Carney pitches Keystone XL restart in exchange for progress on aluminum, steel

CTV News has learned the Keystone XL pipeline expansion project was discussed during Prime Minister Mark Carney's meeting with President Donald Trump.

Following the prime minister’s meeting with president Donald Trump on Tuesday in Washington, CTV News has learned that Mark Carney and Trump discussed Keystone XL pipeline expansion.

Sources say that the now-defunct pipeline project was raised in the context of the U.S. providing relief to Canada from steel and aluminum tariffs.

A government source who was briefed on the discussions told The Canadian Press that Trump was “very receptive” to the idea during his Tuesday meeting with Carney in the White House, and the two leaders directed their teams to pursue discussions in the days ahead.

The source said Carney and Trump discussed co-operation across different sectors, and how agreements in one sector could affect progress in another.

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 before Trump revived it in his first presidency, only for it to be quashed again under President Joe Biden.

“Well, Keystone XL is one of those projects that’s been kicked around for a long time,” said Corey Hogan, Liberal MP for Calgary-Confederation Park.

“Certainly it could be another one of the levers that increases North American energy security and certainly warrants exploring but the devil is always in the details on these things, so we’d have to see how it came out of those conversations,” Hogan added.

No proponent

The talks come as B.C. premier David Eby and Alberta premier Danielle Smith engage in a war of words over Smith pitching the idea of a new pipeline project to the B.C. north coast, near Prince Rupert.

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Eby says there is no proponent for the project, while Smith says Eby is blocking Alberta resources from getting access to new markets.

Smith has given Carney until the middle of November to decide if a pipeline project meets the “nation building” criteria.

“I suppose I could just go down to the United States and start working with American counterparts to see if we can build more pipelines,” said Smith in an interview on PowerPlay with Vassy Kapelos Tuesday.

“They’ve expressed an interest in restarting the Keystone XL, and I suppose we could maybe sell another million or two million barrels a day, additional, to the United States.”

But Smith says she wants to find a made-in-Canada solution to exporting to new markets, including increased exports to Asia.

Smith says she believed the premiers and prime minister months ago to get Canada to “work like a country” and remove interprovincial trade barriers.

“If it doesn’t work, then I guess I’ll have to work with the United States, but that then is a failure in my opinion,” said Smith.

“The whole reason why we’ve had this recalibration in Canada in the last eight months is because people are nervous that we are too reliant on the United States.”

‘Supportive’

South Bow, which owns KXL, says it is not privy to the ongoing discussion between both governments.

“South Bow is supportive of efforts to find solutions that increase the transportation of Canadian crude oil,” read a company statement.

“We will continue to explore opportunities that leverage our existing corridor with our customers and others in the industry.”

Richard Masson, executive fellow at the University of Calgary School of Public Policy and former CEO of the Alberta Petroleum Marketing Commission, says for Keystone XL to work a third time, there needs to be financial backing from the U.S. government, that it will not be cancelled.

“Two times Democratic (Party led) governments have canceled the pipeline,” said Masson.

“The last time around there was $3.5 billion of losses.” That last time was in January 2021, when then-president Joe Biden killed the project.

Prior to that, President Barack Obama nixed the proposal.

Since, Trump has rescinded the order by Biden to revoke the permit for the project, which in turn could allow a company like South Bow to revive the project.

“Keystone XL isn’t a thing anymore. It was a TC Energy pipeline. And, TC Energy isn’t even in the oil pipeline business anymore. They sold that off into South Bow, which is a much smaller company,” said Masson.

“Many of the rights of way have expired. The pipe that was in the ground, much of it’s been pulled out. So, it would have to start at square one.”

Masson says despite the solid united front from premiers and the prime minister, he believes if a pipeline project were to proceed, which one is more realistic.

“Keystone is in the race,” said Masson.

A better option

Former TC energy executive Dennis McConaghy, who worked on the original KXL proposal says the prime minister has to be serious for this project to succeed.

“Because any pipeline that is going to be built to carry incremental oil sands production right now faces two elements of Canadian climate policy that are extraordinarily problematic,” he said.

“It’s constructive that this idea is in play, but the onus to make it really serious is up to Mark Carney,” McConaghy added.

McConaghy says a revived KXL pipeline expansion could be a better option for Canada, in the immediate future.

“It has one element that is actually, I think potentially makes it, a better candidate than the West Coast one, (and that) is simply that it avoids the issue of having to get the concurrence of British Columbia and all of the much more unsettled circumstances with respect to land claims,” he said.

“If Mark Carney sends the right signals, there will be a (private sector) proponent.”

The project was set up to ship more than 800,000 barrels from Hardisty, Alta. to Nebraska, providing access to the US Gulf Coast.

Welcome news

News of Carney’s pitch was welcomed by 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.”

With files from The Canadian Press