Prime Minister Jean Chretien has vowed to ratify Kyoto by the end of the year but a plan on implementing the accord will take much longer to finalize.

Last week Canada softened its implementation plan in a bid to placate provinces and industry groups that fear cutting greenhouse gases would cause serious economic damage.

McLellan's comments will do nothing to heal a divide within cabinet over Kyoto, which pits enthusiasts like Environment Minister David Anderson against Natural Resources Minister Herb Dhaliwal and others who are far more uncertain.

Alberta's vast oil sands are widely seen as a crucial part of the future of Canada's oil industry as it boosts output to quench North America's thirst for secure supplies.

But some developers have said they are delaying major oil sands projects, blaming uncertainty over the costs of cutting emissions under Kyoto.

"We have national resources, like the oil sands, which the prime minister has spoken of eloquently here and in the United States and elsewhere as a key resource in our energy security and long-term prosperity," McLellan told reporters.

"We must ensure that there is nothing, as we move forward to implement Kyoto, that in any way undermines or impedes the growth of projects like the oil sands and obviously their contribution to the prosperity of this country."

Critics say the process to extract crude from the oil sands would result in a major increase in the emissions of carbon dioxide, which Canada is committed to cut under Kyoto.

"It's totally appalling that a health minister would make such a comment," said Steven Guilbeault of Greenpeace.

"She is supposed to be protecting the health of all Canadians and there she is defending a handful of companies."

Kyoto obliges Canada to reduce carbon dioxide emissions - largely blamed for global warming - by 6 percent from 1990 levels by 2012. If no action is taken, Canadian emissions by 2010 are predicted to be 33 percent above the 1990 level.

McLellan, who served as federal energy minister from November 1993 to June 1997, is one of only two legislators from the ruling Liberal Party who won seats in Alberta at the last election. Her majority in her constituency was slim.

She said the government needed to provide certainty about the future to help 13 major industrial sectors.

"I am hopeful we will be able to provide those 13 industrial sectors with the certainty they need," she said.

TrueNorth Energy, a unit of private U.S. industrial giant Koch Industries, said this week it might decide next month to shelve its C$3.5 billion ($2.2 billion) Fort Hills oil sands development because an "investment malaise" created by Kyoto fears was scaring away potential partners.

Early this month, Canadian Natural Resources Ltd. cut the budget for its planned C$8 billion Horizon development in northern Alberta by C$100 million in 2003, and pushed back the target start-up date a year to 2008. It too blamed Kyoto.

A senior government official told an industry conference in Calgary this week that under Ottawa's latest plan, Kyoto commitments would add just 12 cents to the cost of producing a barrel of oil, a figure disputed by industry officials.

(With additional reporting by Jeffrey Jones in Calgary)