Pipeline rejection bad for U.S.-Canada relations, says Redford

If the Obama administration rejects the Keystone XL pipeline, it would be a significant thorn in Canadian-U.S. relations, Alberta's premier said Wednesday.

Premier Alison Redford was in Washington for her fourth trip to lobby on behalf of a pipeline that Canada sees as critical to its economic well-being.

The Obama administration is considering whether to approve the pipeline, which would carry 800,000 barrels of oil a day from Alberta across six U.S. states to the Texas Gulf Coast, which has numerous refineries. A decision is expected later this summer.

"It would become something that we would continue to talk about," Redford said of a possible rejection during a telephone interview with The Associated Press. "It would be a continuing issue."

The pipeline has become a flashpoint in the U.S. debate over climate change. Republicans and business and labour groups have urged the Obama administration to approve the pipeline as a source of much-needed jobs and a step toward North American energy independence.

Environmental groups have been pressuring President Barack Obama to reject the pipeline, saying it would carry "dirty oil" that contributes to global warming. They also worry about a spill.

Obama's initial rejection of the pipeline last year went over badly in Canada, which relies on the U.S. for 97 per cent of its energy exports.

Effect on Canada's GDP

The pipeline is critical to Canada, which needs infrastructure in place to export its growing oilsands production from northern Alberta. The region has the world's third largest oil reserves, with 170 billion barrels of proven reserves.

Daily production of 1.5 million barrels from the oilsands is expected to increase to 3.7 million in 2025. Only Saudi Arabia and Venezuela have more reserves.

A lack of pipelines and a bottleneck of oil in the U.S. Midwest have reduced the price of Canadian crude and have cost oil producers and the federal and Alberta government billions in revenue.

Canada's central bank estimated lower prices for Canada's crude reduced annualized real GDP growth by 0.4 percentage points in the second half of last year. Canada's economy grew just 1.8 per cent in 2012.

Both the federal and provincial governments have increased lobbying efforts to get Keystone XL approved.

Alberta's environmental record

Redford said she was in Washington to provide information on Alberta's environmental record as the decision nears.

Redford and Alberta's environmental minister met with Democrats and Republicans from Congress and Senate, as well as officials with the State Department.

"I find that people are still somewhat surprised at our record, whether it's the fact that we've put a price on carbon or that we've put $1.2 billion into carbon capture and storage," Redford said.

Redford has touted her province's $15-per-tonne tax on carbon for heavy emitters, but her government has also acknowledged it's falling far behind on its greenhouse gas emission reduction targets.

Redford said the debate about Keystone XL has had glaring deficiencies "that are overshadowing the truth."

She tried to put the Canadian oilsands in perspective during a speech at the Brookings Institution on Tuesday by saying the oilsands contribute to just 7 per cent of Canada's greenhouse emissions and less than 0.15 per cent of the global total.

She said the oilsands operations produce fewer greenhouse gas emissions than the electric power plants in Ohio and Indiana.

"We see an awful lot of reaction of surprise. Not only is the footprint smaller, but also our long-term plan to deal with those issues are very aggressive and more aggressive than what we are seeing in the United States," she said.

A number of anti-Keystone protesters repeatedly interrupted her talk at the Brookings Institution.

Redford said those opposed to the pipeline are trying to link the approval of the proposed pipeline to Obama's legacy on climate change, but said she's optimistic it will be approved because there is a strong regulatory system in the U.S.

"It's one the reasons that there are 297,000 kilometers of pipeline infrastructure in the United States already. Keystone would only add one per cent in terms of linear distance," she said. "The infrastructure exists. It works well."