide more time” for a review into the pipeline, ostensibly due to ongoing litigation in a court in Nebraska. It did not say when the consultation is likely to be concluded.



The project would expand an existing pipeline from the vast tar sands of Alberta, Canada, to refineries in the US midwest, transporting crude oil to refineries on the Gulf coast of Texas.



Earlier this year the State Department, in a final review of the $5.4bn project, found that the pipeline would not have a “significant” effect on carbon pollution, a conclusion that cleared a significant hurdle in the way of the pipeline being approved.



The final decision rests with President Barack Obama, who will determine whether Keystone XL, which has been more than five years in the planning, is in the US national interest. There is no deadline for the president’s decision but the State-led consultation, which involves eight other government agencies and was initially projected to last just 90 days, needs to be completed first.



State is playing a central role in the process because the pipeline crosses a border, with Canada. The project is being funded by a Canadian company, TransCanada, and is viewed as significant for relations between the two countries.



Officials did not say how long the extension would last, insisting the case taken up in the Nebraska supreme court could alter the route of the pipeline, with repercussions for a number of agencies.



A senior administration official rejected the suggestion the postponement was a politically motivated.

“There is no intent to delay the process,” the official said.



Asked if a decision would be taken before November’s elections, the same official – who spoke to reporters by phone on the condition of anonymity – replied: “I can’t render a judgment on when a final decision will take place. We want this to take place as expeditiously as possible.”



The Nebraska supreme court took up the Keystone XL case in February, after a district court sided with landowners who objected to the pipeline route. Pressed at the time over whether the court case would delay the decision, the State Department suggested it would not.

Pipeline runs through key electoral states

Demonstrators carry a replica of a pipeline during a march against the Keystone XL pipeline in Washington Photograph: Richard Clement/Reuters Photograph: RICHARD CLEMENT/REUTERS

The proposed pipeline route stretches 1,660 miles, north to south, through Montana and South Dakota – two Senate seats Republicans are trying to seize from Democrats in November. The pipeline decision is also threatening to become a major obstacle for Democrats in Louisiana, where the party’s incumbent, Senator Mary Landrieu, backs the project.



Had Obama backed Keystone XL prior to November, he risked infuriating his Democratic base, many of whom see the decision as a signature test of his environmental capabilities. On the other hand, a decision not to proceed with the pipeline would have undermined several Democratic Senate campaigns, particularly in Louisiana.



Landrieu, who has long been a strong advocate for the oil and gas industry, has already received almost $1m from the sector in campaign contributions, and was recently made chair of the Senate energy committee. Support for Keystone XL is a central plank of her campaign.



“Today’s decision by the administration amounts to nothing short of an indefinite delay of the Keystone pipeline. This decision is irresponsible, unnecessary and unacceptable," Landrieu said in a statement.



Other pro-oil and coal Democrats running for Senate in crucial, energy-producing states include Natalie Tennant of West Virginia, Alison Lundergan Grimes of Kentucky and Mark Begich of Alaska. Begich and Landrieu were among 11 Senate Democrats – five of whom are up for re-election – to sign a letter last week urging Obama to approve the Keystone XL deal before May.



Analysts expect Louisiana and Alaska to be pivotal states in determining the balance of power in the Senate. Republicans, who control the House of Representatives, hope to gain control of the Senate, which would be disastrous for Obama’s final two years in the White House.



There are already about 2.3 million miles of pipeline across the US, carrying oil and natural gas, but the battle over Keystone XL has become a proxy war over climate change.



Environmentalists, including many Democrats, believe the Keystone battle could help determine North America’s future energy policy. Republicans have in recent weeks campaigned hard over Keystone XL, saying it would lower US energy costs and create around 140,000 jobs – a figure extrapolated by proponents of the pipeline in the energy industry.



State estimates the project would create 5,000-6,000 construction jobs. Last July Obama put the figure even lower: just 2,000 construction jobs, and then 50-100 jobs a year.



This is not the first time the Obama administration has kicked the Keystone XL controversy into the long grass. After the pipeline grew into a contentious issue for environmentalists, in early 2012, Obama blocked the deal.



At the time, the president said his decision had nothing to do with the merits of the proposed pipeline, blaming Republicans in Congress for insisting on a deadline that prevented the State Department from conducting the research necessary to make an informed decision.

“It’s disappointing President Obama doesn’t have the courage to come out and reject Keystone XL right now, but this is clearly another win for pipeline opponents,” said Jamie Henn, communications director for 350.org, which has led campaigns against the Keystone XL project.

“We’re going to keep up the pressure on him to make the right call and continue to expand our broader fight against the fossil fuel industry.”