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Canada minister doesn't expect U.S. to veto Keystone pipeline

Joe Oliver, Canada's Minister of Natural Resources, talks to media after speaking at the Canadian Aboriginal Minerals Association's 20th Ann
Joe Oliver, Canada's Minister of Natural Resources, talks to media after speaking at the Canadian Aboriginal Minerals Association's 20th Ann

By Randall Palmer and David Ljunggren

OTTAWA (Reuters) - Canadian Natural Resources Minister Joe Oliver said on Thursday he does not expect the United States to reject TransCanada Corp's proposed Keystone XL pipeline from the Alberta oil sands to Texas.

U.S. officials say they expect the government to make a final decision on the northern leg of the $5.3 billion pipeline by the middle of the year.

Green groups strongly oppose Keystone XL, which they say will boost global warming, and want President Barack Obama to block the project.

"I remain cautiously optimistic," Oliver told reporters.

Canada's Conservative government, which wants Washington to approve Keystone XL, also backs industry proposals for pipelines running from the oil sands to the Pacific and Atlantic coasts.

Asked about the effects of a U.S. veto, he replied: "That rejection, which I do not anticipate, would give even more impetus for us to move west, to move east ... but we're not anticipating that result."

Canada, the single-largest supplier of energy to the United States, sends 100 percent of its natural gas and 98 percent of its crude to its giant southern neighbor.

Last year, Obama threw his support behind the southern section of the line, which is now being built. Washington still has to rule on a new route for the northern pipeline, which is expected to transport 830,000 barrels per day of oil.

Environmentalists oppose Keystone XL because production of oil sands crude is carbon intensive. U.S. labor leaders support the pipeline for the jobs it would generate.

The Canadian government rejects the idea that developing the oil sands would cause a spike in emissions of greenhouse gases. Ottawa says Canada, in some ways, was doing more than the United States to fight global warming, which Obama has made clear will be a major focus of his second four-term term.

Federal Canadian and Alberta government ministers, who have made several trips to the United States recently to push the economic benefits of the pipeline, are starting to stress environmental issues as well.

Oliver, who is due to make speeches on the Canada-U.S. energy relationship in Chicago and Houston next week, said the oil sands were responsible for just 0.001 percent of global greenhouse emissions.

"We think we have science and facts on our side ... in some respects we're moving with the United States, in other respects we're in advance of the United States," he said.

Oliver said emissions from coal-powered plants in the United States were 40 times greater than emissions from the oil sands. Coal emissions in Obama's home state of Illinois alone were more than double those produced by the oil sands, he said.

"So the United States has some work to do," he said.

The Globe and Mail on Wednesday cited unnamed Canadian officials as saying Canada would regard a Keystone XL rejection as a betrayal.

"I wouldn't view it as a betrayal. We're hopeful they'll do the right thing," said Oliver when asked about the reported remarks. "The basic relationship between Canada and the United States remains very strong".

(Editing by Vicki Allen, Peter Galloway and Bernadette Baum)

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