Trump Administration Approves Permits for Pipeline Projects to Move Canadian Oil

The projects aim to revive portions of the previously canceled Keystone XL pipeline and to expand capacity linked to the Dakota Access Pipeline by connecting it with existing lines from Canada. The permits arrive as oil producers seek to move growing volumes of Canadian crude to U.S. refineries.

Developments related to the conflict in Iran have added arguments for greater North American energy self-sufficiency. One analyst said the events in Iran are prompting renewed interest in projects that were already under consideration. These would use existing pipe and assets on the Canadian side that were partially built before the project's cancellation in 2021.

The combined projects would run 647 miles from the Montana border to a hub in Guernsey, Wyoming. The Dakota Access Pipeline, which runs from North Dakota to Illinois, would connect indirectly with Canadian crude through a reversal of the Bakken Pipeline, also known as Line 26.

The operator would build about 80 miles of additional pipeline to link the systems. The goal is to move an additional 250,000 barrels per day on the Dakota Access Pipeline.

Both projects rely heavily on existing pipeline corridors and rights of way. An analyst stated that this approach means many permits are already in place. The strategy is intended to reduce potential opposition from environmental groups and Native American communities that occurred during earlier pipeline disputes.

One analyst said facing less resistance is likely when pipe is already in the ground. The Prairie Connector project is undergoing an internal review until the end of May. It is designed to carry at least 450,000 barrels per day of Canadian heavy oil sands crude into the United States.

A key uncertainty remains the route from the Guernsey, Wyoming hub to the Cushing, Oklahoma oil storage and distribution center or directly to Gulf Coast refineries. Following the original Keystone XL path would require addressing prior permitting issues in Nebraska.

Companies have denied specific partnership proposals for one existing route while stating they are exploring options. The operator of the Mainline network, the largest source of Canadian oil exports to the United States, is pursuing multiple expansions.

A company executive said the importance of energy security has become clearer since the start of the conflict with Iran. The company is positioned to deliver North American energy resources. These projects would increase Canadian reliance on U.S. markets for oil exports.

Canada has considered additional pipelines to its West Coast for shipments to Asia, including an expansion of the Trans Mountain Pipeline. An analyst expressed skepticism about the need for new westbound capacity, citing the risk of expensive overbuild.

The companies have not finalized all aspects of the projects. Final decisions on some elements could come within the next one to two months.