Executives at South Bow Corp. have reported a notable rise in customer interest for increased oil shipments along the southern segment of their pipeline network. Richard Prior, the company’s Chief Operating Officer, attributed this surge to recent geopolitical instability, which has significantly heightened the demand for oil exports, particularly through the U.S. Gulf Coast. The Calgary-based firm operates the Keystone pipeline system, which stretches from eastern Alberta to various refineries in the Midwest and along the Texas coastline.
Rising Throughput Amidst Geopolitical Uncertainty
The Keystone system, which covers approximately 4,900 kilometres from Alberta to the Gulf Coast, has seen an average throughput of 616,000 barrels per day during the first quarter of 2026. Notably, the Gulf Coast section alone averaged around 709,000 barrels daily. According to Prior, while this segment has the capacity to transport over 800,000 barrels per day, any further expansion of capacity is limited.
This uptick in demand comes as the energy market adjusts to a landscape altered by geopolitical tensions and is indicative of shifting dynamics in North American energy exports. South Bow is currently evaluating bids for a new initiative named Prairie Connector, aimed at transporting oilsands crude to the Canada-U.S. border for further distribution in the United States.
Prairie Connector: A New Opportunity
The Prairie Connector project has the potential to utilise existing infrastructure initially earmarked for the now-defunct Keystone XL expansion, which faced significant environmental and political challenges before being halted years ago. The Keystone XL project was previously championed by TC Energy Corp., which spun off its oil pipeline operations to establish South Bow in 2024.
In a related development, U.S. President Donald Trump recently issued a permit for a separate pipeline project by Bridger Pipeline LLC, connecting Wyoming to the Canada-U.S. border. This new pipeline could intersect with the proposed Prairie Connector, marking a significant step forward in the permitting process for cross-border energy infrastructure.
South Bow’s CEO, Bevin Wirzba, stated, “This represents a meaningful development in the permitting process for cross-border energy infrastructure and one that has understandably attracted its fair share of attention.” He emphasised the company’s commitment to advancing projects that align with their risk preferences, ensuring that any undertaken initiatives are well-managed and appropriately allocated among stakeholders.
Navigating Risks and Partnerships
As South Bow moves forward with its plans, Wirzba explained that finalising a partnership structure remains a work in progress. “We’re still baking the cake on a few elements of that,” he remarked, highlighting the need to establish a solid foundation regarding contracting strategies, supply chain logistics, procurement, and financial estimates before making a definitive investment decision.
Moreover, Wirzba stressed the importance of addressing potential risks associated with the project’s last-mile delivery. He indicated that while regulatory harmonisation between Canada and the United States is promising, it is crucial to shield shareholders from unmanageable risks.
Quarterly Financial Performance
On a financial note, South Bow recently reported a net income of US$77 million for the first quarter, marking a decline from US$88 million in the same timeframe last year. Earnings per share dropped to 37 cents from 42 cents a year earlier, while total revenue decreased slightly to US$491 million from US$498 million. Despite these figures, the company remains focused on growth and navigating the complexities of the energy sector.
Why it Matters
The increasing demand for oil exports amidst geopolitical challenges underscores the critical role of infrastructure in North America’s energy landscape. South Bow Corp.’s proactive approach to expanding its pipeline capacity through projects like Prairie Connector could not only bolster the company’s market position but also enhance energy security in the region. As the global energy market evolves, the decisions made now will have lasting implications for both the environment and the economy, highlighting the delicate balance between development and sustainability.
