As Ottawa and Alberta push for a new West Coast pipeline, Keystone XL is back in the debate as a potentially cheaper and faster way to move more Alberta crude.<\/p>\n
First proposed in 2008, Keystone XL was meant to carry oilsands crude from Alberta into the US pipeline system and toward Gulf Coast refineries built to process heavy oil. US President Donald Trump brought the issue back into focus Tuesday when he delayed threatened tariffs on Canadian goods for three days and said Keystone XL \u201cmay be awoken from the grave.\u201d<\/p>\n
The comments land as the provincial and federal governments are advancing a West Coast pipeline as a nation-building project that would open markets in Asia and reduce Canada\u2019s exposure to US trade threats.<\/p>\n
But the Keystone route has a stronger near-term business case because it connects Alberta crude to refineries that already want it, said Richard Masson, former CEO of the Alberta Petroleum Marketing Commission.<\/p>\n
\u201cThe reality is Canada wants to maintain and enhance the US market, because that\u2019s a good market for us, but we also want to have diversification, which means getting to the West Coast,\u201d Masson said.<\/p>\n
Alberta Premier Danielle Smith said the province is pursuing pipeline options in multiple directions.<\/p>\n
\u201cWhile there\u2019s still more work to be done, I\u2019m encouraged by the recent progress we\u2019ve seen in Canada-US trade negotiations,\u201d Smith said in an email statement to Canada\u2019s National Observer. \u201cAs we await the details of this deal, I urge the federal government to continue negotiating to resolve the remaining tariff issues and restore free and fair trade with the United States, while also diversifying and strengthening the Canadian economy.\u201d<\/p>\n
\u201cAlberta wants to build new pipelines West, East, North, and South, and we are always in discussions with industry to support these opportunities,\u201d Smith said.<\/p>\n
Masson said the two routes serve different purposes. A southern pipeline has the clearer commercial case because it would add capacity to the US, Canada\u2019s largest oil market, where Gulf Coast refineries are built to process heavy crude from Alberta. The US received 97 per cent<\/a> of Canada\u2019s crude oil exports by value in the decade before the Trans Mountain expansion. Even after the expansion, it still accounted for 90.1 per cent<\/a> of crude exports in 2025.<\/p>\n If Alberta crude can reach Gulf Coast refineries efficiently, Masson said producers are more likely to receive world prices; currently Canadian oil bound for the US is sold at a discount relative to global prices for similar products. Higher producer returns also mean more royalties and taxes for governments.<\/p>\n Expanding or optimizing an existing pipeline system would likely be the lowest-cost way to increase Canada\u2019s export capacity, said Celina Hwang, director of Canadian crude oil markets at S&P Global Energy. But she said the lowest-cost route for a pipeline operator may not be the best economic choice for Canada.<\/p>\n Hwang said Alberta sees new pipeline capacity as a way to attract more investment into Western Canada\u2019s oil sector. The choice for Canada is whether to keep expanding through the US system or take the harder but more independent route of building new access to global markets from Canada\u2019s West Coast, she added.<\/p>\n The West Coast proposal would give Canadian producers access to more buyers in Asia and reduce dependence on the US, but Masson said diversification would come at a higher cost. The federal-Alberta proposal would largely follow the existing Trans Mountain corridor through BC to a deepwater port near Delta, including Roberts Bank, but would still require a major new pipeline, pump stations and export infrastructure.<\/p>\n \u201cCertainly Canada wants to have a sovereignty that comes with having customers from many countries,\u201d Masson said. \u201cAnd we may have to pay a cost for that.\u201d<\/p>\n Masson said the Keystone project has changed since the original proposal was cancelled. TC Energy, the company that twice tried to build Keystone XL, has since spun its oil pipeline business into a new Calgary-based company called South Bow. That company now owns the existing Keystone pipeline system, along with some assets left over from the cancelled Keystone XL project, which had been intended to expand Keystone\u2019s capacity. Masson said South Bow has been testing whether oil producers and refiners still want more pipeline space to the US, and that work has now taken shape as Prairie Connector, a proposed line from Hardisty, Alta. to the US border, where it would connect with Bridger\u2019s proposed US pipeline system to carry oil farther south toward major refining and storage hubs.<\/p>\n