South Bow disclosed that the Prairie Connector open season garnered 465 Mb/d of 20-year, firm service binding commitments from Hardisty, AB to U.S. delivery points, from nine customers. The volume commitment is basically in line with the rumored number circulating in media reports last quarter. In Q2 South Bow disclosed a mid-2027 FID timing target, and based on an analyst question on the call, it sounds as though South Bow would be targeting completion of construction by year-end 2028, presumably prior to the next U.S. President taking office in early 2029. CEO Bevin Wirzba attributed the success of the open season to the project’s competitive toll, its ability to enable a batch system from Alberta to the Gulf Coast, and the success of South Bow’s current Gulf Coast pipeline system, which has a transit time advantage of about 10 days from Alberta to end markets, relative to alternatives (see image below). Lots of permitting and other work is still needed to achieve the mid-2027 FID target timing.
The company revised its 2026 growth capex guidance up from $10 million to $70-$90 million, to reflect $65 million in pre-final investment decision costs associated with Prairie Connector, and the Liberty Bridge project, a proposed joint development (partnered with Bridger Pipeline) of an oil pipeline from Guernsey, WY to Cushing, OK, that already has some engineering work done and right-of-way agreements in place by the project’s prior owners.
Operationally, Q2 throughput on Keystone and Marketlink averaged 596 Mb/d and 642 Mb/d, respectively, up 52 Mb/d and 17 Mb/d year-over-year, respectively. Keystone continues to operate under mandated pressure restrictions following a leak in 2025 (the “Milepost 171 incident”). South Bow continues to expect a lifting of these restrictions in a phased manner later this year and next year.
Management expects demand for capacity on Keystone’s Gulf Coast segment to decline in the third quarter relative to Q2, due to narrower anticipated spreads between Western Canadian Select prices at the U.S. Gulf Coast compared to at Cushing. As a result, normalized EBITDA guidance for Q3 is 10% lower than what was realized in Q2.
Source: South Bow Corporation
