Harper 'disappointed' by Keystone pipeline delay

Delays on the U.S. side to assess the controversial Keystone XLpipeline proposal are a disappointment, Prime Minister Stephen Harper said, before headingto a meeting with U.S. President Barack Obama at the end of the Asia-Pacific Economic Co-operation summit.

"We have already indicated of course that we are disappointed," Harper told reporters in Hawaii, where the summit was held. "Nonetheless, I remain optimistic that the project will eventually go ahead because it makes eminent sense."

Obama reportedly told Harperthat delaying the project until 2013 will ensure all questions are properly addressed, during their meeting Sunday. The prime minister also noted that Obama said a final decision had not been made.

Earlier in the day, Harper said the recent decision to delay construction of the $7-billion pipeline has been met with "extremely negative reaction"in the U.S.because the project is"obviously what's in the best interests of not just of the Canadian economy but also the American economy."

Harper also noted that the delay draws attention to Canada's need toaccess Asian markets for energy products.

Natural Resources Minister Joe Oliver told CBC News on Sunday the U.S. decisionto put the project on hold pending an environmental-impact assessment will cost the Canadian company pushing the project.

Oliver said he expects the study ordered by the U.S. State Department "will be costly for" Calgary-based TransCanada Corp.

'It will mean lost revenue'

TransCanada is seeking to build the Keystone XL pipeline expansion from Hardisty, Alta., across the border to Nebraska, where it would meet up with an existing pipeline. Another new segment would run south to Port Arthur and Houston in Texas from Cushing, Okla.

The project has approval in Canada but is awaiting the go-ahead from U.S. officials. But that won't happen until late next year, at the earliest, following a State Departmentannouncement Thursdaythat it wants to look into alternative routes for the pipeline's Nebraska portion due to environmental concerns.

"I think that this was disappointing, obviously, and it will be costly for the company. It will mean lost revenue for the province and delayed economic activity for the country," Oliver said.

He said it's unlikely TransCanada will abandon the Keystone XL project, however.

"I think if its delayed too long then the project could, you know, fall off. And the economic viability of any project could be undermined by excessive delay. I dont think that were there yet, but this wasnt helpful."

Environmentalists opposed Keystone XL because under its currently proposed path, it would run through sensitive ecological lands in the American Midwest, where any spill would be devastating.

Other opponents of the project say Canada should refine its oilsands crude domestically and not effectively ship refining jobs and value-added processing to U.S. facilities in the Gulf of Mexico.

Oliver dismissed the environmental concerns, saying the Keystone XL plan had received an environment impact study in the U.S. and was more of a "local issue in Nebraska as much as anything."

Japan and China 'keen' for Alberta oil

The Keystone XL brouhaha highlights the need for Canada to find more buyers for its petroleum, the natural resources minister said.

"Basically all of our energy exports are currently going to the United States. We have one customer. So it is a major fundamental strategic objective of Canada to diversify our customer base," Oliver said.

"I was in Chinaand Japan and I just got back yesterday. And let me tell you theres a keen interest in our resources in both those countries. The Japanese are interested in our natural gas, the Chinese in our oil and gas."

Calgary-based pipeline operator Enbridge has plans afoot to build $5.5 billion in pipelines from Alberta to a port in Kitimat, B.C., to ship oil to East Asia.

But that project, called theNorthern Gateway, is also hotly contested. It would run through aboriginal land and expose First Nations to possible devastation from any spill, which Enbridge has had several of lately inMichigan,Illinoisand theNorthwest Territories.