South Bow plan to refurbish parts of Keystone XL needs Trump’s approval, US oil pipeline link
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A proposal led by Canadian company South Bow to revive parts of the canceled Keystone XL oil pipeline could increase Canadian crude oil exports to the US by more than 12 per cent if it gets the green light from US President Donald Trump and additional links are built to US refining hubs.
The new proposal includes a different route through the US than the previous Keystone XL pipeline project, canceled by former US President Joe Biden in 2021 after years of indigenous and environmental opposition.
South Bow, which was set up by former Keystone XL proponent TC Energy to take over its oil pipeline business in 2024, is considering reviving some of the line that was already built in Alberta and already has all the necessary Canadian permits.
Canadian Prime Minister Mark Carney raised the issue of the pipeline’s revival in talks with Trump in October, and it could give him leverage in upcoming talks to renew the Canada-US-Mexico (CUSMA) trade agreement.
Trump – whose tariff war And merger threats There are strained relations with Canada – there have been repeated calls to lower oil prices, and many US refiners depend on exports of the approximately 4.4 million barrels per day that Canada ships south of the border.
South Bow’s potential US partner, Bridger Pipeline, recently filed a proposal with Montana regulators describing the construction of a 1,038-kilometre-long pipeline – capable of transporting up to 550,000 barrels per day – starting near the US-Canada border in Phillips County, Montana and running to Guernsey, Wyoming.
But analysts say Guernsey is not the end market for crude, so additional links will need to be built to deliver oil to refining centers such as Cushing, Oklahoma; Patoka, Illinois; and the US Gulf Coast.
Prime Minister Mark Carney raised the Keystone XL pipeline project during talks with U.S. President Donald Trump on Tuesday, according to a source CBC News is not identifying because they were not authorized to speak publicly. The news has supporters wondering whether the project, which has been canceled more than once, could be revived again.
Matthew Lewis, founder of Plainview Energy Analytics, said the most plausible configuration would be a new pipeline more than 680 kilometers long from Guernsey to Steele City, Nebraska, where it could connect to the existing Keystone mainline system. From there, the oil can move into underutilized pipelines running toward Cushing, Patoka and Wood River, Illinois.
However, it is not clear who would be willing to assume the risk associated with that phase of a project.
“The biggest challenge to this scheme in the Guernsey-to-Steel City segment is securing permits and building the new pipeline, given the environmental litigation that could take such a project to court,” Lewis said.
South Bow said its proposal could connect to downstream pipelines in the US. But declined to comment further. Bridger Pipeline declined to comment.
Taking advantage of existing infrastructure
Its application states that Bridger is proposing to build the Montana-to-Guernsey leg in locations with existing pipeline infrastructure, which would potentially make it easier to obtain the necessary permits. On the Alberta side, about 150 kilometers of Keystone XL pipe has already been built and is sitting idle since that project was cancelled.
A White House spokesman declined to comment on the South Bow-Bridger proposal, but analysts said the segment crossing the US-Canada border would require presidential permission. Richard Mason, former CEO of the Alberta Petroleum Marketing Commission, said even though the Trump administration supports the plan, there is no guarantee the next U.S. administration will do so.
While the proposal may differ from Keystone XL, it is a massive pipeline expansion and will likely draw the ire of environmentalists, landowners and Indigenous communities, Mason said.
Many pipeline projects in the US have been canceled or mired in litigation. Trump and his team have tried to cut regulation and speed permits, but committing to a multi-year project across more than one administration would be a political risk.
“It brings up all the same issues. It’s all the same things for the people who wanted to cancel Keystone XL,” Mason said.
competitive export pipeline expansion
The proposed project comes at the same time as the company behind the Trans Mountain Pipeline from Alberta to Canada’s west coast is planning several enhancements that could increase its capacity to 360,000 bpd.
South Bow’s competitor Enbridge has already done so allowed Expansion projects for its Flanagan and mainline pipeline systems, which will add a combined 250,000 bpd capacity for Canadian heavy oil shippers carrying crude to the US Midwest and Gulf Coast.
Those projects are less complex than the South Bow proposal and would be more affordable, said TD Securities analyst Aaron McNeil.
He said South Bow will face questions from investors about its ability to finance a new pipeline project while maintaining its dividend and avoiding taking on too much debt.
