Successful Open Season for Canada's Prairie Connector Pipeline

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

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Summary

South Bow says it secured 20-year commitments for its proposed Prairie Connector pipeline. The company is expecting a final investment decision next year.

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20-Year Commitments

Commercial support for the proposed Prairie Connector oil pipeline in Alberta is emblematic of the need to expand access to Canadian crude, developers said.

Industrial Info Resources data show the pipeline could carry as much as 450,000 barrels per day (bpd) of crude oil from Hardisty, Alberta, to the U.S.-Canada border. That would represent about 12% of the total amount of crude oil delivered to the United States each week from Canadian suppliers. Subscribers to the Industrial Info Resources Global Market Intelligence (GMI) Pipelines Project Database can learn more by viewing the project report.

Prairie Connector would include the construction of 236 miles of new 36-inch-diameter pipeline. There are about 93 miles of leftover pipeline and two pump stations available as well, presumably from the Keystone XL artery, which never made it across the U.S.-Canada border.

On Friday, South Bow, a spinoff of TC Energy that's leading pipeline developments, said it concluded a successful open season on Prairie Connecter, with 20-year binding commitments.

"Achieving strong commercial support in the open season marks another critical milestone for our proposed Prairie Connector project and underscores the ongoing need for market access for Western Canadian crude oil to key demand and refining markets," said Bevin Wirzba, South Bow's chief executive officer.

South Bow said it was targeting a final investment decision on the pipeline by the middle of next year. It still needs government permits, assurances about "permit durability," cost estimates and a range of other factors before it can reach that step.

Total exports of crude oil, refined petroleum products, natural gas and natural gas exports were valued at US$114 billion last year, accounting for 20.2% of Canada's total goods exported globally.

What About Trade Diversity?

Canada is already the top exporter of crude oil to the United States, where many refineries are tailored to run the heavier slates of crude such as what's found in bitumen-rich Alberta. U.S. federal data show a four-week moving average to May 22 of 3.7 million bpd, which is about 60% of foreign deliveries.

Both economies are highly interconnected, though Canadian Prime Minister Mark Carney is working to halve U.S. trade in response to the belligerent comments on trade and sovereignty from U.S. President Donald Trump.

Canada can already deliver crude oil outside of North America through the Trans Mountain pipeline. A Major Projects Office meant to steer nation-building projects includes liquefied natural gas exports from British Columbia, and a recent agreement with the provincial government of Alberta calls for an entirely new pipeline to the Pacific Coast.

The Prairie Connector from Alberta could contrast with those efforts, however. It would connect to the planned Bridger pipeline in the United States, which entails the construction of a 435-mile crude oil pipeline that would transport about 550,000 bpd of Canadian and Bakken crude from the U.S.-Canada border to Guernsey, Wyoming.

Running a similar proposed route for the U.S. leg of Keystone XL, the project includes a potential extension to Steele City, Nebraska, for further connection to Gulf Coast markets.

Trump signed an executive order granting a cross-border permit for the Bridger Pipeline earlier this year.

By the Numbers

• 450,000 bpd from Prairie Connector
• 12% increase in Canadian oil exports to U.S. market

Key Takeaways

• Prairie Connector could connect to U.S. Bridger Pipeline
• Routes mirror Keystone XL

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