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Canada confident U.S. will approve major oil pipeline to Gulf

By David Ljunggren

OTTAWA (Reuters) - Canada is confident the United States will approve TransCanada Corp's controversial Keystone XL oil pipeline from Alberta's tar sands to the Gulf Coast, Natural Resources Minister Joe Oliver said on Wednesday.

President Barack Obama, who was re-elected on Tuesday, said in January he would postpone a decision until 2013 on whether to approve the $7.6 billion line, which was initially set to cross ecologically sensitive areas in Nebraska.

In February he welcomed a new TransCanada initiative to build the southern part of the pipeline, at a cost of $2.3 billion. The northern portion, which will cost $5.6 billion, needs State Department approval because it crosses the border.

"We believe that the Keystone XL will be approved by the Americans because it is clearly in the U.S. national interest in terms of national security, jobs (and) economic growth," Oliver told reporters in Ottawa.

Prime Minister Stephen Harper did not mention Keystone XL or oil in a congratulatory message to Obama. Canada is the largest exporter of energy to the United States.

Ottawa says the pipeline, designed to take 830,000 barrels a day to Gulf Coast refineries, would help cut U.S. imports of oil from less stable parts of the world.

"We'll continue of course to advocate for approval of the pipeline ... right now we're not in the middle of an election campaign, and it will be decided by the administration on its merits," said Oliver.

Obama defeated Republican contender Mitt Romney, who had vowed to approve Keystone XL "on Day One" if he won.

TransCanada, which submitted a new route for the northern part of the pipeline in September, said it continued to believe the United States would approve the pipeline early next year.

"The facts that support the approval ... remain the same, and the need for this pipeline grows even stronger the longer its approval is delayed," said company spokesman Shawn Howard.

Canada's main opposition New Democrats said the government should switch its focus away from Keystone XL and instead look to move the oil from Alberta to eastern Canada, a task that is difficult now because of a lack of pipeline capacity.

"It is folly to be exporting our raw bitumen to the Texas Gulf coast instead of providing the possibility of caring for our own energy security in the future and creating jobs for Canada," party leader Thomas Mulcair told reporters.

In early afternoon trading, TransCanada shares dropped 87 Canadian cents, or 1.9 percent, to C$44.63 on the Toronto stock exchange. The overall market was down about 1 percent.

Harper said in January he was profoundly disappointed by Obama's decision to delay approval and declared Canada would try to diversify its energy exports, especially by selling oil into Asian markets such as China.

That requires more pipeline capacity from Alberta to the Pacific Coast. One project, Enbridge Inc's proposed Northern Gateway, faces so much opposition from aboriginal groups and environmentalists that it may never be built.

Enbridge Chief Executive Al Monaco said he did not think Obama's win would result in much change.

"If you look at the fundamentals in the U.S. and Canadian market for crude oil, we are seeing a huge expansion in the volume that is coming forth and new production," he said.

"So I think it's in everybody's interest to get new infrastructure built, and I think that has been the Obama administration's view to this point, and I think we will see that going forward," he said on a conference call.

(Additional reporting by Louise Egan in Ottawa and Scott Haggett in Calgary; Editing by Janet Guttsman, Tim Dobbyn and Jeffrey Benkoe)

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