U.S. President Barack Obama appeared to reverse course on the controversial Keystone XL oil pipeline on Thursday, saying he was fast-tracking approvals on part of the project which he had earlier rejected.

Speaking in Cushing, Okla., Obama said the project would create jobs, improve the flow of oil to refineries, and eventually reduce gas prices for Americans.

"Today I'm directing my administration to cut through the red tape, break through the bureaucratic hurdles and make this project a priority," Obama said.

Keystone XL, a subsidiary of TransCanada Pipelines, had proposed a line from Alberta's oilsands all the way to refineries in Texas. But Obama put full approvals on hold earlier this year under mounting pressure from environmentalists.

On Thursday, he said the 780-kilometre southern leg of that proposal, running from Oklahoma to Texas and its Gulf Coast refineries, would go forward in an effort to clear a "bottleneck" point.

"The problem in a place like Cushing is we're actually producing so much oil and gas in places like North Dakota and Colorado that we don't have enough pipeline capacity to transport all of it to where it needs to go, both to refineries and eventually all a cross the country and around the world," Obama said.

"There's a bottleneck right here because we can't get enough of the oil to our refineries fast enough."

While Obama's decision to put the full Keystone XL project on hold until after the 2012 presidential election appeased environmentalists, it triggered intense criticism from Republicans who say Obama hasn't done enough to improve energy security or create jobs in the U.S.

CTV's Washington Bureau Chief Paul Workman said Obama's announcement Thursday was a shrewd political move.

"Here he turns around and says 'Look, I'm at least going to fast track a good portion of this pipeline and that's going to create jobs and it might just help in eventually bringing down the price of gasoline,'" Workman said.

Construction is expected to begin in Cushing this spring.

Obama also touted his administration's efforts to seek oil on U.S. soil, saying he has approved millions of acres of land in 23 states for oil and gas exploration, saying "we are drilling all over the place right now."

"Under my administration America is producing more oil today than at any time in the last eight years," Obama said.

Rising gas prices have become a key issue as the U.S. presidential election approaches. While Obama brought in a payroll tax cut that became the centrepiece of his jobs agenda late last year, rising gas prices could undermine the benefits of that plan.

Republican presidential hopefuls have already held up rising gas prices as evidence Obama hasn't done enough to protect Americans' pocketbooks.

Gas prices have risen more than 50 cents a gallon in the U.S. since January, climbing to about US$3.86 per gallon, largely due to tensions in Iran and Syria.

Republican presidential hopeful Rick Santorum has slammed Obama over gas prices, saying he has failed to open enough U.S. federal lands to oil exploration, therefore limiting the amount of domestic oil production.

"Here's an opportunity for us in this country to do something about it: increasing jobs, lowering energy prices, decreasing the deficit, all of the things you would think the president of the United States would be for," Santorum said recently in Louisiana.

Mitt Romney, widely seen as the frontrunner for the Republican presidential nomination, has described Obama's energy advisers as the "gas hike trio."

Obama was in New Mexico on Wednesday and will head to Ohio after Oklahoma.