A Canadian company named South Bow is spearheading a proposal to revive sections of the previously terminated Keystone XL oil pipeline. If approved by U.S. President Donald Trump and with the construction of additional links to U.S. refining hubs, this initiative could potentially boost Canada’s crude exports to the U.S. by over 12%.
Unlike the original Keystone XL project, which was canceled by former U.S. President Joe Biden due to opposition from Indigenous and environmental groups in 2021, the new proposal suggests a different route through the U.S. South Bow, established by TC Energy in 2024 to take over its oil pipeline business, is contemplating resurrecting parts of the existing line in Alberta that already possess all required Canadian permits.
Canadian Prime Minister Mark Carney discussed the pipeline’s revival with Trump in October, a move that could offer leverage in forthcoming negotiations regarding the renewal of the Canada-U.S.-Mexico trade agreement (CUSMA).
South Bow’s potential U.S. partner, Bridger Pipeline, 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. The pipeline is planned to start near the U.S.-Canada border in Phillips County, Montana, and extend to Guernsey, Wyoming. However, for the oil to reach refining hubs like Cushing, Oklahoma, Patoka, Illinois, and the U.S. Gulf Coast, additional links must be established since Guernsey itself is not a primary crude oil market.
Matthew Lewis, founder of Plainview Energy Analytics, suggests a feasible configuration involving a new 680-kilometer pipeline from Guernsey to Steele City, Nebraska, connecting with the existing Keystone mainline system. Nonetheless, uncertainties loom over who would be willing to undertake the associated risks of this segment of the project, particularly in terms of permits and potential environmental litigation.
Bridger’s proposal involves constructing the Montana-to-Guernsey leg adjacent to existing pipeline infrastructure to facilitate permit acquisition. On the Alberta side, approximately 150 kilometers of Keystone XL pipe have already been laid but remain unused since the previous project’s cancellation.
While a White House spokesperson refrained from commenting on the South Bow-Bridger proposal, analysts emphasize the necessity of a presidential permit for the segment crossing the U.S.-Canada border. Even if the Trump administration backs the plan, future U.S. administrations may not offer the same support, according to Richard Masson, former CEO of the Alberta Petroleum Marketing Commission.
The proposed revival of the Keystone XL pipeline, though different from its predecessor, is anticipated to stir controversy among environmentalists, landowners, and Indigenous communities. Masson highlights the political challenges associated with long-term projects spanning multiple administrations, especially given the history of pipeline disputes and cancellations in the U.S.
Simultaneously, South Bow faces competition from other pipeline expansions, such as the Trans Mountain pipeline enhancements and Enbridge’s approved projects to increase shipping capacity for Canadian heavy oil to the U.S. Midwest and Gulf Coast. Analysts suggest that these projects may prove more economically viable compared to South Bow’s proposal, raising concerns about the company’s financial stability and debt management among potential investors.