China keen market for oil sands, Oliver says

Canada is counting on China to be a key investor in Alberta's oil sands projects and a big customer for crude that would flow through a proposed Northern Gateway Pipeline.

Federal Natural Resources Minister Joe Oliver is half-way through his visit to China to drum up customers for the country's forestry and oil sectors.

And he told reporters in a conference call from Shanghai Wednesday that he's spent a lot of timetalking about increased Chinese investment in Alberta's growing oil sands.

"On the oil sands ourinterests are aligned. China wants to diversify its sources of oil and we want to diversify our markets."

Chinese investment in Canadian energy projects is steadily increasing. In the past six years, China's international oil companies have spent or pledged more than $11 billion, most of it on Alberta's oil sands projects.

Oliver told reporters there's keen interestin Chinain Enbridge's proposed Northern Gateway Pipeline. It would carry oil sands crude from Edmontonto Kitimat, B.C. and then on to Asiaby tanker. A second pipeline would carry condensate back along the same route from Kitimat to Edmonton.

Northern Gateway faces hurdles

The pipeline is far from being a shoo-in. The route west through the Rocky mountainsiscontroversial and there is strong opposition from dozens of first Nations communities along the way. Environmentalists warn bringing huge oil super tankers into the port at Kitimat is just an accident waiting to happen.

The National Energy Board will start public hearings in the proposal in January and Oliver predicts a decision won't be made until sometime in 2013.

But he says the Chinese are willing to wait for the pipeline because it would be a sure source of energy from a stable country.

"They have put billions into the investment with their eyes open...If we build it, they will come."

Oliver also assured reporters he is "cautiously optimistic" thatTrans Canada'sKeystone XL pipeline project will be approved before the next the U.S. election inNovember, 2012.

That project has faced huge opposition because its route from Alberta to the Texascoast crossesecologically sensitive areas in Nebraska, includinga crucialwater acquifer.

The U.S. State Department now says it may ask TransCanada to reroute the pipeline, which could delay a final decision by 12 to 18 months.

There is alsoa separate special internal reviewof how the State Department handled its environmental study of the pipeline. Opponents allege the State Department acted improperly by using a private consulting firm that has close ties toTransCanada to conduct thestudy.

All this could delay the pipeline approval until after the next U.S. election. The Canadian government has been lobbying hard to get the pipeline approved. It sees the project as crucial to the future of the oil sands and to the Canadian economy.