CALGARY – TransCanada Corp.’s Keystone XL project will reportedly be exempt from U.S. President Donald Trump’s requirement that pipelines in the U.S. be built with American steel – even though the company had already purchased 50 per cent of the steel from an Arkansas mill.

News website Politico reported Friday that TransCanada will not be subject to Trump’s recent executive order requiring pipeline operators to build projects like Keystone XL with American steel “to the maximum extent possible.”

TransCanada spokesperson Matthew John would not confirm whether Keystone XL had been exempt from the executive order but said, “We continue to be encouraged as our Presidential Permit application makes its way through the approval process.”

The Washington-based political news site cited an unnamed White House spokeswoman who said that Keystone XL “is currently in the process of being constructed, so it does not count as a new, retrofitted or expanded pipeline” and would therefore not be subject to the recent executive order.

The pipeline’s approval process has reportedly progressed to the point where Canada’s ambassador to Washington told Bloomberg he expects a smooth ride for the Alberta-to-Nebraska pipeline.

“I don’t see any big hurdles in the way of Keystone from the administration’s point of view,” David MacNaughton, Canada’s ambassador to the U.S., told Bloomberg.

While the state of Nebraska may still have some issues, the outlook for the pipeline’s approval looks “very positive,” MacNaughton said.

The buy-American provision had been considered a major obstacle and Keystone’s exemption would be a remarkable about-face for Trump, who in multiple speeches stressed that the Keystone XL developer must use American-made steel for the project.

Neither the White House nor U.S. consulate offices in Canada responded to requests for comment on the American steel requirement.

In his speech to Congress this week, Trump said, “We have cleared the way for the construction of the Keystone and Dakota Access pipelines – thereby creating tens of thousands of jobs – and I’ve issued a new directive that new American pipelines be made with American steel.”

Trump also reportedly told U.S. Steel Corp. CEO Mario Longhi in February that the TransCanada would need to buy “steel made in this country and pipelines made in this country,” according to Politico.

TransCanada’s John pointed out that TransCanada had announced in 2012 that it bought half of the pipe necessary for the line back from Little Rock, Ark.-based Welspun Pipes Inc.

A 2012 release from TransCanada shows the company purchased 50 per cent of the needed steel from Welspun, another 24 per cent of the pipe was made at the Chicago-based Evraz North America plc’s Regina plant.

The remaining 26 per cent of the pipe for Keystone XL was manufactured by Gruppo ILVA, an Italian steel producer, and from Welspun’s Indian operations.

An industry veteran who asked not to be named said most of the iron used to make steel at Evraz’s Regina is bought from the U.S. Midwest. Steel is made from a combination of iron and metallurgical coal.

Nicholas Kamm/AFP/Getty Images
Nicholas Kamm/AFP/Getty ImagesU.S. President Donald Trump signed executive orders recently reviving the construction of two controversial oil pipelines, one of which is the Keystone XL.

At Trump’s invitation, TransCanada recently re-applied for a presidential permit for Keystone XL, necessary since the line crosses the U.S. border, after former president Barack Obama rejected the line on environmental grounds and said it wouldn’t provide enough benefit to the U.S. economy.

“This project will support U.S. energy security, create thousands of well-paying U.S. jobs and provide substantial economic benefits,” John said.

TransCanada also asked a Texas judge to pause its US$15-billion lawsuit against the U.S. government this week, which claimed Obama had exceeded his executive power in rejecting the line.

The company’s stock was down 0.46 per cent to $60.84 in late afternoon trading on the Toronto Stock Exchange.

Financial Post with files from Bloomberg
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