Canada hopeful US will approve Keystone pipeline

Obama called Prime Minister Stephen Harper to explain that the decision on Wednesday was not on the merits of the pipeline but rather on the 'arbitrary nature' of a Feb. 21 deadline for a decision.

President Barack Obama's decision to temporarily block a pipeline from Alberta to Texas went over badly in Canada, but Canadian officials are hopeful it eventually will be approved. Meanwhile, Canada will push harder for a pipeline to the Pacific Coast, where oil could be shipped to China.

Alberta Premier Alison Redford, the leader of the Canadian province that has the world's third-largest reserves of oil, said Thursday that while Canada is disappointed at Obama's decision, the government believes Obama has made it clear the U.S. would consider a new Keystone XL pipeline application with a new routing.

Obama called Prime Minister Stephen Harper to explain that the decision on Wednesday was not on the merits of the pipeline but rather on the "arbitrary nature" of a Feb. 21 deadline set by Republican legislators as part of a tax measure he signed, Harper's office said.

"The fact that the president has said that the decision was not based on the merits we take as a signal that there is an opportunity to make a decision that is in the national interest that allows the project to go ahead," Redford told The Associated Press in a telephone interview.

TransCanada Corp., the pipeline company based in Calgary, Alberta, which proposed the Keystone XL pipeline, quickly said 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.

In Washington, the proposed $7 billion pipeline has become a political hot potato.

Republicans — who earlier put the president in the awkward position of having to make a decision on it before Feb. 21 — now hope to force Obama to deal with it yet again before next November's presidential election. He wants to put it off beyond that.

Republican Rep. Fred Upton, chairman of the House Energy and Commerce Committee, said he will call Secretary of State Hillary Rodham Clinton, who recommended Obama's rejection, to testify at a hearing as early as next Wednesday.

"This is not the end of the fight. Republicans in Congress will continue to push this because it's good for our country and it's good for our economy and it's good for the American people," especially those who are out of work, said Republican House Speaker John Boehner.

Republicans are looking to drive a wedge between Obama and two key Democratic constituencies. Some labor unions support the pipeline as a job creator, while environmentalists fear it could lead to an oil spill disaster.

While TransCanada is prepared to reapply, it has no guarantee a new applicaiton will get quick approval.

U.S. Assistant Secretary of State Kerri-Ann Jones said she could not guarantee the review would be sped up, saying TransCanada would have to start anew.

But Redford is hopeful it can be fast-tracked.

"To start from the beginning would be something that would certainly take some time, and of course have a greater economic impact, so I hope there is a spirit to try to at least move this to a place where the discussions are real, and we can move through it and hopefully get the approval," Redford said.

The 1,700-mile (2,740-kilometer) pipeline proposed by TransCanada 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.

Obama previously expressed opposition to the plan, saying an alternate route was needed to avoid environmentally sensitive areas of Nebraska. But in an unrelated tax deal he cut with congressional Republicans, Obama had been boxed into making a decision by Feb. 21.

The prime minister's office said Harper expressed to Obama his "profound disappointment with the news" but that he hoped the pipeline would eventually be approved.

Natural Resource Minister Joe Oliver said it's clear the process is not yet over and said Canada is hopeful thepipeline will be accepted on its merits.

Redford said Obama's decision adds urgency to Enbridge's proposed pipeline to the Pacific Coast of British Columbia that would allow Canadian oil to be shipped to Asia for the first time.

The project is undergoing a regulatory review in Canada.

"Asian markets are a very viable alternative. I say alternative, I probably shouldn't. It's not an either or situation. There's an opportunity here for us to grow our markets in both directions and we'd like to be able to do that," Redford said.

Canadian officials see the pipeline to the Pacific coast as critical as Canada seeks to diversify its energy customer base beyond the United States, which Canada relies on for 97 percent of its energy exports.

Alberta has more than 170 billion barrels of oil 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.

Sinopec, a Chinese state-controlled oil company, has a stake in Enbridge's proposed $5.5 billion Northern Gateway Pipeline. Chinese state-owned companies also have invested more than $16 billion in the oil sands in the last two years.

Tens of billions more are expected to be invested in Canada's oil sands if the Pacific pipeline is built.

There is fierce environmental and aboriginal opposition to the Pacific pipeline, but Harper's government has called it a nation-building project that is crucial to the country's goal of becoming an energy super power.