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Executives at South Bow Corp. have reported a surge in customer demand for shipping oil through the southern segment of their pipeline network. This uptick is attributed to recent geopolitical tensions that have heightened the need for increased oil exports, particularly to the U.S. Gulf Coast. The Calgary-based company oversees the Keystone system, which transports crude oil from eastern Alberta to various refineries across the Midwest and down to the Texas coast.
Rising Demand for Oil Exports
According to Richard Prior, the Chief Operating Officer of South Bow, there has been a notable increase in throughput on the Keystone system over recent months. In the first quarter of 2026, the average daily throughput reached 616,000 barrels per day, with the Gulf Coast segment alone averaging around 709,000 barrels daily. The capacity of this segment is over 800,000 barrels per day; however, there are constraints on expanding this capacity further.
New Projects on the Horizon
In light of the growing demand, South Bow is currently evaluating bids for a new initiative called the Prairie Connector. This project aims to transport oilsands crude to the Canada-U.S. border and facilitate further distribution into the United States. Interestingly, Prairie Connector could potentially utilise existing pipeline infrastructure that was originally intended for the now-defunct Keystone XL expansion project, which faced significant environmental and political backlash prior to its cancellation.
TC Energy Corp. had initially pursued the Keystone XL project before spinning off its oil pipeline business to form South Bow in 2024. Meanwhile, the recent granting of a permit by U.S. President Donald Trump to Bridger Pipeline LLC for a line connecting Wyoming to the Canadian border could align with the Prairie Connector, possibly enhancing its viability.
Navigating Regulatory Landscapes
South Bow’s CEO, Bevin Wirzba, highlighted the importance of ensuring that any new project adheres to both Canadian and U.S. regulatory frameworks. “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,” Wirzba stated. He emphasised the need for meticulous risk management, stating, “We need to ensure that we manage and mitigate any last-mile risk that could occur on the project in the future.”
As the company considers partnerships for the Prairie Connector, Wirzba elucidated that they are still finalising key elements, including contracting strategies and cost estimates, to ensure the project aligns with their risk preferences.
Financial Performance and Future Outlook
In its latest financial report, South Bow Corp. announced a net income of US$77 million for the first quarter, a decrease from US$88 million in the same period last year. The earnings reflect a drop to 37 cents per share, down from 42 cents in 2025, while revenues fell slightly from US$498 million to US$491 million. Despite these fluctuations, South Bow remains focused on strategic growth and operational efficiency as they navigate the changing energy landscape.
Why it Matters
The developments at South Bow Corp. signal significant shifts in the oil transportation sector, particularly as demand for Canadian crude increases amidst geopolitical uncertainty. The potential revival of the Keystone XL infrastructure through innovative projects like the Prairie Connector highlights the ongoing balancing act between energy needs, environmental considerations, and regulatory compliance. As the global energy market continues to evolve, the decisions made by companies like South Bow will have far-reaching implications for both the Canadian economy and international energy dynamics.
