South Bow explores increasing crude exports after Carney raises Keystone XL revival with Trump

South Bow Corp. SOBO-T says it is exploring ways to leverage existing oil pipeline corridors to increase crude exports, in the wake of Prime Minister Mark Carney raising the prospect of reviving the long-dead Keystone XL pipeline project in discussions with U.S. President Donald Trump.

The company said in a statement that while it’s not privy to discussions between the Canadian and U.S. governments, it supports any efforts to boost the transportation of Canadian crude.

“We will continue to explore opportunities that leverage our existing corridor with our customers and others in the industry,” the statement said.

During a conversation with Mr. Trump about energy co-operation, Mr. Carney brought up Keystone XL, which was designed to ship 830,000 barrels of crude a day along a 1,947-kilometre route from Hardisty, Alta., to Steele City, Neb.

The idea is to use the pipeline as leverage to alleviate tariffs for Canada’s steel and aluminum sectors if the construction of Keystone has Ottawa’s support, according to a senior federal government official.

Officials to continue trade talks after Carney leaves White House meeting empty-handed

Opinion: What Keir Starmer figured out about Donald Trump before the rest of us

The official said that Mr. Trump was very receptive to the idea of reviving the pipeline, and that the topic will be an important one during follow-up discussions between Canada and the United States in the days ahead.

The Globe and Mail is not naming the official as they were not authorized to speak publicly about the issue.

Calgary-based company TC Energy Corp. TRP-T terminated Keystone XL in 2021, ending a project that appeared to have run out of options after Joe Biden pulled its permit as one of his first official acts as U.S. president.

The company then spun off its oil pipeline business into a new company, South Bow. In February, when Mr. Trump repeated calls to get the pipeline built, South Bow said that it had “moved on” from Keystone.

TC Energy’s decision to nix Keystone ended a 13-year regulatory odyssey that saw the proposed pipeline blocked twice by then-president Barack Obama and revived by Mr. Trump, his successor. The project’s cancellation was a significant blow to Alberta, whose economy has struggled in the face of constrained pipeline access and whose government bought an ownership stake under then-premier Jason Kenney in 2020.

2024: Donald Trump wants to revive long-dead Keystone XL pipeline as he pushes fossil-fuel agenda

The pipeline, which had become a focal point for climate change activists in Canada and the United States, would have given Alberta oil companies a long-sought direct route to refineries on the U.S. Gulf Coast.

The oil sectors of Canada and the U.S. are joined at the hip, with the U.S. importing more crude from its northern neighbour than from any other country.

About 40 per cent of U.S. refineries are specifically tooled for heavy crude – the kind produced in Canada, predominantly from the oil sands. In 2023, Canadian crude accounted for about 24 per cent of U.S. refinery output, according to the U.S. Energy Information Administration. That’s about 3.9 million barrels a day – an increase from 17 per cent in 2013.

Although the U.S. remains the largest customer for Canadian crude, Mr. Trump’s global trade war has the oil sector here looking to expand its export options.

Alberta Premier Danielle Smith has been pushing for another pipeline to the British Columbia coast, for example, which would open up more access to Asian markets thirsty for oil.

Last week, the Alberta government announced it was taking the lead on an application for a major new oil pipeline in an attempt to break through several federal policies that Ms. Smith has blamed for scaring away private investors.