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Alberta Premier Alison Redford shown in an interview at The Canadian Press in Ottawa, Monday March 18, 2013.

FRED CHARTRAND/The Canadian Press

Alberta Premier Alison Redford has warned that rejection of the Keystone XL pipeline by the Obama administration would undermine the economic relationship between the countries, and strengthen Canada's resolve to look for new markets for its resources.

During a visit to Ottawa Monday, Ms. Redford painted the Keystone project as vital not only to Alberta but to Canada's national interest – and slammed federal NDP Leader Thomas Mulcair, saying he had betrayed those Canadian interests when he talked down the pipeline proposal during a trip to Washington last week. Federal and provincial leaders have launched an intense lobbying campaign to win approval from President Barack Obama for the controversial pipeline, which would transport 800,000 barrels a day of oil sands bitumen to the world's largest refining hub on the U.S. Gulf Coast.

Canadian leaders paint the Keystone project as a critical link to a major new market for oil sands production, which now is mainly sent to the U.S. Midwest. Alberta needs to expand its oil sands markets to eliminate the current glut of such crude and help drive up depressed prices. The province says it will bring in $6-billion less in revenue this year as a result of lower-than-forecast prices, and Ms. Redford said Monday that Ottawa will have to make some "painful choices" in its Thursday budget due to a shortfall in federal revenues.

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In an interview Monday, Ms. Redford said she remained optimistic the pipeline would be approved, but stressed a rejection would hurt Canada-U.S. relations.

"I looked at it historically that we've always had a very strong trading relationship, especially between Alberta and the United States around energy," she said. "If this didn't go ahead it would be disappointing for Albertans and Canadians and I think people would wonder what that meant. I don't think at the end of the day it would cause irreparable damage, but I think it would fundamentally change the relationship."

The result would be that Canada would look elsewhere for markets, she said, and that would increase the importance of concluding pipeline projects through British Columbia and to the Canadian East Coast to access overseas customers.

Opponents in the United States – including prominent Democrats like House Minority Leader Nancy Pelosi – argued the Keystone pipeline will stoke further development of the oil sands, and contribute to increasing greenhouse-gas emissions that threaten catastrophic climate change.

Ms. Redford insisted she is not advocating for a specific project, though her government ran an ad in The New York Times on Sunday challenging its anti-pipeline editorial under the headline "Keystone XL: The Choice of Reason."

In a luncheon speech, the Premier said Keystone and other proposed pipelines are in the Canadian national interest because the energy exports fund social programs like health care and education, both provincially and federally.

And she echoed criticism of Mr. Mulcair from federal Conservatives and Saskatchewan Premier Brad Wall.

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"I think it was very unfortunate for Mr. Mulcair to have travelled to Washington to undermine the months of good work that's been undertaken by national leaders in this country and premiers in this country and advocates in industry and the trade unions," she said. "I actually believe it was a fundamental betrayal of Canada's long-term economic interests."

Mr. Mulcair did not respond directly to the barrage of criticism. He said he is advocating policies that would see oil sands bitumen processed in Canada, rather than losing jobs by shipping the raw resource to the United States to be turned into products like gasoline and diesel.

"The NDP's position is that we should be adding value to our own natural resources and creating jobs in Canada," he told reporters. "We think that we should take care of Canada's own energy security first."

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