South Bow’s plan to rehabilitate parts of Keystone XL needs Trump’s approval, links to US oil pipelines
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A proposal led by Canadian company South Bow to revive parts of the canceled Keystone XL oil pipeline could increase Canada’s crude exports to the US by more than 12 percent, if it gets the green light from US President Donald Trump and more links to US refineries are built.
The new proposal involves a different route through the US than the previous Keystone XL pipeline project that was canceled by former US President Joe Biden in 2021, after years of opposition from Indigenous and environmental groups.
South Bow, which was founded by former Keystone XL promoter TC Energy in 2024 to take over its oil pipeline business, is considering renovating one of the lines that was already built in Alberta and has all the necessary Canadian permits.
Canadian Prime Minister Mark Carney introduced the renewal of the pipeline in a meeting with Trump in October, and it could give him leverage in future negotiations on renewing the Canada-US-Mexico trade agreement (CUSMA).
Trump – whose tariff wars and threats of tariffs have strained relations with Canada – has repeatedly called for lower oil prices, and many US refiners depend on the nearly 4.4 million barrels a day that Canada sends south of the border.
South Bow’s potential US partner, Bridger Pipeline, recently submitted a proposal to Montana regulators detailing the construction of a 1,038 kilometer pipeline – capable of transporting up to 550,000 barrels per day – starting near the US-Canada border in Phillips County, Montana, and extending to Guernsey, W.
But analysts say Guernsey is not the final market for crude oil, so more links will need to be built to transport oil to refineries such as Cushing, Oklahoma; Patoka, Illinois; and the US Gulf Coast.
Prime Minister Mark Carney raised the Keystone XL pipeline project during a meeting with US President Donald Trump on Tuesday, according to a CBC News source who was not authorized to speak publicly. The news has supporters wondering if a project that has been canceled more than once can be revived again.
The most reliable configuration would be a new pipeline spanning more than 680 kilometers from Guernsey to Steele City, Nebraska, where it would connect to the existing Keystone mainline system, said Matthew Lewis, founder of Plainview Energy Analytics. From there, the oil can go through less-used pipelines to Cushing, Patoka and Wood River, Illinois.
However, it is not clear who would be willing to take the risk associated with that leg of the project.
“The biggest challenge in this project in the Guernsey-to-Steele City section is obtaining permits, and the construction of a new pipeline that may face an environmental case that binds this project to court,” said Lewis.
South Bow said its proposal could connect to downstream pipelines in the US. but declined to comment further. Bridger Pipeline declined to comment.
Using existing infrastructure
Bridger is proposing to build the Montana-to-Guernsey leg in areas compatible with existing pipeline infrastructure, his application says, which could make getting the necessary permits easier. On the Alberta side, about 150 kilometers of the Keystone XL pipeline has already been built and has been sitting idle since that project was canceled.
A White House spokesman declined to comment on the South Bow-Bridger proposal, but analysts said presidential approval would be required for the section that crosses the US-Canada border. Even if the Trump administration supports the plan, there is no guarantee that the next US administration will, said Richard Masson, former CEO of the Alberta Petroleum Marketing Commission.
While the proposal may be different from Keystone XL, it remains a major pipeline expansion and is likely to attract environmentalists, landowners and indigenous communities, Masson said.
Many US pipeline projects have been canceled or tied up in court. Trump and his team have tried to slow down regulatory approvals and speed, but a multi-year project under more than one administration could be politically risky.
“It shows all the same stories. For those who wanted the Keystone XL canceled, it’s all the same,” Masson said.
Competition for export pipeline expansion
The proposed project comes at the same time that the company behind the Trans Mountain pipeline from Alberta to Canada’s west coast is planning a series of upgrades that could increase its capacity by 360,000 bpd.
South Bow’s competitor, Enbridge, has already approved expansion projects for its Flanagan and Mainline pipeline systems, which will add a combined 250,000 bpd of capacity to Canadian heavy oil tankers moving green to the US Midwest and Gulf Coast.
Those plans are less complicated than the South Bow proposal and would be more economical, said TD Securities analyst Aaron MacNeil.
He said South Bow will face questions from investors about its ability to finance a new pipeline project while maintaining its profitability and avoiding taking on too much debt.
