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Ottawa quick to respond to Obama’s skepticism over Keystone pipeline

Ottawa quick to respond to Obama’s skepticism over Keystone pipeline

We are deep in the hardball phase of discussions about the controversial Keystone XL pipeline project.

Analysts are trying to parse U.S. President Barack Obama's latest comments about the contentious plan to pipe Alberta oil sands crude across America to refineries on the Gulf of Mexico.

Over the weekend, Obama told the New York Times, he doubted the rosy job-creation numbers being attacked to the project and said his administration would approve or reject it based on its contribution to global carbon emissions.

“Republicans have said that this would be a big jobs generator,” Obama said in an interview with Times. “There is no evidence that that’s true.

"The most realistic estimates are this might create maybe 2,000 jobs during the construction of the pipeline, which might take a year or two, and then after that we’re talking about somewhere between 50 and 100 jobs in an economy of 150 million working people.”

The president also questioned whether the pipeline would help lower pump prices for gasoline, pointing out most of the oil would be refined for export.

He also suggested Canada could do more "to mitigate carbon release," though he didn't link this directly to the $7-billion project's fate.

Obama said his decision would be based on the recommendation of Secretary of State John Kerry. The former Democratic senator is an outspoken advocate for action on climate change but hasn't expressed an opinion on Keystone XL.

[ Related: Will Obama’s climate plan mean an approval for Keystone XL? ]

The Conservative government reacted predictably to Obama's comments via its ambassador in Washington.

Gary Doer told the Globe and Mail bluntly that Obama's long-delayed decision on Keystone XL, now expected by the end of this year, won't prevent oil sands crude from heading south.

“His choice is to have it come down by a pipeline that he approves, or without his approval, it comes down on trains," Doer told the Globe on Sunday.

"That’s just the raw common sense of this thing, and we’ve been saying it for two years and we’ve been proven correct. At the end of the day, it’s trains or pipelines.”

The comment looked like a clear reference to the July 6 Lac-Megantic rail disaster, when a dozens of tank cars laden with American crude transiting through Canada to Maine derailed and exploded in the eastern Quebec town, killing 47 people.

A lack of pipeline capacity has forced oil producers on both sides of the border to ship more by rail.

Environmentalists have opposed new pipeline projects such as Keystone XL, Calgary-based Enbridge Inc.'s Northern Gateway project through British Columbia and TransCanada's proposed Energy East line to Quebec and New Brunswick in hopes of choking off oil sands development.

But the Globe noted U.S. Energy Information Administration data that shows trains now carry almost a million barrels a day of crude in North America.

And Doer pointed out the State Department's draft report on Keystone XL, released last March, concluded the pipeline would have little impact on carbon emissions because producers would find another way to get their oil to market.

[ Related: Environmentalists fire latest salvo in battle against Keystone XL ]

But environmentalists call the pipeline-or-trains dilemma a false choice, saying governments could reject pipelines that would boost production of greenhouse-gas-intensive oil sands while at the same time aggressively stiffening rail safety regulations in the wake of Lac-Megantic, the Globe said.

TransCanada also dismissed Obama's comments, saying they were aimed at his Republican opponents, who have touted the economic benefits of the project. Opponents are a major slice of the Democrats' support base.

“I wouldn’t think the president would come out externally and in the media and actually agree with the Republicans regardless of what he might think in private,” spokesman James Millar told The Canadian Press.

“I attribute those comments more to being political rather than how he might truly believe on a project.”

The company also challenged Obama's job estimate for the project.

"We have and can factually rebut each point the President has made," Millar told Business News Network within hours of Obama's comments appearing in the Times.

Millar pointed out the southern leg of the 830,000 barrel-per-day project, which runs from Oklahoma to Texas and is now 95% complete, has already employed 4,000 Americans.

"On this leg of the Keystone system alone we employed more Americans than the 2,000 figure the president pointed to," he told BNN.

"We have dealt with criticism of our job number totals for over two years and we stand by them. It is not logical to think a US$7.6-billion infrastructure project stretching across the entire breadth of the continental U.S. wouldn’t employ thousands of workers both in the manufacturing sector and in constructing the pipeline."

TransCanada is standing by the 13,000 direct jobs figure for the construction phase of the 2,575-kilometre pipeline and pumping stations, Millar said. Another 7,000 jobs are expected to be created among U.S. manufacturers supplying the project, he added.