LINCOLN, Neb. - Canadian pipeline developer TransCanada will shift the route of its planned oil pipeline out of the environmentally sensitive Sandhills area of Nebraska, two company officials announced Monday night.

Speaking at a news conference at the Nebraska Capitol, the officials said TransCanada would agree to the new route, a move the company previously claimed wasn't possible, as part of an effort to push through the proposed $7 billion project. They expressed confidence the project would ultimately be approved.

Alex Pourbaix, TransCanada's president for energy and oil pipelines, said rerouting the Keystone XL line would likely require 30 to 40 additional miles of pipe and an additional pumping station. The exact route has not yet been determined, but Pourbaix said Nebraska will play a key role in deciding it.

The announcement follows the federal government's decision last week to delay a decision on a federal permit for the project until it studies new potential routes that avoid the Sandhills area and the Ogallala aquifer as the proposed pipeline carries crude oil from Canada to Texas Gulf Coast refineries.

Debate over the pipeline has drawn international attention focused largely on Nebraska, because the pipeline would cross the Sandhills - an expanse of grass-strewn, loose-soil hills - and part of the Ogallala aquifer, which supplies water to Nebraska and parts of seven other states.

Company officials had claimed that moving the route was impossible because of a U.S. State Department study which found the Sandhills route would leave the smallest environmental footprint.

Pourbaix said he was confident a new route would also avoid the parts of the aquifer that sit closes to the surface, which was a major concern cited by environmentalists and the region's landowners. He said moving it out of the Sandhills region would likely ease many of the concerns posed by landowners.

"We do remain confident that we could have built a safe pipeline through the original route that was approved by the State Department" in an environmental impact statement released earlier this year, Pourbaix said. "At the same time, it has always been a priority of TransCanada to listen to our stakeholders."

He added: "We're confident that collaborating with the state of Nebraska will make this process much easier."

The final federal decision on the pipeline will still likely take 12 to 18 months, a State Department official familiar with the process said Monday. The official spoke on condition of anonymity because no final decision has been made.

Delaying the decision on the pipeline went over badly in Canada, where it was seen as a signal that the country must diversify its oil exports away from the United States and toward Asia.

Canadian Prime Minister Stephen Harper said he made it clear in a weekend meeting with President Barack Obama that the nation will step up its efforts to sell oil to Asia since the decision was delayed, and would keep pushing the U.S. to approve the project.

"This highlights why Canada must increase its efforts to ensure it can supply its energy outside the U.S. and into Asia in particular," Harper said.

Harper said he emphasized the pipeline would mean economic growth on both sides of the border.

Business and labor groups who support the project say the environmental criticism is overblown, and based more on opposition to oil than the project itself. They say the project will create construction jobs, although the exact number is disputed.

Environmentalists and some Nebraska landowners fear the pipeline would disrupt the region's loose soil for decades, harm wildlife, and contaminate the aquifer.

The speaker of Nebraska's legislature, Mike Flood, said the state will conduct an environmental assessment of its own at state expense to determine a route that avoids the Sandhills area and other ecologically sensitive areas. The Nebraska Department of Environmental Quality will oversee the process, with collaboration from the U.S. State Department.

Noah Greenwald, a spokesman for the Center of Biological Diversity, said his group remains opposed to the pipeline and still believes it poses an environmental threat. The center is one of three environmental groups that have sued the U.S. State Department, seeking a judge's order to block the project.

"Even with the reroute, we still feel like we can push forward," he said. "We're going to keep up the public pressure on the administration as this moves forward."

Nebraska Gov. Dave Heineman had called a special legislative session to seek a legal and constitutional solution to the pipeline debate. But the session's stated goal - to enact oil pipeline legislation - has lacked a clear consensus about what, if anything, state officials ought to do.

Nebraska State Sen. Ken Haar of Malcolm, an outspoken pipeline critic, was pleased with Monday's announcement.

"It's good for the people of Nebraska. It's good for TransCanada," he said.

Associated Press writer Matthew Daly in Washington contributed to this report.