UPDATE 2-Canada loses patience on Keystone XL, tells U.S. to decide

Fri Jan 17, 2014 1:41am IST

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(Adds U.S. reaction, details, background)

By David Ljunggren

OTTAWA Jan 16 (Reuters) - Canada bluntly told the United States on Thursday to settle the fate of TransCanada Corp's proposed Keystone XL pipeline, saying the drawn-out process on whether to approve the northern leg of the project was taking too long.

The hard-line comments by Foreign Minister John Baird were the clearest sign yet that Canada's Conservative government has lost patience over what it sees as U.S. foot-dragging.

Baird also conceded that Washington might veto the project, the first admission of its kind by a Canadian government minister.

The 1,200-mile (1,930-km) pipeline would carry 830,000 barrels a day from the Alberta tar sands in western Canada to the U.S. Gulf Coast. Ottawa strongly backs Keystone XL, which it says would create jobs and provide a secure supply of oil to Canada's closest ally and trading partner.

"The time for Keystone is now. I'll go further - the time for a decision on Keystone is now, even if it's not the right one. We can't continue in this state of limbo," Baird said in a speech to the U.S. Chamber of Commerce.

Although the State Department is responsible for ruling whether the pipeline meets the national interest, President Barack Obama has made clear he will make the final decision.

Obama is under heavy pressure from environmental activists to veto the northern leg, and Washington seems in no hurry, despite the growing irritation in Ottawa. Canada is the largest single supplier of energy to the United States.

The State Department issued a largely favorable initial environmental impact assessment in March 2013, which was followed by a public comment period. On paper, at least, the department should have issued an updated impact assessment and then a final recommendation by the end of 2013.

But the timetable has slipped badly, and political observers expect Obama will act later this year, possibly after midterm congressional elections on Nov. 4.

White House spokesman Jay Carney referred questions about Baird's comments to the State Department, citing the current review. When a decision is made, it will be announced, he told reporters.

Canadian Prime Minister Stephen Harper said earlier this month that Obama had "punted" the decision but expressed confidence that the United States would eventually approve the pipeline.

Last September, he told a New York audience that the logic behind the pipeline was "simply overwhelming" and said "you don't take 'no' for an answer."

Green groups say building the pipeline will speed up extraction of oil from the tar sands - a process that consumes more energy than regular drilling.

Canada has long promised to unveil rules on curbing greenhouse gas emissions from the oil sands. Obama said last July that Canada could be doing more to curb emissions, which some Canadian politicians took as a hint that he wanted to see the new rules before making a decision on Keystone XL.

Baird's comments made it clear this would not be the case. Harper told the Global News television network last month that he was prepared to work with the United States on a joint regulatory regime to cut emissions and hoped this could be done "over the next couple of years".

A poll by Nanos Research this week said support for the pipeline in Canada had slipped. It said 47.5 percent of Canadians had a positive or somewhat positive impression of the project, compared with 60.1 percent in April 2013.

Canadian-born rock star Neil Young this week played a series of concerts to raise money for an aboriginal group which is trying to prevent the expansion of the oil sands.

Baird, who is due to meet U.S. Secretary of State John Kerry on Friday, said that if Keystone XL were approved, less oil would have to be shipped by rail.

A train carrying crude derailed in eastern Canada earlier this week. On Dec. 30, an oil train hit a derailed car from a grain train in a fiery crash in North Dakota. Earlier in the year, 47 people died in Quebec when a train pulling oil tanker cars derailed and exploded in the small town of Lac-Megantic. (Additional reporting by Jeff Mason in Washington; Editing by Andre Grenon and Jonathan Oatis)

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