A Canadian company, South Bow, is putting forth a new plan to reinvigorate sections of the previously scrapped Keystone XL oil pipeline. If approved by U.S. President Donald Trump and with the construction of additional links to U.S. refining centers, this initiative could potentially boost Canada’s crude oil exports to the U.S. by more than 12%.
This proposed project differs from the previous Keystone XL pipeline route that was canceled by former U.S. President Joe Biden in 2021 due to prolonged opposition from Indigenous groups and environmental advocates. South Bow, a company established by TC Energy in 2024 to take over its oil pipeline operations, is exploring the revival of a portion of the pipeline that was already constructed in Alberta and possesses all the necessary Canadian permits.
Canadian Prime Minister Mark Carney raised the possibility of reviving the pipeline during discussions with President Trump in October, which could offer leverage in forthcoming negotiations related to the renewal of the Canada-U.S.-Mexico trade agreement (CUSMA).
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. The pipeline would start near the U.S.-Canada border in Phillips County, Montana, and extend to Guernsey, Wyoming. However, analysts point out that additional links would be necessary to transport the oil to key refining hubs such as Cushing, Oklahoma; Patoka, Illinois; and the U.S. Gulf Coast.
According to Matthew Lewis, founder of Plainview Energy Analytics, the most feasible configuration would involve a new pipeline spanning over 680 kilometers from Guernsey to Steele City, Nebraska, connecting to the existing Keystone mainline system. Despite the potential benefits, uncertainties remain about who would be willing to undertake the risks associated with this segment of the project.
South Bow and Bridger Pipeline have refrained from providing further comments on their proposals. Bridger intends to build the Montana-to-Guernsey leg alongside existing pipeline infrastructure to facilitate the permit acquisition process. In Alberta, approximately 150 kilometers of the Keystone XL pipeline have already been constructed but remain unused following the project’s cancellation.
While the new proposal differs from the original Keystone XL project, it is still a substantial pipeline expansion that is likely to face opposition from environmentalists, landowners, and Indigenous communities. The project’s approval process could be complex, and there are uncertainties about the future support it might receive from different U.S. administrations.
In a competitive landscape, Enbridge, a rival of South Bow, has already 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 targeting the U.S. Midwest and Gulf Coast. Comparatively, these projects are considered less intricate and more financially viable than South Bow’s proposal. Investors are anticipated to scrutinize South Bow’s ability to fund a new pipeline project while upholding dividends and managing debt levels effectively.
