Keystone Pipeline

Pipeline System and Operations

The Keystone Pipeline System is an extensive network of pipelines connecting Alberta's oil sands to refineries in the American Midwest and Gulf Coast. The operational system consists of three completed phases. Phase I, completed in June 2010, runs from Hardisty, Alberta, to Steele City, Nebraska, and onwards to refineries in Wood River and Patoka, Illinois. This initial phase involved converting approximately 864 kilometres of existing natural gas pipeline in Saskatchewan and Manitoba to crude oil service and constructing 373 kilometres of new 30-inch-diameter pipeline. It also included the construction of 16 pump stations and the Keystone Hardisty Terminal. Phase II, finished in February 2011, added a 468-kilometre extension from Steele City to major storage facilities in Cushing, Oklahoma, a crucial crude oil marketing and pipeline hub. This phase also added 11 new pump stations to increase the system's capacity from 435,000 to 591,000 barrels per day. The completion of Phase III in January 2014, known as the Gulf Coast Project, extended the system another 784 kilometres from Cushing to refineries in Port Arthur and Nederland, Texas. The system has a design capacity to deliver up to 700,000 barrels of oil per day to Texas refineries. The pipelines are primarily 30-inch and 36-inch diameter pipes buried with a minimum ground cover of 1.2 metres. A lateral pipeline to refineries in Houston, Texas, was completed in mid-2016 and came online in 2017.

Origins and Initial Development

The Keystone project was first proposed in 2005 by Calgary-based TransCanada Corporation. Canada's National Energy Board, replaced in 2019 by the Canadian Energy Regulator, approved the construction of the Canadian section, including the gas pipeline conversion, in September 2007. The United States Department of State issued a crucial Presidential Permit authorizing border facilities in March 2008 during the George W. Bush administration. Initially, ConocoPhillips acquired a 50 percent stake in the project in January 2008, but TransCanada bought out those shares in 2009 to become the sole owner. The company spent over two years acquiring necessary state and federal permits before construction could begin. The pipeline became operational in June 2010, marking the start of a new export route for Canadian crude oil. The project faced early criticism from Canadian labour groups, such as the Communications, Energy and Paperworkers Union, which argued it would create few permanent Canadian jobs and reduce national energy security. The union's president, Dave Coles, stated the pipeline would exclusively serve US markets and hinder investment in the Canadian energy sector.

The Keystone XL Proposal and Political Battles

The proposed Keystone XL Pipeline, first pitched in 2008, was designed as a fourth phase to dramatically expand the system's capacity. It would have constructed a new, shorter 36-inch pipeline route from Hardisty, Alberta, to Steele City, Nebraska, with a capacity of 830,000 barrels per day. A key feature was a planned connection at Baker, Montana, to also carry light crude oil from the Bakken formation in the United States. The project quickly attracted intense opposition from environmentalists, Indigenous groups, and landowners. In August and September 2011, protesters staged a two-week campaign of civil disobedience at the White House. Concerns centred on potential spills, greenhouse gas emissions from oil sands development, and impacts on ecologically sensitive areas like Nebraska's Sandhills region and the Ogallala Aquifer. The political saga saw multiple reversals across US administrations. President Barack Obama initially rejected the permit in January 2012, citing an inadequate review timeline imposed by Congress. After a revised route was approved by Nebraska Governor Dave Heineman in January 2013, the US Senate passed a bill to approve construction in January 2015 by a vote of 62 to 36. The House of Representatives passed it in February 2015, but President Obama vetoed it on February 24, 2015, stating the decision should rest with the Executive Branch. In November 2015, the Obama administration formally rejected the project, with Secretary of State John Kerry stating it was not in the US national interest and would undercut US credibility in climate negotiations.

The Trump Era Revival and Legal Onslaught

President Donald Trump revived the project in his first week in office, signing a presidential memorandum on January 24, 2017. He later signed a presidential permit on March 24, 2017, after the State Department issued a new Record of Decision reversing its earlier finding. This move was supported by Canadian Prime Minister Justin Trudeau and Alberta Premier Rachel Notley, with a poll at the time showing 48 percent of Canadians supported the revival. However, the project immediately faced new legal and regulatory hurdles. In November 2017, the Nebraska Public Service Commission approved construction but only via an alternative, longer route, which TransCanada argued would cause years of new review. In November 2018, US District Judge Brian Morris in Montana blocked construction and vacated the permit, ruling the policy reversal violated the Administrative Procedure Act, the National Environmental Policy Act, and the Endangered Species Act. In March 2019, Trump directly issued a new permit, bypassing the State Department. Although the Ninth Circuit Court of Appeals lifted an injunction in June 2019 and the Nebraska Supreme Court affirmed the state commission's approval in August 2019, challenges continued. In April 2020, Judge Morris again suspended construction after finding the US Army Corps of Engineers violated the Endangered Species Act during the 2017 reauthorization. The Supreme Court of the United States upheld a work halt in July 2020 in the case US Army Corps of Engineers v. Northern Plains Resource Council, pending final rulings from lower courts.

Financial Commitments and Final Cancellation

As legal battles persisted, significant financial commitments were made to try to advance the project. In March 2020, Alberta Premier Jason Kenney announced the province was taking an equity stake and providing a loan guarantee, amounting to a total financial commitment of just over $7 billion. This included a C$1.5 billion equity investment in 2020 and a C$6 billion loan guarantee in 2021. On March 31, 2020, TC Energy CEO Russ Girling announced the company would proceed with construction, thanking political leaders for their support. He noted construction during the COVID-19 pandemic would follow health guidance. The investment was aimed at spurring an estimated $2.4 billion contribution to Canada's GDP and $30 billion in tax and royalty revenues. Despite this, the election of President Joe Biden proved decisive. On January 20, 2021, Biden revoked the presidential permit for the Keystone XL border crossing. With this definitive action and the legal landscape, TC Energy announced the termination of the Keystone XL project on June 9, 2021. The Government of Alberta agreed to an orderly exit from the partnership with TC Energy. Final costs to the Alberta government were expected to be materially within $1.3 billion. In February 2022, Alberta filed a notice of intent to initiate a legacy NAFTA claim under the Canada, United States, Mexico Agreement to recover its investment.

Ownership Change and the South Bow Era

In a major corporate restructuring, TC Energy spun off its liquids pipeline business into a separate, publicly traded company. Effective October 1, 2024, ownership of the Keystone Pipeline System transferred to this new entity, named South Bow. This move separated the oil pipeline assets from TC Energy's other operations in natural gas transmission and power generation. South Bow is now the second largest crude oil pipeline operator out of western Canada. Following this change, there have been indications of renewed interest in a pipeline expansion under the new ownership structure. On April 30, 2026, President Donald Trump signed an executive order authorizing a project to restart a pipeline expansion between South Bow Pipeline and Bridger Pipeline. Reports indicate this proposed expansion would follow a slightly altered 1,038-kilometre route ending at Guernsey, Wyoming, ostensibly to address previous environmental concerns. The proposed pipeline would be 36 inches in diameter with a capacity of about one million barrels per day. In August 2026, President Trump posted on his Truth Social website suggesting the Keystone XL plan 'may come back,' sharing an AI-generated image of the revival. South Bow has stated that shifts in US and Canada energy policy are improving prospects for such projects, though the Alberta government has terminated its previous partnership and no new construction has begun.

Safety Record, Spills, and Environmental Scrutiny

The operational Keystone Pipeline has experienced several crude oil leaks since it began service, drawing scrutiny from regulators and the public. In May 2011, shortly after Phase I started, leaks prompted the US Pipeline Hazardous Materials and Safety Administration (PHMSA) to issue a Corrective Action Order to TransCanada. Another significant incident occurred in April 2016, involving a leak of approximately 16,800 US gallons in Hutchinson County, South Dakota, which led to another PHMSA order. The pipeline restarted at a reduced operating pressure on April 10, 2016, after regulators approved corrective actions. The largest disclosed spill happened in November 2017 near Amherst, South Dakota, in Marshall County, where an estimated 9,700 barrels of oil leaked from the pipeline. The leak was detected and contained 56 kilometres south of the Ludden pump station. These incidents have been a focal point for opponents of pipeline expansion, who argue they demonstrate the ongoing risks of transporting oil across long distances. Proponents point to the pipeline's safety systems and the fact that it is monitored 24 hours a day from a control centre. The US State Department's final environmental impact report from August 2011 stated the pipeline would pose no significant impacts to most resources if protection measures were followed, but it would have significant adverse effects on certain cultural resources.

Economic, Employment, and Trade Implications

The Keystone pipeline system plays a substantial role in the Canadian economy by providing a direct export route for oil from Alberta. The existing pipeline's capacity is a key part of Western Canada's oil export network. The now-cancelled Keystone XL project had projected significant economic benefits. Proponents estimated it would have contributed approximately $2.4 billion to Canada's gross domestic product and generated an estimated $30 billion in tax and royalty revenues over its lifespan. During its brief construction period in 2020, the Keystone XL project employed roughly 2,500 construction workers in Alberta and the United States, with reports of thousands of additional indirect jobs in supporting trades, retail, and hospitality services along the route. The existing Keystone pipeline continues to support ongoing employment in operations and maintenance. The original Keystone Pipeline cost US$5.2 billion to build, and from January 2018 through December 2019, Keystone XL development costs were $1.5 billion. The financial commitment from the Alberta government underscored the project's perceived economic importance to the province. The cancellation and subsequent trade claim filed by Alberta in February 2022 highlight the project's deep entanglement with international trade relations and investment protection agreements.

Questions about Keystone Pipeline

Who owns the Keystone Pipeline now?

The Keystone Pipeline System is now owned by South Bow, a separate publicly traded company. This change occurred on October 1, 2024, when TC Energy (formerly TransCanada) completed a spin-off of its liquids pipeline business. South Bow is the entity that now operates the existing pipeline network and is involved in discussions about potential future expansions. TC Energy no longer owns the oil pipeline assets, focusing instead on its natural gas and power generation operations across Canada, the United States, and Mexico.

Is the Keystone XL pipeline being built?

The original Keystone XL pipeline project was terminated by TC Energy on June 9, 2021. However, there have been recent political developments suggesting a revival of a similar expansion project under the new owner, South Bow. On April 30, 2026, President Donald Trump signed an executive order authorizing a pipeline expansion project between South Bow Pipeline and Bridger Pipeline. This proposed project would follow a new 1,038-kilometre route to Guernsey, Wyoming, slightly altered from the previous plan. As of late 2026, this is a proposal and not an active construction project, and the Alberta government has ended its previous financial partnership for Keystone XL.

Why was the Keystone XL pipeline cancelled?

The Keystone XL pipeline was cancelled primarily due to the revocation of its US presidential permit and insurmountable legal challenges. President Joe Biden revoked the crucial permit for the border crossing on his first day in office, January 20, 2021. This action followed years of litigation where US courts repeatedly blocked construction over violations of environmental laws like the National Environmental Policy Act and the Endangered Species Act. A key ruling in April 2020 found the US Army Corps of Engineers violated the Endangered Species Act when reauthorizing the project in 2017. Facing this definitive regulatory barrier and ongoing uncertainty, TC Energy concluded the project was no longer viable and announced its termination in June 2021.

What is the route of the Keystone Pipeline?

The operational Keystone Pipeline System starts at the Hardisty Terminal in Alberta, Canada. It travels southeast through Saskatchewan and Manitoba before crossing the US border. In the United States, it runs through North Dakota, South Dakota, and Nebraska to a junction at Steele City, Nebraska. From there, one leg continues to refinery hubs in Wood River and Patoka, Illinois. Another leg runs south from Steele City to the major oil storage and distribution centre in Cushing, Oklahoma. From Cushing, the Gulf Coast extension (Phase III) continues south through Oklahoma and Texas to refineries in Port Arthur and Nederland, Texas, with a lateral to Houston. The total operational length is approximately 3,461 kilometres. The cancelled XL route would have taken a more direct path from Hardisty to Steele City through Montana and South Dakota.

How much oil does the Keystone Pipeline carry?

The Keystone Pipeline System has a significant capacity to transport crude oil. The first two phases, delivering oil to US Midwest refineries and Cushing, Oklahoma, have a combined capacity of up to 591,000 barrels per day. The third phase, the Gulf Coast extension to Texas completed in 2014, can deliver up to 700,000 barrels per day. The proposed but cancelled Keystone XL expansion would have added an additional 830,000 barrels per day of capacity, which would have brought the total system capacity to approximately 1.1 million barrels per day. The pipeline primarily carries a mix of synthetic crude oil and diluted bitumen from Alberta's oil sands, and was designed to also carry light crude from the US Bakken formation via the XL connection at Baker, Montana.

What was Alberta's financial involvement in Keystone XL?

The Government of Alberta made a substantial financial commitment to the Keystone XL project in an effort to see it constructed. In March 2020, Premier Jason Kenney announced the province was taking an equity stake and providing a loan guarantee, representing a total financial commitment of just over $7 billion. This included a C$1.5 billion equity investment in 2020 and a C$6 billion loan guarantee in 2021. Following the project's cancellation in 2021, the Alberta government agreed to an orderly exit from the partnership with TC Energy. Final costs to the province were expected to be materially within $1.3 billion. In February 2022, Alberta filed a notice of intent to initiate a trade claim against the United States under the Canada, United States, Mexico Agreement to seek recovery of this investment, arguing the permit revocation constituted an unfair treatment of its investment.

Sources: Wikipedia and current public reporting, checked by the Yadude Books desk. Last updated 2026-10-21.