South Bow approaches Saskatchewan landowners in bid to revive Keystone XL pipeline

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South Bow Corp. SOBO-T has approached farmers and ranchers in southwest Saskatchewan to re-survey land that lies along the original Keystone XL pipeline route, according to documents obtained by The Globe and Mail, as it looks to revive portions of the long-dead project.

The move follows months of speculation around the pipeline project, which was cancelled in 2021. And in October, Prime Minister Mark Carney raised the prospect of reviving Keystone XL during talks with U.S. President Donald Trump.

Calgary-based South Bow announced late Thursday that it has commenced an “open season” to solicit binding commitments for long-term volumes on a pipeline it calls Prairie Connector. The 450,000 barrel/day line would run from Hardisty, Alta., to multiple U.S. delivery points, including Cushing, Okla., and the Gulf Coast.

The open season for Prairie Connector runs until March 30. South Bow will then take 60 days to determine whether there is enough commercial support to advance the proposed project.

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But the company is already getting its ducks in a row on the ground. It is gathering permissions and making initial payments to landowners “for the purpose of surveying, examining and making other necessary arrangements on the lands for fixing the site for the Project,” according to the documents.

The land in question lies along the initial Keystone XL route, in the rural municipalities of Piapot, Arlington and Grassy Creek in the southwest corner of Saskatchewan. The original line was poised to run alongside the existing Foothills natural-gas system owned by TC Energy Corp., which ships Alberta natural gas to the U.S. border.

Here in rural Saskatchewan – a landscape of snow-scattered prairies that is home to ranches, farms and herds of pronghorn and deer – many remain skeptical that a new pipeline will be built. The region was burned by the on-again, off-again nature of Keystone XL; the common refrain is “I’ll believe it when I see it.”

And many landowners were reticent to speak on the record at all, lest it draw negative attention to a project they would like to see built.

Yet there is optimism; any little bit of cash helps with municipal upkeep, and workers in the region would bring much-needed business to towns like Maple Creek and Shaunavon.

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Don Lundberg, reeve of the Rural Municipality of Arlington, said a pipeline would be a huge tax win for his area, bringing in as much as $400,000 each year.

“I’m having my fingers crossed, hoping it goes through. It’s a real bonus for the landowners – they will get well-compensated – and for our municipality,” he said.

To the east, in the R.M. of Grassy Creek, reeve Michael Sutter cast his mind back to the cancellation of Keystone XL.

Piles of pipes for the original project are still lying on land in the municipality that had been purchased as a holding yard. It has since been sold off to a scrapping business, he said, which is slowly cutting the pipes into smaller pieces and carting them away.

“We were kind of looking forward to it, because it would have been sizable for our R.M.,” he said.

Cash from a new pipeline would “make running the R.M. a lot easier,” Mr. Sutter said – particularly as Grassy Creek doesn’t have much oil, unlike some neighbouring municipalities.

“We have a few wells, but it was going to make it so we could stand on our own two feet.”

During a Friday morning earnings call, South Bow chief executive Bevin Wirzba declined to give analysts a cost estimate or timeline for the potential pipeline.

However, he said, working within a preinvested corridor boosts the likelihood of advancing construction quickly.

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Many customers that would use Prairie Connector to transport oil from Alberta to the U.S. have announced significant growth ambitions over the next three to five years, Mr. Wirzba said. So, developing the project “in the midterm would be consistent with providing a competitive solution for our customers at the time frame of when they’re intending to have their production growth.”

South Bow’s permits for the Canadian portion of Keystone XL remain valid with the Canada Energy Regulator, even though the project was cancelled in 2021. However, the company has not filed anything with the CER regarding the Prairie Connector project, the regulator said.

The prospect of bringing part of Keystone XL back to life under the moniker of Prairie Connector follows a proposal by Bridger Pipeline LLC for a pipeline that would transport more than 500,000 barrels of oil a day from the Canada-U.S. border to Wyoming.

Bridger, a private oil-transportation company based in Casper, Wyo., submitted its proposal to the Montana Department of Environmental Quality on Jan. 28.

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A project that straddles the Canada-U.S. border will require a presidential permit – a key approval that ultimately killed the first iteration of Keystone XL. While Mr. Trump had granted a permit during his first presidential term, Joe Biden ripped it up after he took office in 2021.

At that time, Keystone XL was owned by TC Energy. Besides forcing the company to declare a writedown of $2.2-billion, it also meant a $1.3-billion loss for Alberta taxpayers a year after then-premier Jason Kenney’s government bought an equity stake in the project and provided loan guarantees. (TC later spun its entire oil-pipeline business into South Bow, a new, separate company.)

Keystone XL was first proposed in 2008. The target of climate-change activists in Canada and the U.S., it was subject to years of protests, studies and court challenges.

Mr. Trump has long raised the prospect of restoring approval for the pipeline to bring more Canadian oil into the U.S. market. He brought it up during a presidential election debate with Democratic opponent Kamala Harris and, in February last year, repeated calls to get the line built.

South Bow said at the time that it had “moved on” from Keystone but, in October, it said it was exploring ways to leverage existing oil pipeline corridors to increase crude exports. That month, Mr. Carney raised the prospect of reviving Keystone XL during talks with Mr. Trump – even as the Canadian government sought to reduce its trade reliance on the U.S. in the wake of tariffs and threats to make Canada the 51st state.

Mr. Wirzba said if customers support the open season, it will help prove the economic case for the project.

“These are not small decisions by anyone,” he said, but “customers have relayed that they’re under the right policy environment, there is an ability for them to grow.”

Many members of South Bow’s management were at TC during the Keystone XL days, Mr. Wirzba said, and learned some valuable lessons to apply to Prairie Connector.

“The unfortunate events that are ongoing in Iran and what we’ve had in the tragic events in Ukraine really demonstrate that energy security and establishing energy corridors are critical,” he said.

“Those realities are a great backdrop for us to provide maybe a solution that increases energy security in North America, between the great resource up in Canada to the strong demand markets in the U.S. Gulf Coast.”