The U.S. State Department said Thursday it will evaluate an alternative route for the controversial Keystone XL oil pipeline, postponing a final decision on the project until after the 2012 elections.

"(G)iven the concentration of concerns regarding the environmental sensitivities of the current proposed route through the Sand Hills area of Nebraska, the Department has determined it needs to undertake an in-depth assessment of potential alternative routes in Nebraska," the State Department said in a statement.

Based on its experience with similar review processes and their typical timetables, "it is reasonable to expect that this process ... could be completed as early as the first quarter of 2013."

President Barack Obama said he supported the State Department's decision.

"Because this permit decision could affect the health and safety of the American people as well as the environment, and because a number of concerns have been raised through a public process, we should take the time to ensure that all questions are properly addressed and all the potential impacts are properly understood," he said in a statement.

The $7 billion pipeline, which would be used to transport oil from Canada through the central United States to the Gulf of Mexico, has pitted environmentalists and Nebraska farmers on one side against labor unions and business groups.

Environmentalists say the conduit will pose a serious threat to sensitive wetlands in Sand Hills, while proponents, including Republicans in Congress, maintain that it will help create jobs and reduce dependence on Middle East oil.

On Sunday, thousands of opponents of the pipeline formed a human chain around the White House to demand the president stop the project.