November 5, 2015 / 9:05 PM / 2 years ago

UPDATE 2-New Canada government backs Keystone pipeline -foreign minister

(Adds transport minister remark on need for social license for pipelines, last two paragraphs)

By David Ljunggren

OTTAWA, Nov 5 (Reuters) - Canada’s new Liberal government backs TransCanada Corp’s Keystone XL pipeline, but does not want the project opposed by environmentalists to spoil relations with the United States, Foreign Minister Stephane Dion said on Thursday.

Washington has spent more than seven years deciding whether to approve the northern leg of the $8 billion pipeline, which would take oil from Alberta’s tar sands to U.S. refineries.

U.S. President Barack Obama, under pressure from environmentalists, is widely expected to veto the proposed pipeline before he leaves office in early 2017.

Washington formally denied a request on Wednesday to pause the review of the proposed Keystone XL oil pipeline, seen by many as an attempt to postpone the decision until after the presidential election in November 2016.

Democratic front-runner Hillary Clinton opposes the pipeline while many Republican candidates support the project for making America less reliant on the Middle East.

While Canada’s Liberals back Keystone XL, they have made it clear they will not adopt the same tack as Canada’s outgoing Conservatives, who irritated the U.S. administration with constant pressure over pipeline.

“Our position is that it is up to the Americans to see what they can do but we support this project and we hope that it will work well,” Dion told reporters.

Asked about the strain Keystone had imposed on ties with the United States, by far Canada’s most important partner, he replied: “We don’t want it to be an irritant ... we understand the Americans have to look at this very closely.”

U.S. officials made little secret of their unhappiness with the Conservatives’ blunt tactics and lectures.

New Canadian Prime Minister Justin Trudeau says relations with Washington are far broader than just one project and did not raise the pipeline with Obama when they talked last month.

Former Canadian diplomat Colin Robertson said the Liberal government would be best advised to put Keystone to one side.

Separately, Transport Minister Marc Garneau said well-built pipelines are recognized as safer than rail but must also have social license. He pointed to the regulatory processes surrounding the TransCanada’s Energy East Pipeline and the expansion of Kinder Morgan Inc’s Trans Mountain Pipeline.

“We’ll see what comes out of that, and if the social license is not there, then there probably will be an increase in rail transportation, and the important part of that will be to ensure that rail safety is paramount,” he told CTV.

Reporting by David Ljunggren; Additional reporting by Randall Palmer; Editing by Lisa Shumaker

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