Calgary Mayor Naheed Nenshi says he defended the Keystone XL pipeline proposal last week while he was at the World Economic Forum in Switzerland.

Nenshi says the massive $7-billion project is the core public policy issue right now for both Canada and the United States and says protests against the pipeline are misdirected and could ultimately result in higher carbon emissions if the pipeline project is rejected.

"We have to focus on mitigating the environmental impacts of the oilsands, but doing that by trying to stop Keystone I think is foolish," said Nenshi.

“I think it's a terrible shame that this one metre in diameter pipeline is being asked to carry all of the sins of the carbon economy and, in fact, I think that some of the protests against this pipeline are deeply misdirected because if, in fact, the pipeline is not built, I imagine that we will end up with ways that are more carbon intensive to move the bitumen from the oilsands and it would, if anything, be a pyrrhic victory for environmentalists,” Nenshi said.

He also says Canada needs to push harder on the issue.

“What I learned is that we have not done a good enough job as industry and as Canadians in making the case — in making the complicated case for this pipeline and I certainly tried to do that,” Nenshi said.

The pipeline would push oil from Alberta to refineries on the U.S. Gulf Coast.

TransCanada considers pipeline upgrade

As Alberta Premier Alison Redford touched on last week in her provincial address, government royalties from the oilsands are falling fast.

While many say the solution is to build new pipelines, TransCanada Corp. says there is another option.

The company, also behind Keystone XL pipeline proposal, points to the Canadian Mainline, a 14,000-kilometre natural gas pipeline from Alberta to Quebec, saying it could be converted to carry crude.

TransCanada Corp. says producers and refiners have expressed an interest in converting the line and extending it to reach refineries in New Brunswick as well as a creating a deep water port near Saint John.

A TransCanada spokesperson says the project would cost $5 billion, but those companies will have to show more than just interest for the pipeline to go ahead.

"We have to translate that interest into long-term commercial contracts, and we're not there yet," said Shawn Howard.

Access to the east, west and gulf coasts

Analyst Peter Linder calls it a crisis because of the price gap differential, and the low price for Canadian crude compared to the North American benchmark.

The shortfall is shredding the province's revenue projections, and Linder believes the Canadian Mainline could boost government profits.

He says it could happen if U.S. President Barack Obama puts a knife in the Keystone XL project.

"I would say, probably an 80 per cent chance of happening if Keystone is not approved," Linder says.

Alberta's Energy Minister Ken Hughes isn't calling it a crisis, but admits the lower rate of return for Alberta is a problem.

Hughes says support for a pipeline to the east doesn't mean the government is losing confidence in those other pipelines.

“We need access to the west coast, we need access to the east coast, we need access to the gulf coast, at a minimum, in order to get the amount of bitumen out of this province that is being produced,” Hughes said.

New Brunswick Premier David Alward is pushing hard for the pipeline and will be in Calgary next week to meet with Alberta Premier Alison Redford to tour the oilsands and sit down with industry executives.