CORRECTED-South Bow says US, Canada policy shift boosts prospects for Keystone XL revival

By Amanda Stephenson

CALGARY, March 6 (Reuters) - The company behind a plan to revive the Keystone XL pipeline system to increase Canadian oil exports to the United States is hopeful a North American policy shift in favour of energy development will shelter its project from the political and regulatory hurdles that led to its cancellation in 2021.

CEO Bevin Wirzba of Canadian pipeline operator South Bow said Friday the world has changed since U.S. President Joe Biden canceled the permit for Keystone XL after years of Indigenous and environmental opposition.

"The policy environment in North America has been far more constructive," Wirzba said. He said the current war in Iran as well as the ongoing conflict in Ukraine emphasize the need for energy security.

"Those realities are a great backdrop for us to provide maybe a solution," Wirzba said on a conference call.

South Bow, which was set up by former Keystone XL proponent TC Energy in 2024 to take over its oil pipeline business, is considering reviving some of the line that was already built in ​Alberta and already has all necessary Canadian permits.

The proposal is not identical to Keystone XL, as the U.S. segment of the pipeline would be built not by South Bow, but by U.S. partners. The full route and details of how the various segments would come together remain unknown, but the goal is to ultimately transport up to 550,000 bpd of Canadian oil to the U.S. Gulf Coast, according to a regulatory filing by U.S. partner Bridger Pipeline.

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The company's plan comes as U.S. President Donald Trump has sought to speed energy project permitting times and boost domestic oil and gas production. A presidential permit would be required for the proposed new pipeline to cross the Canada-U.S. border.

In Canada, Prime Minister Mark Carney is depending on the energy sector to help boost the country's economy, and has pledged to speed permitting times in addition to dropping some climate legislation that the oil industry said was impeding its growth.

Carney's moves thus far have materially moved the needle in favour of considering a pipeline development, Wirzba said. He said South Bow has launched a formal open season process aimed at gauging commercial interest in new pipeline space, and more broadly, gauging the Canadian oil industry's confidence in its ability to grow production in the coming years.

Wirzba declined to say what its proposed project — which South Bow is calling the "Prairie Connector" pipeline — would cost or when construction might start.

But he said many of Canada's oil sands companies have indicated they plan to increase output materially over the next three to five years.