A Canadian company, South Bow, is proposing to revive sections of the Keystone XL oil pipeline, potentially boosting Canada’s crude exports to the U.S. by over 12% pending approval from U.S. President Donald Trump and the construction of additional links to U.S. refining centers.
This new proposal outlines a different pathway in the U.S. compared to the previous Keystone XL project, which was canceled by former U.S. President Joe Biden in 2021 following opposition from Indigenous groups and environmental advocates.
South Bow, established by TC Energy in 2024 to oversee its oil pipeline operations, is contemplating the revitalization of a portion of the pipeline already constructed in Alberta and possessing all required Canadian permits.
Canadian Prime Minister Mark Carney discussed the pipeline’s potential revival with Trump in October, seeing it as a negotiating leverage point for the upcoming Canada-U.S.-Mexico trade agreement talks.
The proposed collaboration between South Bow and U.S. partner Bridger Pipeline includes the construction of a 1,038-kilometer pipeline starting near the U.S.-Canada border in Montana and ending in Wyoming, with a capacity of up to 550,000 barrels per day. However, additional links to key refining hubs like Cushing, Oklahoma, Patoka, Illinois, and the U.S. Gulf Coast would be necessary as Wyoming is not a primary crude oil market.
Experts suggest extending the pipeline further to Steele City, Nebraska, connecting it to the existing Keystone mainline system to facilitate oil transport to crucial refining locations. Despite the potential benefits, uncertainties linger regarding project stakeholders willing to undertake associated risks, especially in obtaining permits and navigating potential environmental challenges.
While South Bow and Bridger Pipeline have remained tight-lipped about specific details, Bridger’s strategy involves constructing the pipeline alongside existing infrastructure to streamline the permitting process. On the Canadian side, a segment of the Keystone XL pipe has already been built but remains inactive since the project’s cancellation.
The White House has not commented on the South Bow-Bridger proposal, emphasizing the necessity of a presidential permit for the cross-border segment. Richard Masson, a former CEO of the Alberta Petroleum Marketing Commission, highlights the likelihood of opposition from environmentalists, landowners, and Indigenous communities towards such large-scale pipeline expansion initiatives.
In a parallel development, Enbridge, a competitor of South Bow, has greenlit expansion projects for its pipeline systems, aiming to enhance Canadian heavy oil shipping capacity to U.S. markets. These projects are perceived as more straightforward and economically viable compared to South Bow’s ambitious proposal.
As South Bow navigates investor inquiries regarding financing, debt management, and dividend sustainability for its pipeline venture, industry analysts anticipate a challenging path ahead amid regulatory scrutiny and political uncertainties spanning multiple administrations.