Trump's Push for Keystone XL: A Window of Opportunity for Canadian Energy?

The Keystone XL pipeline has long been a contentious issue in North American energy policy. Originally proposed in 2008, the project aimed to transport 830,000 barrels of oil per day from Alberta's oil sands to refineries in the U.S. Midwest. However, after a turbulent path marked by approvals, cancellations, and legal battles, it was ultimately scrapped in 2021 when President Joe Biden revoked its permit on his first day in office. Now, with former President Donald Trump once again pushing for the pipeline’s revival, the question arises: Is this an opportunity Canada and the U.S. can afford to ignore?

Keystone XL’s journey has been anything but smooth. First introduced in 2008, the project faced resistance from environmental groups, Native American communities, and landowners concerned about potential spills and the expansion of Canada’s oil sands industry. Despite these challenges, the Obama administration initially delayed the project before outright rejecting it in 2015.

Then came Trump’s first term in office. In 2017, he reversed Obama’s decision, signing an executive order to greenlight the pipeline. Construction resumed, but legal challenges from environmental groups and a ruling from the U.S. Supreme Court halted progress once again. With Biden’s election in 2020, the project’s fate was sealed, and the permit was revoked as part of the new administration’s broader environmental policies.

In the aftermath, TC Energy, the company behind Keystone XL, attempted to recover over $15 billion in damages from the U.S. government. By 2023, it had completely restructured, spinning off its oil pipeline operations into a new company, South Bow Energy. However, South Bow has since confirmed that it has no interest in reviving the Keystone XL project.

Despite South Bow's reluctance, Trump remains adamant about getting the project built. In a recent Truth Social post, he urged TC Energy—or any other willing company—to take up the mantle, promising “easy approvals” and an “almost immediate start.” His rhetoric, while seemingly at odds with his proposed 10% tariff on Canadian crude oil, underscores his broader ambition: securing energy independence and reducing reliance on hostile markets such as China, Russia, and the Middle East.

While the project may be an uphill battle due to legal and environmental opposition, Trump's stance presents a rare window of opportunity for Canadian energy developers. The key takeaway is that Keystone XL is not just about a single pipeline—it’s about North American energy security. If private investors or another pipeline company step forward, the regulatory landscape under a second Trump administration could be significantly more favorable than in previous years.

If Canadian and U.S. energy companies wish to capitalize on this opening, they must act swiftly. With Trump’s strong pro-energy policies and the likelihood of a Conservative-led government in Canada—historically supportive of oil and gas projects—the next four years could offer a golden opportunity for infrastructure expansion.

Alberta Premier Danielle Smith and Saskatchewan Premier Scott Moe have already voiced their support for the project’s revival. Smith has even gone as far as to suggest eliminating inflationary tariffs to help facilitate construction. Industry experts argue that investing in pipelines like Keystone XL would strengthen North American energy independence while also creating jobs and boosting tax revenues.

However, if this opportunity is squandered, there’s a real risk that a future Democratic administration in the U.S., possibly by 2029, could once again close the door on pipeline expansion. Given the political volatility surrounding energy policy, waiting too long could mean missing out on a rare alignment of pro-oil governments in both Canada and the U.S.

Despite Trump’s enthusiasm, hurdles remain. Opposition from environmental activists, Indigenous groups, and legal challenges could once again derail progress. Additionally, the economic viability of such a project must be reassessed, considering changing market conditions, shifting global energy demands, and increased interest in renewable alternatives.

Energy policy analyst Heather Exner-Pirot has argued that Canada should focus on diversifying its energy exports rather than doubling down on the U.S. market. She suggests that future investments should prioritize routes to Canada’s West Coast, allowing access to international markets beyond North America. This strategy, while viable, does not necessarily negate the value of Keystone XL, which would still provide a direct and cost-effective route for Canadian crude to reach U.S. refineries.

Trump’s eagerness to revive Keystone XL, despite its complex history, presents a significant opportunity for Canadian energy companies and investors willing to step up. While South Bow Energy has moved on, there remains a potential opening for other enterprises to seize the moment and push for approvals under a Trump-led administration.

With a likely pro-oil government in Canada (the Conservative Party likely to win the next federal election) and a limited window before another potential Democratic administration in the U.S., stakeholders must act quickly if they wish to capitalize on this unique moment in energy policy. If industry leaders hesitate, the opportunity may pass, leaving Canada increasingly vulnerable to energy market volatility and reliant on alternative export strategies.

For Canadian oil and gas companies, the message is clear: Trump is willing, the door is open, and the time to act is now.