Canada disappointed over pipeline rejection

TORONTO (AP) ? Canadian prime minister Stephen Harper said Wednesday he told Barack Obama he was profoundly disappointed after the U.S. president called to tell him the administration rejected a plan to build an oil pipeline from Canada to Texas.

But the Canadian government expressed optimism the Keystone XL pipeline will ultimately be approved. Natural Resource Minister Joe Oliver said it's clear the process is not yet over and said Canada is hopeful TransCanada's pipeline will be accepted on its merits.

Andrew MacDougall, a spokesman for Harper, said that Obama explained the decision was not on the merits of the pipeline, but rather on the "arbitrary nature" of the Feb. 21 deadline set by a Republicans as part of tax measure he signed.

Obama said the decision was without prejudice, meaning that TransCanada is free to reapply. The Calgary, Alberta-based company said in a statement that it would reapply and said it expects the presidential permit to be processed in an expedited manner that would allow the pipeline to go online in late 2014.

TransCanada CEO Russ Girling said in a statement that plans are already under way to largely maintain the construction schedule of the project. He said the project is too important to the U.S. economy and the Canadian economy for it not to proceed.

MacDougall said Harper told Obama that he hoped the pipeline would eventually be approved.

The pipeline is critical to Canada, which must have infrastructure in place to export its growing oil sands 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 oil sands is expected to increase to 3.7 million in 2025. Only Saudi Arabia and Venezuela have more reserves.

MacDougall said Harper also reiterated to Obama that Canada will look to sell its oil to Asia.

Earlier this week, Harper called Obama's decision in November to delay the Keystone XL delay a "wake up call" said said it was made for "very bad political reasons."

Harper has said Canada is far too dependent on the U.S., which Canada relies on for 97 percent of its energy exports.

With the product of oil sands and pipeline delivery to the U.S. under perennial clouds of environmental objection, Canada wants to ensure a market for the growing production.

The price of North American oil also sells for less than oil sold internationally because of a glut of Canadian oil in Cushing, Oklahoma, so shipping the oil to Asia would command a better price.

Alberta Premier Alison Redford said Obama's decision strengthens Canada's resolve to pursue access to alternative markets.

Tom Huffaker, a vice president with the Canadian Association of Petroleum Producers, said they were disappointed with the decision because the pipeline has already been reviewed for several years. But he said they remain optimistic it will eventually be approved.

"There is clear room to reapply. That was explicit," Huffaker said.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/cae69a7523db45408eeb2b3a98c0c9c5/Article_2012-01-18-CN-Oil-Pipeline-Canada/id-ef664950adaf46478040a07aeec040e6

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