The Obama administration said Thursday it would study an alternate route for a controversial US-Canada oil pipeline, and pushed back its final decision on the project until 2013 -- after next year's presidential elections.

President Barack Obama's Republican opponents quickly slammed the decision on the Keystone XL project as one that would cost thousands of jobs. Canada's prime minister also regretted the move, while environmentalists hailed it.

After months of wrangling over how to proceed with the multi-billion-dollar plan to pump oil from Canada's tar sands to the Gulf of Mexico, the State Department said it needed more time to assess its environmental implications.

The department said its move was based on specific concerns about the Sand Hills area of Nebraska, which is along the proposed pipeline route from Canada's Alberta province to refineries in Texas.

Sand Hills has "a high concentration of wetlands of special concern, a sensitive ecosystem, and extensive areas of very shallow groundwater," the State Department said, noting that public concern had mounted over time.

"Given the concentration of concerns regarding the environmental sensitivities of the current proposed route" through Sand Hills, "the Department has determined it needs to undertake an in-depth assessment of potential alternative routes in Nebraska," it said.

The State Department, which is handling public consultations as the pipeline would run across the border with Canada, had initially expected to issue its final decision by year's end.

But on Thursday, it said it was "reasonable to expect" that its review process "could be completed as early as the first quarter of 2013" -- after Obama bids for re-election in November 2012.

The project puts two of Obama's goals -- energy independence and cutting back on greenhouse gas emissions -- at odds. It also pits environmentalists and labor, both usually key Democratic Party supporters, against each other.

Activists fear an accident along the 1,700-mile (2,700-kilometer) pipeline would be disasterous for aquifers in central US Great Plains states.

The route proposed by TransCanada would pass through the US states of Montana, South Dakota, Nebraska, Kansas and Oklahoma before ending up in Texas.

Others oppose the project because exploiting the tar sands requires energy that generate a large volume of greenhouse gases.

In its long-awaited environmental impact statement on the project, the State Department said in August that the pipeline would be safer than most current oil transportation systems.

Obama said he supported the decision to "seek additional information" before deciding whether to give the go-ahead to the $7 billion project, which is part of the broader $13 billion Keystone pipeline system.

"Because this permit decision could affect the health and safety of the American people as well as the environment... we should take the time to ensure that all questions are properly addressed," Obama said in a statement.

But the Republican speaker of the House of Representatives, John Boehner, slammed the delay, saying: "More than 20,000 new American jobs have just been sacrificed."

Canadian Prime Minister Stephen Harper said he was "disappointed" with the decision, insisting the pipeline would "create thousands of jobs and billions in economic growth on both sides of the border."

But he noted: "We remain hopeful the project will be decided on its merits and eventually approved."

Environmental pressure groups hailed the delay as a victory.

"This is a major accomplishment for the climate movement and the people in the pipeline's path, demonstrating the tremendous power of ... grassroots activism," Friends of the Earth head Erich Pica said in a statement.

The group, which campaigned hard against the project, praised Obama "for rejecting a defective environmental impacts analysis that was corrupted by bias, lobbyist influence and conflicts of interest."

However the group warned: "Make no mistake: this fight is not over. Ultimately, this dangerous pipeline must not be built."

Susan Casey-Lefkowitz with the Natural Resources Defense Council (NRDC) said it was a "a tremendous victory," and praised Obama for "displaying leadership and a continued strong commitment" to protecting the environment.

In Canada, the pro-environment Pembina Institute underlined the "stark contrast" between Washington's decision and Harper's "active promotion" of the Enbridge Northern Gateway project, a planned pipeline which would move Alberta tar sands oil to Canada's west coast.