The long-debated Keystone XL pipeline project will be debated a while longer. The U.S. State Department postponed its decision on extending the Keystone pipeline to the Gulf Coast until 2013, effectively putting off expected gains for TransCanada (NYSE: TRP) as well. While the lack of extra shipping capacity could crimp production growth in the oil sands, other companies are stepping up with their own proposals to pump crude all the way to Texas refineries. Will it be enough to serve Canada's increasing production, or is this delay only going to keep supplies scarce and prices high?

Who might get hurt?
Keystone XL was more than just a longer pipe; it was also a bigger one, with capacity expected to increase to 1.1 million barrels per day. Oil sands production has already surpassed that figure and is reaching for 3 million barrels of daily production by 2018, so major oil sands producers could certainly use the capacity.

Suncor Energy (NYSE: SU) is the largest current oil sands operator, which puts a heavier burden on its expansion if no new shipping options are available. Its operating capacity is currently listed at 440,000 barrels of crude bitumen per day, and it also holds a stake in Syncrude's 407,000 barrels of daily production.

Syncrude's partnership also includes Murphy Oil, Imperial Oil, Sinopec, Mocal Energy, and Nexen Oil. Canadian Natural Resources (NYSE: CNQ) and Royal Dutch Shell (NYSE: RDS-A) are also major oil sands operators, with about 150,000 barrels per day of capacity each. The Keystone XL pipeline expansion could have transported nearly all the oil these companies are producing, but that oil must find some other way of getting to refineries. Valero Energy (NYSE: VLO), as a major Keystone XL refinery partner, will surely lose out in the near term.

Stepping up to the plate
All is not lost, despite the delay. Enbridge (NYSE: ENB) has been planning a pipeline from Cushing, Okla. (where the current Keystone pipeline ends) to Gulf refineries. The Wrangler pipeline, as it's called, is a joint endeavor with Enterprise Products Partners (NYSE: EPD) and is expected to have a capacity of 800,000 barrels per day, making up most of the difference between the current Keystone capacity and its proposed expansion.

Since the construction time for the Keystone XL pipeline could be about two years, Enbridge's Wrangler pipeline needs to get going soon. Wrangler could be completed by mid-2013, and it might even reduce oil prices slightly -- though this could easily be offset by any number of political or economic problems that could crop up in the interim.

The Foolish bottom line
However, with oil sands production expected to hit 3 million barrels per day in a few years, will Wrangler be enough? An analyst at FirstEnergy Capital believes that Keystone XL is still necessary, and it's hard to disagree -- the two pipelines' combined capacities would be a million barrels less than 2018 targets. That oil has to go somewhere, and wouldn't our economy be better served if it flowed into America's refineries? TransCanada and most oil sands producers certainly believe so, so it will fall to the State Department and President Obama to determine the final strength of our Canadian pipeline connections.

To stay on top of pipeline progress, or to monitor any other development in these companies' financial futures, add them to your Watchlist now. If you're looking for an oil stock with less Canadian exposure, take a look at The Motley Fool's free report on one well-positioned company that's set to capitalize on the rising cost of oil.