Pipeline dispute derails bid to create Canada energy policy

* Pipeline dispute stalls attempt to devise energy policy

* British Columbia says it wants more money from pipeline

* Alberta premier rejects the idea of negotiations

By Richard Woodbury

HALIFAX, Nova Scotia, July 27 (Reuters) - A dispute over a proposed oil pipeline to Canada's Pacific Coast derailed plans by premiers of the 10 Canadian provinces on Friday to devise a common policy on developing rich energy resources.

Premier Christy Clark of the westernmost province of British Columbia said she would boycott talks on energy until neighboring oil-rich Alberta agreed to share more revenue from Enbridge Inc's proposed C$6 billion ($6 billion) Northern Gateway pipeline.

The project is designed to take oil from Alberta's tar sands to a port in British Columbia for transport to China and other lucrative Asian markets.

The federal Conservative government strongly backs the pipeline, which would help to diversify exports away from the United States in the wake of Washington's decision last year to delay approving the Keystone XL pipeline from the tar sands to Texas.

"Until we see some progress in the discussions between British Columbia, Alberta and the federal government with respect to the Gateway pipeline through British Columbia, we will not be participating in a discussion of a national energy strategy," Clark told reporters.

The premiers, at a meeting in Halifax, had wanted to agree on how to best develop Canada's oil and gas resources as well as address problems such as the lack of a major pipeline to the east of the country, which is forced to import much of its oil.

"Provinces have had a real chance to demonstrate that we are willing to sit down at the table and take on some of these thorny issues between us and it hasn't happened," Clark said at the end of the three-day meeting.

Clark -- who said she had had frank talks on Friday with Alberta Premier Alison Redford -- insists she wants more money to compensate for the environmental risk of allowing the pipeline to cross British Columbia.

Redford, asked about the dispute, said: "I don't think we should lament the fact we are not all the way there yet ... we have almost every premier in the country talking about the fact we need to come together and talk about how to grow Canada's energy economy."

Green activists and some aboriginal groups -- across whose territory the Northern Gateway would cross -- say the risks of an environmental disaster are too great for the pipeline to go ahead.

Kathy Dunderdale, premier of Newfoundland and a strong backer of talks on an energy policy, acknowledged the conversations had been difficult.

"There are challenges on these issues, but we don't get to walk away from them. ... We're looking forward to the time when British Columbia is comfortable enough that they'll be a part of it," she told the closing news conference.

Clark's critics note opinion polls regularly show her Liberals trailing the opposition New Democrats badly ahead of a provincial election in British Columbia due next year. The New Democrats strongly oppose the pipeline.

Terry Teegee, of the Carrier Sekani aboriginal group, said Clark was "putting on a show because she's under political pressure and needs votes" and should instead make clear she opposed the pipeline under all circumstances.

"It is absolutely unacceptable for our premier to play a game of 'The Price is Right' while putting our lands, our waters and our futures at risk to devastating oil spills," he said in a statement.