OTTAWA (CNN) -- In a phone conversation that came as little surprise, President Barack Obama called Canadian Prime Minister Stephen Harper Wednesday afternoon to explain why he had rejected the Keystone oil sands pipeline project.
In a statement released by Harper's office, the president is quoted as saying that the decision was not a decision based on the "merits of the project" and that TransCanada, the company looking to build the pipeline, could reapply for permission after a new route had been developed.
The statement went on to say that Prime Minister Harper "...expressed his profound disappointment with the news. He indicated to President Obama that he hoped that this project would continue given the significant contribution it would make to jobs and economic growth both in Canada and the United States of America."
But crucially, the statement also said that the prime minister reiterated to President Obama that Canada will continue to work to diversify its energy exports.
In fact, in a sign of warming relations, Harper is scheduled to make a high-profile trip to China in February. Canada is proposing to build a pipeline of its own through western Canada that would make oil exports to China faster and cheaper.
In recent months, Harper has pushed more forcefully for the Northern Gateway pipeline project to get underway, calling it in the country's "national interest" as it works to develop markets other than the United States for its crude oil exports.
The Gateway project, like the Keystone Pipeline proposal, is facing significant protests from environmental and community groups.