About 85 to 90 per cent of Canada's crude oil exports go directly to the United States

U.S. President Donald Trump says a Canada-U.S. oil pipeline project cancelled by two of his predecessors "may be awoken from the grave" under a new bilateral trade agreement between the neighbouring nations.

But a former executive involved with Keystone XL and other industry experts suggest the remark may have more to do with politics than petroleum.

In a social media post late Tuesday, less than two hours before punishing new levies on Canadian goods entering the U.S. were due to start, Trump announced a "deal" with Canada and a three-day halt on new tariffs.

"The great Keystone XL Pipeline, long ago killed by Sleepy Joe Biden, may be awoken from the grave!" he wrote in a post on his Truth Social platform, referring to his predecessor in the White House.

Prime Minister Mark Carney did not address this in a statement responding to Trump’s post.

For U.S., Keystone XL 'can be a nightmare'

"The fact that Trump has signalled that is something that he sees in the deal, I think is helpful to Carney [and] the trade-offs he's going to have to make over the next 72 hours," said Dennis McConaghy, former executive vice-president of corporate development at TransCanada Corporation, now called TC Energy.

From auto parts and lumber to steel and aluminum, the Republican president has targeted key sectors of Canada's economy since Feb. 1, 2025, when his administration announced sweeping tariffs on goods from Canada.

Since then, he has regularly stated that the U.S. does not need anything that Canada has, even as key items like oil, potash and critical minerals have stayed exempt from U.S. tariffs.

"In the context of a person who says we don't need anything from Canada, that [Keystone XL remark] was somewhat welcome," McConaghy said.

However, Carlo Dade, director of international policy at the University of Calgary's School of Public Policy, told CBC Radio's Calgary Eyeopener that a revival of the controversial project would face familiar political and environmental challenges today.

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"Let's not get too excited about Keystone just yet," Dade said on Wednesday.

"Will it be done by the end of his term? Because we potentially have Democrats ... in the offing, which is going to make this extremely difficult," he said. "He looks at this as a rejection of the policies of previous administrations, Biden, Democrats, et cetera."

Valérie Beaudoin, a member of the federal government's Advisory Committee on Canada-U.S. Economic Relations, said greenlighting Keystone XL will be far easier for Carney than Trump.

"For them, it can be a nightmare," she said. "Even if Trump says, 'Oh, Keystone XL is back on track,' who is going to want to invest when we know in 2028, the next president can be a Democrat?"

"It's all definitely meant as a retort to Biden," Commodity Context founder Rory Johnston told CBC News in an email. "[It] would be completely out of the blue, and make little immediate sense, to literally reanimate KXL given the work done on the other projects thus far. [It's] also a much different market from when KXL was initially proposed."

Ottawa revives interest in Keystone XL

About 85 to 90 per cent of Canada's crude oil exports go directly to the U.S., down slightly since the 2024 expansion of the Trans Mountain pipeline, which ships to Asian and other non-U.S. markets from terminals on the West Coast.

Owned and operated by Calgary-based South Bow Corp., the 4,327-kilometre Keystone Pipeline System delivers Canadian and U.S. crude oil to American refining markets in Illinois, Oklahoma and Texas.

In 2008, TransCanada and ConocoPhillips, the owners of Keystone at the time, proposed a major extension to the network called Keystone XL. After years of political, legal and environmental opposition, including cancellation by the Obama and Biden administrations in the U.S., the project was effectively abandoned by its backers.

When he returned to the White House in 2025, Trump rescinded Biden's revocation order and granted approvals to revive sections of the project in the U.S. Since then, he's openly praised the project's merits on multiple occasions.

Last fall, CBC News reported that Carney raised the project with Trump, expressing his renewed interest in advancing Keystone XL. The project remains fully permitted by the Canadian government. By 2021, about 150 kilometres of pipe were installed in Alberta.

Prairie Connector project

South Bow was ‌created in 2024, when TC Energy spun off its oil pipeline business in a pivot toward natural gas. The company is currently working with Wyoming-based midstream firm Bridger Pipeline on a project called Prairie Connector using parts of the cancelled Keystone XL pipeline previously built on the Canadian side of the border.

If built, the Prairie Connector project could increase Canada's crude exports to the U.S. by more than 12 per cent.

"If this project were to be built, it adds substantial value," said former TransCanada executive McConaghy.

South Bow CEO Bevin Wirzba has touted brisk long-term U.S. demand for Canadian crude, citing the company’s recent open-season process for Prairie Connector.

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The company says this yielded 20-year binding commitments from nine customers, totalling 465,000 barrels of oil per day of firm transportation service from Hardisty, Alta., to South Bow’s U.S. delivery points.

South Bow has yet to issue a final investment decision on the project.

"Disruptions to global crude oil trade drove increased demand for connectivity to refining and export markets,” Wirzba told stock market analysts on a post-earnings conference call on Aug. 5.

"And we've consistently said that the demand in the Gulf Coast for Canadian crude into that refining market was and is and will be resilient for decades to come."