Skip to main content

The Globe and Mail

Trudeau welcomes Trump’s Keystone pipeline revival

Prime Minister Justin Trudeau speaks to the media at the end of a two-day cabinet retreat in Calgary, Alberta, January 24, 2017.

CHRIS BOLIN/REUTERS

Donald Trump has taken executive action to pave the way for the Keystone XL pipeline – his first concrete step on U.S.-Canada relations as President and part of his plan to expand the oil industry.

But the President warned he will look to "renegotiate" the terms of the project – likely extracting payments from TransCanada Corp. to the U.S. Treasury in exchange for approval – and that he wants the pipes themselves to be manufactured in the United States.

The long-planned pipeline has become a symbol both of Canada's efforts to get land-locked bitumen to international markets and a flashpoint in the battle over climate change. Former president Barack Obama blocked Keystone in 2015 under pressure from environmental activists.

Story continues below advertisement

Read more: Why do we need Keystone XL anyway?

Read more: Canadian oil patch cheers Keystone XL revival

Economic insight: With Keystone in play, oil may be spared from any U.S.-Canada trade spat

Mr. Trump's move signals his expected rupture with his predecessor's stance on the climate.

In a memorandum signed in the Oval Office on Tuesday, the President invited TransCanada to reapply to build Keystone and directed the U.S. Department of State to make a favourable decision on the application within 60 days, while seeking a "better deal" from the company. "Subject to a renegotiation of terms by us – we're going to renegotiate some of the terms – and if they'd like, we'll see if we can get that pipeline built," Mr. Trump said.

Prime Minister Justin Trudeau welcomed the President's move to revive Keystone, saying he has spoken twice with Mr. Trump and discussed the project both times.

"I've been on the record for many years supporting it because it leads to economic growth and goods job for Albertans," he said after a cabinet meeting in Calgary.

Story continues below advertisement

He noted the federal-provincial climate agreement will limit any impact on greenhouse gases because Alberta has set a cap on oil sands emissions. "We know we can get our resources to market more safely and responsibly while meeting our climate-change goals."

Mr. Trudeau also said he misspoke earlier this month when he told an audience in Peterborough, Ont., that Alberta's oil sands must be phased out.

"I misspoke. I said something the way I shouldn't have said it," Mr. Trudeau explained. He added, however, that over the long term, the world is going to have to wean itself off oil in order to combat climate change.

The White House later on Tuesday clarified that the renegotiation of Keystone would involve extracting "a benefit" for the treasury.

Former Exxon Mobil Corp. chief executive Rex Tillerson has been tapped as secretary of state and is awaiting confirmation by the Senate.

Another directive from Mr. Trump on Tuesday ordered government departments to speed up permits for the equally contentious Dakota Access Pipeline.

Story continues below advertisement

The President also signed a memo ordering the Department of Commerce to come up with a plan for using American steel in the Keystone and Dakota Access pipelines, and further orders for the government to roll back the environmental assessment process to get decisions on projects made faster.

TransCanada has said its shippers remain committed to the project, which would deliver diluted bitumen from Alberta's oil sands to refineries on the Gulf Coast that are specifically equipped to process heavy crude.

The construction of Keystone, however, is not yet a sure thing.

First, TransCanada will have to make a deal with the Trump administration on its tithe to the treasury.

TransCanada will also have to sort out how it can meet Mr. Trump's "Buy American" proviso: A 2012 breakdown of the steel to be used on Keystone showed that about half was to be manufactured in the United States, a quarter in Canada and the rest in Italy and India.

TransCanada also needs to secure a permit to build the line across Nebraska, where opponents won a crucial court battle invalidating the governor's approval. As a result of that ruling, the company now has to apply through Nebraska's public-service commission to get approval for its route, and that process can take up to a year.

Green groups oppose the project on the basis that pipeline expansion encourages the extraction of more oil and the release of the greenhouse gases that cause climate change. Landowners along the route, for their part, also opposed the project out of fears of environmental contamination and expropriation of their lands.

In South Dakota, U.S. indigenous groups are gearing up for a Keystone fight similar to the one that has occurred at Standing Rock in North Dakota over the proposed Dakota Access Pipeline, said Kandi Mossett, a spokeswoman for the Indigenous Environmental Network.

In addition to direct protest action, tribal councils are considering court challenges to defend their treaty rights and access to clean water.

"We shut it down before and we can shut it down again," said Ms. Mossett, who is a member of the Fort Berthold reservation situated in the heart of the Bakken oil field of North Dakota. "If they want to revive it, they can expect our non-violent, direct-action tactics. This is the fight of our lives."

Lena Moffitt, a campaigner with the Sierra Club, said environmentalists would explore legal options for blocking the pipe and promised to mobilize mass protests.

"This fight is not over. These pipelines are not a certainty – people are ready to hit the streets," she said.

Canada's Natural Resources Minister Jim Carr said that – despite Mr. Trump's protectionist promise Tuesday – he expected TransCanada would cut a deal that still allowed much of the work – such as assembling the pipe – to be done in Canada.

"It's a position that the American President has taken. It's subject to negotiation with TransCanada and I'm sure that that conversation will yield a set of conditions. … Our interest is this pipeline will be built on the north side of the border," he said.

In late November, the Liberal government approved two major pipeline expansions, Kinder Morgan Inc.'s Trans Mountain line to Vancouver harbour and Enbridge Inc.'s Line 3 to the U.S. Midwest, that together boosted export capacity by a million barrels a day.

Dakota Access, for its part, has been the subject of clashes between First Nations and climate activists camped at the Standing Rock reservation in North Dakota since last spring. In December, Mr. Obama's government denied the pipeline permission to build on its proposed route.

Mr. Trump promised during the election to help both pipelines proceed. His America First Energy Plan, released Friday shortly after he took office, promised to slash regulations on oil and gas development, roll back climate action and revive the coal industry.

"For too long, we've been held back by burdensome regulations on our energy industry. President Trump is committed to eliminating harmful and unnecessary policies such as the Climate Action Plan and the Waters of the U.S. rule," the policy reads. The policy statement also pledges to cut U.S. reliance on the Organization of Petroleum Exporting Countries – a promise that could make Canadian oil more attractive to the United States.

Ms. Moffitt contended Mr. Trump's big bet on oil would put the United States behind in the world's transition to a cleaner economy, ceding an advantage to China and other countries that are developing renewable energy.

"Trump is ready to double down on the dirty energy sources of the past. The green energy economy is roaring ahead, and someone is going to benefit," she said.

Report an error Licensing Options
About the Authors
Washington correspondent

Adrian Morrow covers U.S. politics from Washington, D.C. Previously he was The Globe's Ontario politics reporter. He's covered news, crime and sports for The Globe since 2010. He won the National Newspaper Award for politics reporting in 2016. More

Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

Please note that our commenting partner Civil Comments is closing down. As such we will be implementing a new commenting partner in the coming weeks. As of December 20th, 2017 we will be shutting down commenting on all article pages across our site while we do the maintenance and updates. We understand that commenting is important to our audience and hope to have a technical solution in place January 2018.

Discussion loading… ✨