Prime Minister Stephen Harper is backing a plan to send oil to Canada’s eastern provinces from Alberta as the Obama administration decides whether to allow construction of the Keystone XL pipeline.

Harper met Canadian oil-industry executives in Calgary April 11 to build support for a plan by TransCanada Corp. to ship crude to Saint John, New Brunswick, about 640 kilometres northeast of Boston. Executives from TransCanada and Saint John-based Irving Oil Corp. attended the meeting, according to two people familiar with the matter who asked not to be named because the discussions weren’t public.

Canada “strongly supports constructing energy infrastructure that will help transport Western Canadian oil to the east,” Harper wrote in an April 29 letter obtained by Bloomberg News. He was replying to Conservative lawmakers from New Brunswick who had asked for a fast regulatory review of the proposed project.

A “made-in-Canada” pipeline to the east coast could have a “huge” impact on shares of Alberta-based producers, while lessening eastern Canada’s need to import crude, said Daniel Cheng, vice president and portfolio manager in Calgary at Matco Financial Inc. who helps oversee $420 million.

Canada should “evaluate as many options as possible as opposed to simply relying on one, like Keystone XL,” Cheng said in a phone interview May 31.

Calgary-based TransCanada plans to convert part of its Mainline natural-gas line to carry crude and extend it by 1,400 kilometers to reach refineries as far east as Saint John.

The company started soliciting bids April 15 from refiners and oil producers interested in transporting crude on the pipeline, which could handle as many as 850,000 barrels per day.

The project, which TransCanada calls Energy East, would provide relief to producers facing a supply glut in the central U.S. that has helped depress the price for Canadian heavy crude. Oil-sands crude has traded at an average discount this year of $23 (U.S.) a barrel to the main U.S. grade, according to data compiled by Bloomberg.

With Energy East, “that differential would at least stabilize and narrow,” said Cheng.

Alberta Premier Alison Redford said Jan. 24 the province will collect $6 billion less revenue this year as a result of the price gap. The Bank of Canada cited the glut as a factor that helped cut 0.4 percentage points from the country’s annualized growth rate in the second half of last year.

Harper has stressed the need to diversify markets for Canada’s energy exports even as his government lobbies for approval of Keystone, which would transport Alberta oil to the Gulf Coast. The U.S. consumes 99 per cent of Canada’s oil exports.

The government “strongly supports, in principle, proposals that would transport western Canadian oil to Eastern Canada,” spokesman Carl Vallee said in an email

TransCanada spokesman Philippe Cannon said in an email the company won’t comment on meetings with elected officials. “We view all levels of government, municipalities and provinces, as important stakeholders.”

Carolyn Van der Veen, a spokeswoman for Irving Oil, declined to comment when asked about the meeting.

New Brunswick Premier David Alward said the pipeline would give a “huge boost” to the province, which had a jobless rate of 10.9 per cent in April, compared with 7.2 per cent nationally, according to Statistics Canada.

“This project and what it could mean to our country is as important as the construction of the railway was to Canada centuries ago,” Alward said June 3 by phone, adding he will discuss the project with Redford tomorrow when she visits Saint John for an Irving-Oil sponsored luncheon.

Redford will support the “push for stronger East-West pipeline links” in Saint John this week, Stefan Baranski, a spokesman for the premier, said by email.

Interest in Energy East is rising as Keystone remains stalled. TransCanada applied to Canadian and U.S. regulators to build the pipeline five years ago and originally planned to open the line in 2012.

Since Obama initially rejected the project in January last year, citing concerns over its route through ecologically sensitive lands in Nebraska, Canadian energy stocks have underperformed their U.S. peers by 12.8 percentage points. TransCanada shares have lost 0.6 per cent so far this year, while energy stocks have returned 2.6 per cent.

The company rerouted the line and submitted a new application last year. It postponed in April its targeted startup to the second half of 2015, citing delays in getting a U.S. presidential permit.

Building a route west to the Pacific coast has also been a hard sell for pipeline companies. Enbridge Inc. has faced opposition from environmentalists and aboriginal groups to its proposed Northern Gateway pipeline to the British Columbia coast. The provincial government said May 31 it can’t support the $6 billion project because of spill risks.

Enbridge has proposed its own pipeline to the east coast. The company plans to reverse a crude conduit called Line 9 to carry oil to Montreal.

In their March 22 letter to Harper, 14 Conservative lawmakers called on the government to conduct a single regulatory review for Energy East. “The last thing this project needs is unnecessary red tape or approval processes.”

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John Williamson, one of the lawmakers who signed the letter, said in an email “A lack of political support has, at best, delayed projects elsewhere or, at worst, killed them in other Canadian and U.S. jurisdictions.”

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