A plan put forth by Canadian firm South Bow aims to resurrect sections of the defunct Keystone XL oil pipeline, potentially boosting Canada’s crude exports to the United States by over 12%. The proposal hinges on approval from U.S. President Donald Trump and the construction of additional links to American refining centers.
This new proposal outlines a different pathway through the U.S. compared to the previous Keystone XL project, which was axed by former U.S. President Joe Biden in 2021 following years of opposition from Indigenous groups and environmental advocates.
South Bow, established by former Keystone XL supporter TC Energy in 2024 to manage its oil pipeline operations, is exploring the revival of segments already constructed in Alberta, holding all necessary Canadian permits.
During discussions with Trump in October, Canadian Prime Minister Mark Carney broached the subject of the pipeline’s revival, potentially leveraging it in future negotiations related to the renewal of the Canada-U.S.-Mexico (CUSMA) trade agreement.
Trump, whose trade disputes and territorial claims have strained U.S.-Canada relations, has consistently advocated for lower oil prices. Numerous American refiners rely on the approximately 4.4 million barrels per day of Canadian oil exports.
Bridger Pipeline, a potential U.S. partner for South Bow, has submitted a proposal to Montana regulators for the construction of a 1,038-kilometer pipeline capable of transporting up to 550,000 barrels per day. This pipeline would begin near the U.S.-Canada border in Phillips County, Montana, and extend to Guernsey, Wyoming.
However, analysts note that Guernsey is not a primary crude oil market, necessitating the development of additional links to transport oil to key refining hubs like Cushing, Oklahoma; Patoka, Illinois; and the U.S. Gulf Coast.
The most feasible scenario would involve a new pipeline spanning over 680 kilometers from Guernsey to Steele City, Nebraska, connecting to the existing Keystone mainline system. This would allow the oil to flow into underutilized pipelines leading to Cushing, Patoka, and Wood River, Illinois.
However, the entity willing to undertake the associated risks for this segment remains unclear.
“The primary hurdle in this plan for the Guernsey-to-Steele City segment is obtaining permits and constructing new pipelines that could face environmental litigation, potentially entangling the project in legal proceedings,” explained Matthew Lewis, founder of Plainview Energy Analytics.
South Bow mentioned that its proposal might link to downstream pipelines in the U.S., but refrained from providing further details. Bridger Pipeline also declined to comment.
Leveraging existing infrastructure
Bridger’s proposal involves constructing the Montana-to-Guernsey segment alongside existing pipeline infrastructure, which could streamline the permit acquisition process. In Alberta, around