Canada toughens tone on Keystone approval

Tue Nov 1, 2011 2:39pm EDT
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By Bruce Nichols

HOUSTON (Reuters) - Canada is toughening its tone on the Keystone XL pipeline, warning the Obama administration that rejection of TransCanada Corp's $7 billion project could prompt Ottawa to concentrate on selling its oil-sands-derived crude to Asian customers instead.

"What will happen if there wasn't approval -- and we think there will be -- is that we'll simply have to intensify our efforts to sell the oil elsewhere," Joe Oliver, Canada's natural resources minister, told Reuters on Monday.

In the face of rising environmental opposition to the planned pipeline, which would carry 700,000 barrels per day of supply from Canada's oil sands projects to refineries on the U.S. Gulf Coast, the Obama administration has signaled that it may miss a year-end target for approval.

Oliver said a delay by the Obama administration would not be fatal to the project, and that TransCanada has multiple options -- including customers in Asia.

"It may be other parts of the United States, it may be a rerouted pipeline, and then, of course, there's Asia," Oliver said in an interview.

The increasingly heated debate pits environmental groups and some politicians raising fears over ecological destruction against other lawmakers and TransCanada, who say the project will create jobs and bolster energy security.

"While we still hope to make a decision by the end of the year, we are first and foremost committed to a thorough, transparent and rigorous review process," a U.S. official said last week on condition of anonymity.

The ruling falls to the State Department because the line crosses national borders. The decision has already been pushed back once.   Continued...

<p>A group of demonstrators rally against the controversial Keystone XL oil pipeline outside President Barack Obama's fundraiser at the W Hotel in San Francisco, California October 25, 2011. REUTERS/Stephen Lam</p>