In a speech to the Financial Times Forum, Prentice, now a senior executive at CIBC, stressed the importance of the Canada-U.S. relationship.
"I say this because North America is accelerating towards a future of energy independence and the Canadian oilsands are an essential part of the North American energy marketplace," he said.
"That resource will afford both Canada and the United States security of supply and a consequential global competitive advantage for generations. That, in my view, is a prize work seeking."
A draft environmental report into the $5.3-billion pipeline released by the U.S. State Department earlier this month flagged no major environmental concerns with the project and said it was unlikely to affect the pace of oilsands development or U.S. oil consumption.
It will be a few more months before Obama decides whether to sign off on the long-delayed controversial project, which would deliver 830,000 barrels per day of mostly oilsands crude to U.S. markets.
Prentice, who handled the environment and industry portfolios when he was in government, said a rejection would force U.S. and Canadian producers to ship their crude by less efficient means, such as rail, and provide "an artificial competitive advantage for heavier crudes from less democratic, less market-oriented countries."
"In effect, such a decision moves us further away from North American energy security," he said.
Prentice's remarks followed a New York Times editorial urging Obama to say no to Keystone XL.
"A president who has repeatedly identified climate change as one of humanity's most pressing dangers cannot in good conscience approve a project that — even by the State Department's most cautious calculations — can only add to the problem," it said.
In Washington on Wednesday, Obama reportedly told House Republicans that jobs numbers and other benefits touted by Keystone supporters are probably exaggerated.
But participants who attended the closed-door meeting told The Associated Press that Obama did not rule out a decision to approve the pipeline and is still weighing a decision.
TransCanada, which is proposing the pipeline, initially said it could create at least 20,000 jobs, including 13,000 construction jobs and 7,000 jobs among suppliers and manufacturers. The company later clarified that the figures were for one person per year, based on a two-year construction timetable.
The U.S. State Department has estimated the project would create about 5,000 to 6,000 jobs.
Republican Rep. Lee Terry said Obama appeared “conflicted” on the pipeline, saying that many of the promised jobs would be temporary and that much of the oil produced likely would be exported.
But Terry said Obama also indicated that dire environmental consequences predicted by pipeline opponents were exaggerated.
“He said there were no permanent jobs, and that the oil will be put on ships and exported and that the only ones who are going to get wealthy are the Canadians,” Terry said.
Obama said the pipeline “is not going to create as many jobs as you (Republicans) hope,” according to Republican Rep. Steve Scalise, a pipeline supporter.
Meanwhile, Canadian politicians — including cabinet ministers and provincial premiers — have been parading through Washington pushing for approval.
NDP Leader Tom Mulcair, however, has not made the pipeline a focus of his trip to the U.S. capital. He has said it's up to the Americans to decide.
In a speech to the Woodrow Wilson Center on Wednesday, Mulcair made little mention of Keystone XL, but called Canada's natural resources a "tremendous blessing," provided they're developed in a sustainable way.
The Opposition leader has questioned whether Keystone XL is good for Canada, or whether it will mean high-paying oilsands processing jobs flow south of the border along with the oil. He has spoken out in support of a west-to-east pipeline proposal to bring more Canadian crude to Canadian refineries.
"I would make sure that we took care of our energy security —something the current government's not doing — because whatever else happens with global warming we will have to heat our houses and run our factories," he said.
The Tories have lambasted Mulcair for his unwillingness to speak out in favour of Keystone XL during his visit to the U.S. capital.
International Trade Minister Ed Fast, who is also visiting Washington with Treasury Board President Tony Clement and Public Safety Minister Vic Toews this week, said Mulcair is trying to "please everybody by speaking out of both sides of his mouth" when it comes oilsands development.
"They haven't even realized that when you travel abroad, as members of parliament, they should be promoting Canada's interests, not their own narrow political interests, so it's pretty frustrating for us," he said.
— By Lauren Krugel in Calgary and with files from The Associated Press