Is Keystone XL Back on the Table?

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

It's possible the Keystone XL crude oil network could be revived, but in a different form. With a long history, new project proposals may run into different obstacles amid a changing world.

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Cross-Border Pipeline Expansions Possible

There could be developments on the Keystone oil pipeline from Canada that could lead to an increase in U.S. imports of Alberta's oil, though routes and politics could be complicating factors.

South Bow, created to handle the pipeline business from TC Energy, said it delivered an average of 594,000 barrels per day (BBL/d) through the entire Keystone network during the three-month period ending December 31, nearly 2% higher than third quarter levels.

Keystone stretches some 2,689 miles from Alberta to the U.S. Gulf Coast, with storage terminals in Hardisty, Alberta, Cushing, Oklahoma, and Port Arthur, Texas. It can transport about 15% of the crude from the so-called Western Canadian Sedimentary Basin (WCSB).

The Reuters news service on Tuesday reported that Bridger Pipeline, which could partner up with South Bow in the United States, filed an application with regulators in Montana for a Keystone artery beginning on the U.S-Canadian border in Montana to Wyoming. Additional tie-ins may be necessary to complement existing Keystone networks.

The entire project could be a tacit revival of the Keystone XL oil pipeline, which was cancelled by former President Joe Biden in 2021 following environmental and indigenous outcry. Canadian Prime Minister Mark Carney last year mentioned Keystone XL during a bilateral trade meeting with U.S. President Donald Trump. The route could be different from earlier proposals, Reuters added.

Proposed first in 2008, the pipeline's fate has been incredibly volatile. The original artery has a history of leaks, raising environmental concerns given the difficult process of remediating heavy Canadian crude, which sinks in water.

A southern portion of the proposed pipeline eventually was built, running from Cushing, Oklahoma, to Port Arthur, Texas.

New Obstacles in a New World

The proposal may run into political obstacles given the declining bilateral ties between Canada and the United States. The United States is Canada's largest trading partner, and its refining segment relies on heavy Canadian crude oil. Some 60%, or around 4 million barrel per day, of foreign oil imported into the U.S. market comes from Canada.

Trump since returning to office has upended trade relations with hefty tariffs on Canadian goods, even threatening to block the opening of a new bridge between Detroit and Ontario. Carney, for his part, is working to halve the amount of U.S. trade over the coming years and has supported new nation-building projects, which could possibly include a new export pipeline to British Columbia.

Apart from the broader tariff disputes, South Bow on Thursday said that conflict in the Middle East was not impacting its business or the long-term prospects for Canadian crude.

"Pricing differentials impacting the rates South Bow can charge for capacity on the U.S. Gulf Coast segment of its Keystone Pipeline System are expected to remain tight throughout 2026," the company added.

The revival would increase Canadian crude oil exports to the United States by more than 12%, though it would require U.S. approval. Despite South Bow's assurances on geopolitical issues, Canadian leaders have expressed concern about the possibility for additional Venezuelan barrels in the U.S. refining sector eating into its market share.

South Bow on Thursday reported revenue of US$368 million, compared to $357 during the same period in 2024. Fourth quarter net income of $114 million marked a 183% improvement over 2024 levels.

By the Numbers

• 12% increase in Canadian oil to U.S. possible
• 2,689-mile network could be expanded

Key Takeaways

• Keystone XL could be revived
• But trade and political issues could complicate that

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).