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With Keystone XL pipeline uncertain, Alberta floats idea of moving tar-sands oil through Alaska

02/10/2015 09:03 EST | Updated 04/12/2015 05:59 EDT

Officials in the Canadian province of Alberta say they hope to talk to Alaska leaders about shipping tar-sands crude oil through the state as the Keystone XL pipeline route through the Lower 48 remains bogged down in politics.

An Alaska economist said the idea faces many challenges but is possible.

"The desert is full of mirages, but the desert also has water," said Gunnar Knapp, director of the University of Alaska Anchorage's Institute of Social and Economic Research.

He was putting a hopeful spin on Alaska's troubling fiscal outlook, with the state facing years of billion-dollar deficits unless it can dramatically increase oil production.

Canadian oil moving through Alaska could provide additional revenue opportunities for state and local governments, through property taxes on facilities, for example.

The state and Alberta have held no meetings on the idea, which was only recently presented when representatives of Alberta Premier Jim Prentice reached out to Kip Knudson, with the governor's office in Washington, D.C., to request discussions about the concept, said Grace Jang, Gov. Bill Walker's press secretary.

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