US and Canada weigh revival of ‘zombie’ Keystone XL pipeline in trade talks

Unlock the White Home Watch e-newsletter for freeYour information to what Trump’s second time period means for Washington, enterprise and the worldThe US and Canada are contemplating reviving a controversial oil pipeline as a part of a grand discount to ease a few of President Donald Trump’s tariffs on metal and aluminium.Dominic LeBlanc, who’s chargeable for Canada-US commerce, has been in Washington this week for talks with senior US officers, following a gathering between Trump and Prime Minister Mark Carney within the White Home final week.Officers from each side mentioned that the prospect of restarting work on the Keystone XL oil pipeline — scrapped by former US president Joe Biden on environmental grounds — was on the desk and had been mentioned in latest conferences.Ottawa was “open to exploring Keystone” if the US wished to, Canada’s power minister Tim Hodgson instructed the Monetary Instances. He mentioned Canada, the US’s largest overseas provider of oil by far, would hyperlink power provide with progress on Trump’s tariffs. “We’re open to discussing the development of continental power safety, if we additionally handle the irritants for metal and aluminium,” Hodgson mentioned.One particular person conversant in the discussions throughout Carney’s go to final week mentioned US officers pushed Canada to offer extra power in trade for tariff aid. Keystone XL was raised in that context, the particular person mentioned. A US official mentioned reviving the venture was “one thing the president would really like”, however cautioned it was “not a silver bullet” to resolve the commerce dispute between the 2 international locations. The official mentioned the US remained involved about different commerce obstacles. Keystone XL, first proposed greater than 15 years in the past, was an extension to an present system and would have shipped 830,000 barrels a day of heavy crude from the western province of Alberta to refineries on the US Gulf coast.However it grew to become a lightning rod for the environmental motion, which mentioned that the infrastructure would underpin the growth of carbon-intensive tasks in Alberta’s north.Barack Obama shuttered the venture in 2015 because it “wouldn’t serve the nationwide pursuits of the US”. It was relaunched in 2017 by Trump throughout his first presidency however scrapped once more by Biden in June 2021. TC Vitality, the Canadian developer, terminated the venture shortly after Biden’s cancellation, prompting jubilation from oil sand opponents. Republicans have continued to name for its revival in recent times.In February Alberta premier Danielle Smith posted on X “agreed” in response to Trump’s Fact Social submit “We wish the Keystone Pipeline XL constructed!” Keystone XL had change into Canada’s “zombie pipeline”, mentioned Rory Johnston, an oil analyst at Commodity Context. “It has change into some bizarre image within the place of precise progress in Canada’s oil trade,” he mentioned. “By no means constructed however by no means totally lifeless, at all times there when somebody wants it.”Tim Hodgson: ‘Identical to we’re speaking about continental power safety, I believe we have to speak about continental safety with respect to metal and aluminium’ © Lauren Krugel/The Canadian Press/ReutersAny tariff aid for Canada would break an deadlock that has left the US’s second-biggest buying and selling accomplice amongst a handful of nations to not have struck a considerable cope with Trump.Though Canada was supplied a big carve-out from sweeping tariffs Trump unveiled in April, he imposed 50 per cent levies on its metal and aluminium, in addition to new duties on vehicles and lumber. Canada has already totally permitted its portion of the Keystone XL pipeline, however years of intensive lobbying in Washington had didn’t revive the venture within the US. Hodgson mentioned growing US entry to Canadian oil sands may benefit “continental power safety”, provided that many American refineries have been set as much as course of the heavy crude.“Identical to we’re speaking about continental power safety, I believe we have to speak about continental safety with respect to metal and aluminium. If we’re coping with all these issues, Canada’s open to having that dialogue,” he mentioned.Canada equipped greater than 4mn b/d of crude to its southern neighbour final yr, about 60 per cent of the US’s complete crude imports.Heather Exner-Pirot, head of power at Ottawa’s Macdonald-Laurier Institute think-tank, mentioned declining provides of heavy oil from Mexico and Venezuela, coupled with slowing output progress from US shale fields, boosted Canada’s case.It ought to come as “no shock that the USA was going to return in search of secure, low cost and dependable provide from the Canadian oil sands”, she mentioned. South Bow, a TC Vitality spin-off that operates the Keystone pipeline system, mentioned it was not aware of the talks between the Canadian and US governments.“South Bow will proceed to discover alternatives that leverage our present hall with our clients and others within the trade,” mentioned a spokesperson.