INTERVIEW - Canada steps up oil sands push in United States

By Jeffrey Jones

CALGARY, Alberta (Reuters) - Canada has mounted its biggest campaign yet to sell the United States on the energy security benefits of the oil sands as Washington debates new environmental policy, the country's energy minister said on Friday.

Canadian Natural Resources Minister Lisa Raitt said she and her staff are lobbying interests in the United States at all levels, trying to send the message that the huge heavy-oil resource in Alberta is being developed responsibly and that U.S. input on environmental fixes is welcome.

The push comes as environmental groups have intensified their own campaigns warning of the impact of oil sands development on climate, water, land and local communities on both sides of the border.

"There are certain groups that just want to completely shut down the oil sands. That is completely unacceptable. That will not happen," Raitt said in an interview.

"This is too strategic a resource for the country, and that's the other part of the message: we will develop it, we will use technology, we are going to work with the United States on it."

Canada is already the largest foreign supplier of oil to the United States, topping such OPEC suppliers as Saudi Arabia and Venezuela. Much of that crude is derived from oil sands developments in northern Alberta.

TransCanada Corp is preparing to start its 435,000-barrel-a-day Keystone Pipeline to the the U.S. Midwest, pushing even more oil to the country's biggest trading partner.

Raitt travels to New York next week as part of the effort to promote the oil sands. That trip follows a series of meetings with the new U.S. ambassador to Canada, David Jacobson, and Prime Minister Stephen Harper's new top diplomat in Washington, Gary Doer.

"We're deploying people on the ground in the United States as well. It has to happen at all levels, you have to engage at 'officials' levels, you have to engage at ministerial levels, you have to engage at business levels," she said.

U.S. Energy Secretary Steven Chu has said he is aware of the impact of oil sands development, but has expressed optimism over the industry's ability to develop technology to limit the ecological damage.

California, often seen as a bellwether of U.S. environmental policy, established its own low-carbon fuel regulations this year that the Canadian energy industry has warned could eventually hurt exports.

"I absolutely recognize the fact that in some cases, individual states are implementing energy policy that would seem to be detrimental to Canadian positions," Raitt said. "But as well, even with all that, we exported more oil this summer than we ever have."

Raitt was in Calgary to talk to industry R&D people about ways to cut emissions, such as carbon capture and storage, as well as how to make energy production more efficient to offset some of the costs of CCS.

Despite the short record carbon capture technology, Canada and the province of Alberta have pledged hundreds of millions of dollars to private-sector projects they hope will help the country meet emission-reduction targets.

Canada can cooperate with the United States on some aspects of energy and environmental policy, Raitt said. But she said a full-blown continental energy plan is not possible.

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