Alberta wary of California low-carbon fuel rule

HOUSTON (Reuters) - Canada's biggest energy-producing province, Alberta, is wary of the new California low-carbon fuel rule and its potential effects on exports of oil sands production, the province's energy minister said on Friday.

Mel Knight, Alberta minister of energy, said the new rule - and rules being considered by other states - are a potential threat to exports of upgraded oil from Canada's oilsands, but Alberta will continue to try to participate in discussions to help shape such rules.

"We've got people there in California. We'll continue to work with them," Knight said at the end of a visit with the American Petroleum Institute's Downstream Committee in Houston. "We'll want to be very active relative to that."

As for potential effects on Alberta exports, Knight said he could not be specific. "Does it have a possibility of a negative effect on Alberta's bitumen future? I would suggest I'd be very naive if I thought anything other than 'yes' is the proper answer to that," Knight said.

Environmentalists are critical of the process of producing oilsands and processing them into refinable oil because of its effects on land, water supply and global warming.

(Reporting by Bruce Nichols; Editing by David Gregorio)