A plan put forward by South Bow, a Canadian company, aims to resurrect sections of the Keystone XL oil pipeline, potentially raising Canada’s crude exports to the U.S. by over 12% pending approval from U.S. President Donald Trump and the establishment of additional connections to U.S. refining centers.
The proposed route for this revived project differs from the previous Keystone XL pipeline, which was scrapped by former U.S. President Joe Biden in 2021 following opposition from Indigenous groups and environmental activists.
South Bow, created by TC Energy in 2024 to manage its oil pipeline operations, is contemplating the revival of a segment in Alberta that is already constructed and possesses all necessary Canadian permits.
Canadian Prime Minister Mark Carney broached the topic of reviving the pipeline during discussions with Trump, potentially giving him leverage in future talks regarding the renewal of the Canada-U.S.-Mexico trade agreement (CUSMA).
Trump, known for his trade disputes with Canada, has consistently advocated for lower oil prices, with many U.S. refiners reliant on the roughly 4.4 million barrels of crude oil per day imported from Canada.
Bridger Pipeline, a potential U.S. partner for South Bow, has submitted a proposal to Montana regulators outlining the construction of a 1,038-kilometer pipeline capable of transporting up to 550,000 barrels per day from Phillips County, Montana, to Guernsey, Wyoming.
However, analysts point out that Guernsey is not an ideal crude oil destination, necessitating the construction of additional links to transport oil to key refining centers like Cushing, Oklahoma, Patoka, Illinois, and the U.S. Gulf Coast.
The most viable configuration, according to Matthew Lewis of Plainview Energy Analytics, would involve a new pipeline spanning over 680 kilometers from Guernsey to Steele City, Nebraska, connecting to the existing Keystone mainline system to facilitate the movement of oil to various refining hubs.
Obtaining permits and addressing potential environmental litigation pose significant challenges for the Guernsey-to-Steele City segment of the project, making its execution uncertain.
South Bow mentioned the possibility of linking with downstream pipelines in the U.S., while Bridger Pipeline declined to provide further comments on the matter.
Bridger’s strategy involves constructing the Montana-to-Guernsey leg alongside existing pipeline infrastructure to streamline the permit acquisition process. On the Canadian side, approximately 150 kilometers of the Keystone XL pipeline have already been built but remain inactive since the project’s cancellation.
While the revived proposal differs from the original Keystone XL project, it is anticipated to face opposition from environmentalists, landowners, and Indigenous communities due to its large-scale nature.
In light of the challenges associated with multi-year projects spanning multiple administrations, the likelihood of gaining support for the proposal remains uncertain, despite efforts to expedite regulatory processes.
Simultaneously, Enbridge, another major player in the industry, has greenlit expansion projects for its Flanagan and Mainline pipeline systems, which will collectively add 250,000 barrels per day of capacity for Canadian heavy oil shippers transporting crude to U.S. markets.
Compared to South Bow’s proposal, these Enbridge projects are deemed less complex and more economically viable, according to analysts, who also highlight potential investor concerns regarding South Bow’s financial capacity to undertake a new pipeline venture while maintaining financial stability and avoiding excessive debt.
