Canada-U.S. crude pipeline project nears shipper commitment threshold

A proposed pipeline designed to carry Canadian crude oil to the United States is close to securing the minimum long-term shipping commitments typically needed before construction can proceed, according to four sources familiar with the matter.

The project is being developed by Canadian pipeline company South Bow Corp and its U.S. partner Bridger Pipeline. If built, it could increase Canada’s crude exports to the United States by more than 12%.

Capacity commitments near target

Oil companies have committed to ship at least 400,000 barrels per day (bpd) through the pipeline, the sources said. That represents about 72% of the project’s initial capacity of 550,000 bpd.

South Bow and Bridger are seeking long-term contracts for about 450,000 bpd, which would clear the roughly 80% commitment level pipeline operators typically look for before starting construction.

Route and permitting

The project recently received a cross-border permit from the U.S. president.

Under the plan, South Bow would revive about 150 km (93 miles) of pipeline already built on the Canadian side and connect it to a new U.S. segment. Bridger’s proposed line would extend about 645 miles to Guernsey, Wyoming.

Demand for additional takeaway capacity

The project comes as Canada’s oil industry continues to seek additional pipeline takeaway capacity.

Canadian oil output was about 5.5 million bpd at the end of January and could climb to 6.1 million bpd by 2030.

Major shippers including Cenovus Energy and Canadian Natural Resources Ltd have committed to the project, one source said. Other operators, including Enbridge and Trans Mountain, are also pursuing expansions to existing infrastructure as the industry looks to ease transportation bottlenecks.