Evaluation-South Bow plan to revive elements of Keystone XL wants Trump approval, US oil pipeline hyperlinks

By Amanda Stephenson

CALGARY, March 2 (Reuters) – A proposal led by Canadian firm South Bow to revive elements of the cancelled Keystone XL oil pipeline may improve Canada’s crude exports to the U.S. by greater than 12%, if it will get a inexperienced gentle from U.S. President Donald Trump and extra hyperlinks to U.S. refining hubs ‌are constructed.

The brand new proposal includes a special route by means of the U.S. than the earlier Keystone XL pipeline mission cancelled by former U.S. President Joe Biden in 2021 after ‌years of Indigenous and environmental opposition.

South Bow, which was arrange by former Keystone XL proponent TC Vitality in 2024 to take over its oil pipeline enterprise, is contemplating reviving a few of the line that was already inbuilt ​Alberta and already has all obligatory Canadian permits.

Canadian Prime Minister Mark Carney introduced up the pipeline’s revival in a dialog with Trump in October and it may present him leverage in upcoming negotiations round renewing the U.S.-Mexico-Canada (USMCA) commerce settlement.

Trump – whose tariff wars and annexation threats have strained relations with Canada – has repeatedly known as for decrease oil costs and plenty of U.S. refiners rely on the roughly 4.4 million barrels per day of exports that Canada sends south of the border.

South Bow’s potential U.S. companion, Bridger Pipeline, not too long ago filed a proposal with Montana regulators that describes the development of a 645-mile (1,038-km) pipeline – able to ‌transporting as much as 550,000 bpd – starting close to the U.S.-Canada border in ⁠Phillips County, Montana, and transiting to Guernsey, Wyoming.

However analysts say Guernsey isn’t an finish marketplace for crude oil, so extra hyperlinks would have to be constructed to move oil to refining hubs similar to Cushing, Oklahoma; Patoka, Illinois; and the U.S. Gulf Coast.

Probably the most credible configuration could be a ⁠new pipeline spanning roughly 425 miles from Guernsey to Steele Metropolis, Nebraska, the place it may hook up with the prevailing Keystone mainline system, stated Matthew Lewis, founding father of Plainview Vitality Analytics. From there, the oil may transfer into underutilized pipelines operating towards Cushing, Patoka and Wooden River, Illinois.

It stays unclear, nevertheless, who could be keen to tackle the danger related to that leg of a mission.

“The most important problem on this plan ​in ​a Guernsey-to-Steele Metropolis phase is gaining permits, and constructing new pipeline that will probably face environmental litigation tying ​up such a mission up in court docket,” Lewis stated.

South Bow stated its ‌proposal may hook up with downstream pipelines within the U.S. however declined to remark additional. Bridger Pipeline declined to remark.

LEVERAGING EXISTING INFRASTRUCTURE

Bridger is proposing to construct the Montana-to-Guernsey leg in areas alongside current pipeline infrastructure, its software states, which might probably make getting required permits simpler. On the Alberta aspect, roughly 150 km of Keystone XL pipe is already constructed and has been sitting idle since that mission was cancelled.

A White Home spokesperson declined to touch upon the South Bow-Bridger proposal, however analysts stated a presidential allow could be required for the phase that crosses the U.S.-Canada border. Even when the Trump administration helps the plan, there is no such thing as a assure that the subsequent U.S. administration would, stated Richard Masson, former CEO of the Alberta Petroleum Advertising Fee.

Whereas the proposal could ‌be totally different than Keystone XL, it stays a large-scale pipeline growth and can probably entice the ire of ​environmentalists, landowners and Indigenous communities, he stated.

Many pipeline tasks within the U.S. have been cancelled or slowed down in ​litigation. Trump and his workforce have tried to chop regulation and pace permits, however ​a multi-year mission throughout multiple administration would carry political threat.

“It brings up all the identical points. For individuals who needed Keystone XL cancelled, ‌that is all the identical stuff,” Masson stated.

COMPETING EXPORT PIPELINE EXPANSIONS

The proposed ​mission comes on the similar time that the corporate ​behind the Trans Mountain pipeline from Alberta to Canada’s west coast is planning a sequence of enhancements that would improve its capability by 360,000 bpd.

South Bow’s competitor, Enbridge, has already authorised growth tasks for its Flanagan and Mainline pipeline methods, which can add a mixed 250,000 bpd of capability for Canadian heavy oil shippers shifting crude to the ​U.S. Midwest and Gulf Coast.

These tasks are easier than South ‌Bow’s proposal and might be extra financial, stated TD Securities analyst Aaron MacNeil.

He stated South Bow will face questions from buyers about its capability to finance a ​new pipeline mission whereas sustaining its dividend and avoiding taking up an excessive amount of debt.

(Reporting by Amanda Stephenson in Calgary; extra reporting by Siddharth Cavale in New York, ​Valerie Volcovici in Washington and Georgina McCartney in Houston; Modifying by Caroline Stauffer and Nia Williams)