Outgoing US diplomat says pipeline decision looms

TORONTO (AP) -- Outgoing U.S. ambassador to Canada David Jacobson said Monday he is leaving the relationship between Canada and the United States in a very good state, but acknowledged a "very important decision" on the contentious Keystone XL pipeline looms.

Jacobson, who leaves July 4 after a four-year stint, said in an interview with The Associated Press that the Obama administration knows how important the pipeline is to Canada but he won't speculate about how much it would damage the relationship should it not be approved.

Canadian Prime Minister Stephen Harper has said the pipeline "absolutely needs to go ahead" and Alberta's premier has said if it's rejected it would mar the relationship between Canada and the U.S.

Asked to name his biggest accomplishment, Jacobson said he's proud that when problems arise between the countries people "take it in stride" and people "don't go off the reservation." But Jacobson is leaving before the president decides whether to approve the pipeline, which would carry 800,000 barrels of oil a day from Alberta across six U.S. states to the Texas Gulf Coast. A decision is expected this year.

Jacobson said some people will be happy with the Keystone XL decision and some won't. He said he's been in meetings between U.S. President Barack Obama and Harper where Harper has stressed the pipeline's importance to Canada, which needs infrastructure in place to export its ingrowing oil sands production. The northern Alberta region has the world's third largest oil reserves, with 170 billion barrels of proven reserves.

A lack of pipelines and a bottleneck of oil in the U.S. Midwest have reduced the price of Canadian crude, costing oil producers and the federal and Alberta governments billions in revenue. Harper has said the pipeline "absolutely needs to go ahead" and Alberta's premier has said if it's rejected it would mar the relationship between Canada and the U.S.

The long-delayed project carrying oil from Alberta's oil sands requires approval from the State Department.

"The people in the administration who are charged with deciding this issue are aware of the full range of facts and consequences, whether it to be the bilateral relationship, to climate, to the environment, to the economies, to energy independence, to our geopolitics, there are a range of issues that all have to be taken into account," Jacobson said.

Republicans, and business and labor groups, have urged the Obama administration to approve the pipeline as a source of much-needed jobs and a step toward North America energy independence.

Environmental groups have been pressuring Obama to reject the pipeline, saying it would carry "dirty oil" that contributes to global warming. They also worry about a spill.

Obama's initial rejection of the pipeline last year went over badly in Canada, which relies on the U.S. for 97 percent of its energy exports.

Jacobson said United States and Canada are lucky to have each other as neighbors.

"Fundamentally this is as good a relationship between two countries that exists on earth," Jacobson said.