Alberta may offer more to smooth way for Keystone: envoy

CALGARY, Alberta (Reuters) - Alberta could offer up new environmental initiatives for oil sands development to show the Obama administration that approving a $5.3 billion pipeline to U.S. Gulf Coast refineries will not increase pollution, the Canadian province's new envoy in Washington said on Monday.

Alberta, anxious to tap new markets in the United States for its growing volumes of oil, has already boosted monitoring of the impacts of tar sands projects on northern waterways. It also has established a land-use plan for the region to protect some areas, said David Manning, appointed by Premier Alison Redford last week as the province's envoy in Washington.

"We have much more in our toolbox, and I think this is all about transparency and sharing information, and I'm just going to be one piece of that," Manning told Reuters in an interview from Edmonton, where he was being briefed in advance of traveling to Washington next week.

Manning said he expects much of his work to involve promoting pipelines that move Alberta energy supplies to market, initially TransCanada Corp's long-delayed Keystone XL pipeline.

He did not offer specific concessions that the province could make as it seeks to persuade the U.S. State Department that the contentious project makes economic and energy-security sense.

The department is in charge of vetting Keystone XL because it would cross the Canada-U.S. border.

New U.S. Secretary of State John Kerry, as former chairman of the Senate Foreign Relations Committee, is well versed in Canadian and Alberta issues, said Manning, who was head of Canada's oil lobby in the 1990s.

"He's committed to sustainability and the environment, and so is the administration and so is Alberta," Manning said. "And the premier made it clear that she's anxious to engage in that conversation, and she will clearly lead that conversation. But to the extent that I can support it, I will."

TIMELINE SLIPS

The State Department's decision on Keystone had been expected in the first quarter of this year, but a U.S. government source said last week that the timeline is likely to slip to at least June.

Manning said he was not surprised by the delay given the regulatory steps remaining. These include issuing supplementary and final environmental impact statements and inviting comments for them.

This is TransCanada's second attempt to get Keystone XL approved. U.S. President Barack Obama rejected it last year, saying it needed rerouting around a sensitive area of Nebraska.

"If they chose to abbreviate ongoing processes, then that might have given us an earlier decision. But I think it's in everybody's interest that the regulatory process play out to its completion," he said.

Alberta is already the largest foreign supplier of energy to the United States. But limited export capacity has played a big role in pulling the price of its heavy oil to less than half the value of a barrel of international benchmark Brent crude.

The situation last month prompted Redford to warn of a C$6 billion ($6 billion) revenue shortfall in the upcoming budget, and to redouble efforts to try to convince Washington that the 830,000-barrel-a-day Keystone XL pipeline would benefit the economies of Canada and the United States.

Environmentalists and many U.S. politicians firmly oppose the project. They say it will only foster more oil sands development, leading to a surge in greenhouse gas emissions due to energy-intensive production methods.

Some environmental groups also complain that moves such as joint federal-provincial water monitoring and the Lower Athabasca regional plan, approved last year, do not go far enough in capping development.

Manning, who will earn C$275,000 a year in his post, is no stranger to cross-border energy issues. He was most recently senior vice president and head of the energy practice at Vanasse Hangen Brustlin Inc, a Boston engineering firm.

A one-time deputy energy minister in Alberta, Manning spent 10 years as an executive vice president at National Grid Plc's KeySpan unit.

He was also head of the Canadian Association of Petroleum Producers from 1995 through 1999, representing oil and gas producers during negotiations for the Kyoto Protocol. ($1=$1 Canadian)

(Editing by Xavier Briand)