Canada’s South Bow will decide whether to proceed with its proposed partial revival of the Keystone XL oil pipeline by mid-2027, the company said on Friday, as it announced it has secured the shipper commitments it was seeking to advance the project. The proposed 550,000-barrel-per-day Alberta-to-Wyoming pipeline, dubbed Prairie Connector, could increase Canada’s crude exports to the U.S. by 12%, adding much-needed Canadian pipeline capacity.
South Bow, working with U.S. partner Bridger Pipeline on the proposal, said it has secured 20-year binding contracts from oil companies through a process launched this year to gauge commercial interest. Reuters reported this month that South Bow was close to reaching its goal of securing 450,000 bpd, or 80% of initial pipeline capacity, citing sources.
PIPELINE PARTLY ASSEMBLED IN CANADA
South Bow spun off from former Keystone XL proponent TC Energy in 2024 to take over its oil pipeline business.
While the new pipeline does not follow the same U.S. route as an earlier project that was cancelled in 2021 when former President Joe Biden revoked its permit, it would use some of the already-assembled Keystone XL pipe on the Canadian side of the border.
U.S. President Donald Trump has signed an order granting a cross-border permit to the new proposal. But South Bow CEO Bevin Wirzba on Thursday the company cannot proceed unless it has evidence that permit is “durable,” and will not be revoked by a future administration.
While the successful open season to secure shipper commitments achieves a significant milestone, there is lingering risk about the U.S. permit, said TPH Energy analyst AJ O’Donnell.
“Without assurances that a new U.S. administration would not revoke the permits in 2029, as Biden did with KXL, the project is likely to be stalled,” O’Donnell said.
South Bow has not publicly put a pricetag on its project, but ATB Capital Markets analysts said it could cost $2.2 billion (C$3 billion) and take two to three years to build after an investment decision.
Canada, the world’s fourth-largest oil supplier, produces 5.5 million bpd. Forecasts suggest that could climb to 6.1 million bpd by 2030.
(Reporting by Amanda Stephenson in Calgary and Arathy Somasekhar in Houston Editing by Rod Nickel)