EXCLUSIVE-Carney knew of South Bow's Keystone XL plans before White House meeting, source says

By Amanda Stephenson

CALGARY, Feb 24 (Reuters) - Canadian Prime Minister Mark Carney was aware of oil company South Bow's plans to revive parts of the canceled Keystone XL pipeline to the United States when he floated the idea to U.S. President Donald Trump in October, a source familiar with the matter said on Tuesday.

South Bow, the Canadian pipeline company behind the canceled Keystone XL pipeline, is considering reviving some of the already-built line in an expansion project aimed at transporting more Canadian oil to the United States, the source said.

During Carney's meeting at the White House, he raised with Trump the prospect of reviving the Keystone XL oil pipeline from Alberta to the United States, as part of his efforts to ease trade tensions between the two countries.

Carney, who was under increasing pressure in Canada to address painful U.S. tariffs on steel, autos and other goods, asked Trump if he would be interested if the Keystone project were to be revived and had Canadian support, Reuters reported in October.

At that time, South Bow said it had "moved on" from Keystone but was supportive of efforts to increase the transportation of Canadian oil.

Carney was aware then that South Bow was in talks with potential U.S. partners to resurrect part of the old Keystone XL line, a federal source familiar with the matter told Reuters.

"He certainly was aware that there would be some private-sector interest," the source said. The source declined to be named in order to speak freely about the matter.

The Canadian government is not involved in any way with the South Bow proposal, the source said, but added that energy in general will be an important part of negotiations during the upcoming review of the Canada-United States-Mexico trade agreement, or CUSMA.

A spokesperson for Carney's office declined to comment, referring questions to Canada's Department of Natural Resources.

Natural Resources spokesperson Charlotte Power, in an emailed reply, said: "Canada is an energy superpower, and we have what the world wants.

"As the federal government prepares for the CUSMA review, we are actively engaging with industry leaders and provinces and territories to ensure our negotiating position reflects Canada's economic interest."

A spokesperson for Calgary-based South Bow SOBO.TO confirmed in an email to Reuters that the company is evaluating a proposal that would leverage its existing infrastructure and already-permitted corridors in Canada to potentially connect to crude oil pipelines in the U.S.

The spokesperson did not specify what existing infrastructure it might use or what company it would partner with south of the border.

U.S. company Bridger Pipeline recently filed a proposal with Montana regulators that describes the construction of a potential 645-mile (1,038-km) pipeline beginning near the U.S.-Canada border in Phillips County, Montana, and transiting to Guernsey, Wyoming.

The purpose of the new pipeline, Bridger said in its application, would be to transport up to 550,000 barrels per day of Canadian crude oil to the U.S. market. Bridger declined to comment on the matter.