Canada's Flaherty less optimistic on Keystone prospects

Fri Jan 25, 2013 1:35pm EST
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* Flaherty says Obama's speech "not encouraging"

* Washington to decide on Keystone XL in coming months

* Industry evaluating alternative routes

DAVOS, Switzerland, Jan 25 (Reuters) - U.S. President Barack Obama's emphasis in his inaugural address on fighting climate change may not bode well for the contentious project to build the Keystone XL oil pipeline, Canada's finance minister said on Friday.

The Canadian government has been an enthusiastic supporter of TransCanada Corp's plan to build the $5.3 billion pipeline, which would open up a huge new market on the U.S. Gulf Coast for crude derived from oil sands in Alberta.

Washington faces a decision in the next few months on whether to approve the project, a possible cure for deeply discounted Canadian crude prices.

"I had reason for optimism before the election that the president would approve it, were he re-elected, but his speech the other day was not encouraging," Finance Minister Jim Flaherty told Reuters at the World Economic Forum in Davos.

Obama promised in his address on Monday to combat climate change, citing recent fires, drought and storms, "knowing that the failure to do so would betray our children and future generations". The United States had to be a leader in sustainable energy, Obama said, putting the issue as a matter of national security and economic opportunity.

Environmental groups oppose Keystone XL, saying it would encourage more carbon-intensive tar sands development.   Continued...