Prime Minister Mark Carney raised the prospect of reviving the Keystone XL pipeline project with U.S. President Donald Trump on Tuesday as part of a larger pitch on linking energy co-operation and support for Canada's steel and aluminum sectors.
A government source who was briefed on the discussions told The Canadian Press Trump was "very receptive" to the Keystone idea during his meeting with Carney at the White House, and the two leaders directed their teams to pursue discussions in the days ahead.
CBC News was first to report on Carney raising Keystone XL.
The source said Carney and Trump discussed co-operation across different sectors, and how agreements in one sector could affect progress in another.
Prime Minister Mark Carney spoke virtually at a conference in Toronto hosted by BMO and Eurasia Group Wednesday and said the meeting involved a "very granular" discussion around steel, aluminum and energy. That discussion "has a pathway to specific progress there," he said.
Trump posted on social media in February that he wanted to revive the Keystone XL project, which would run Alberta crude oil down to refineries on the U.S. Gulf Coast.
The project was shut down by the Obama administration. Trump revived it in his first presidency, only for it to be quashed again under president Joe Biden.
South Bow Corp., the oil pipeline operator spun off from TC Energy Corp. last year and now the owner of the existing Keystone system, said in February — following Trump's social media post — the company had "moved on" from the XL expansion project.
A spokesperson for South Bow told The Canadian Press on Wednesday the company was not privy to ongoing discussions between Canada and the U.S. but it "is supportive of efforts to find solutions that increase the transportation of Canadian crude oil."
"We will continue to explore opportunities that leverage our existing corridor with our customers and others in the industry," Solomiya Lyaskovska wrote in a media statement.
News of Carney's pitch was welcomed by Alberta Premier Danielle Smith, who has been on a tour of Quebec and Ontario this week pitching a new pipeline project to the West Coast.
"They're talking about a steel, aluminum and energy construct for a deal to start easing some of the pain on the tariffs. So I think that that's a positive," Smith said at a conference in Toronto on Wednesday.
"What I told Prime Minister Carney when he came in is, stop threatening to sell the U.S. less energy, and let's promise to sell them more. Because I think that's the pathway to a solution."
Observers say Carney's move to leverage Keystone XL could serve to kill two birds with one stone — both in negotiations with the United States, but also domestically.
"It should address a prickly political problem that our national government has with the province of Alberta, who seems to be highly committed to a new oil pipeline," said former Canadian ambassador to the U.S., Frank McKenna.
He said Carney could leverage a renewed Keystone XL project to also push Alberta to see its Pathways carbon-capture project with any advancement on Keystone.
"I can't imagine the premier (of Alberta) could move the goalpost again and say 'I not only want more oil pipelines, I want two, not just one.' I think it would be difficult to make that argument," McKenna said.
Conservative MP Andrew Scheer told reporters Wednesday his party welcomed the renewed interest in Keystone XL but he called the project "low hanging fruit" in a negotiation between the two countries. He said without a scale back of environmental policies — namely the emissions cap on oil and gas producers — it doesn't serve Canada much good.
"It doesn't matter if you can build a pipeline if you can't put anything through it," Scheer told reporters in Ottawa. "This pipeline does not truly solve Canada's sovereignty problem. Under the Liberals, Canada has become even more dependent on the U.S. And while this pipeline would provide benefits to Canada, it still means we're selling our energy to the U.S."
Interim NDP leader Don Davies criticized Carney on the proposal to revive Keystone XL, saying it differs from what Carney campaigned on.
"He said that the days of closer economic and military integration with the United States are over," Davies told reporters.
"I fail to understand the economics of that because part of the idea of providing East-West infrastructure is to reduce our reliance on oil and gas exports to the United States."
Environmental groups were also quick to criticize the move.
"It's hard to imagine anything more elbows-down than trying to revive Keystone XL," said Keith Stewart, senior energy strategist at Greenpeace Canada.
"We should be building a vibrant renewable energy sector in Canada, not deepening our dependence on oil and the United States."
Picture Courtesy: THE CANADIAN PRESS/Adrian Wyld
