South Bow finalizing Blackrod Connection project, warns of tariff headwinds

South Bow Corp., Calgary, provided updates on pipeline projects and noted uncertainties surrounding tariffs and counter-tariffs between the US and Canada could create headwinds for the company’s marketing segment. 

The company, recently spun out of TC Energy, provided the update as part of its quarterly earnings report (OGJ Online, July 28, 2023).  

The company reported fourth-quarter 2024 normalized net income of $112 million, down from $94 million during the same period a year earlier as a business segment of TC Energy.

Along with project updates, the company said its marketing segment, providing customers with a variety of crude oil marketing services, including transportation, storage, and logistics, could face pressure as the back-and-forth tariff actions between the US and Canada continue.

“The potential for, and continuation of, tariffs on energy imposed by the US government and counter-tariffs imposed by the Canadian government have created economic and geopolitical uncertainty, resulting in volatility in pricing differentials,” the company said in its results Mar. 5. 

“Persistence of this uncertainty may create additional headwinds for uncommitted capacity on South Bow’s pipeline systems and impact South Bow’s Marketing segment results,” the company continued. 

Blackrod Connection

South Bow said the Blackrod Connection project remains on track for an early 2026 in-service date, with cash flows increasing through 2026 and into 2027. 

The project is designed to provide liquids and natural gas transportation infrastructure to support International Petroleum Corp.’s Blackrod steam-assisted gravity drainage facility to South Bow’s 460-km Grand Rapids pipeline system in Alberta, which connects producing areas northwest of Fort McMurray, to terminals in the Edmonton/Heartland regions, including the TransMountain Terminal. 

The company said it is in the final stages of completing construction of the project’s 25-km crude oil and natural gas pipeline segments, with welding complete and hydrostatic testing activities under way. Facility construction, including the tank terminal, is expected to be completed in late 2025.

This year, South Bow expects to invest about $110 million in growth capital expenditures for the project. The total expected capital cost is estimated to be $180 million. As of Dec. 31, 2024, South Bow has invested $62 million in the project.

Keystone pipeline

The company also provided an update on the Keystone pipeline, where in December 2022, the then TC Energy-owned pipeline released oil into a creek in Washington County, KS (the Milepost 14 incident) (OGJ Online, Dec. 8, 2022).

The company was subject to an Amended Corrective Action Order (ACAO) issued by the Pipeline and Hazardous Materials Safety Administration (PHMSA). By June 2023, the recovery of all released volumes was completed, and by October 2023, creek restoration was finished, restoring natural flows to Mill Creek. 

In January 2025, Silver Bow received PHMSA approval of the remedial work plan. The approval culminates the completion of 2,145 miles of inline inspections across the Keystone Pipeline System and 68 investigative excavations over the past 2 years. 

In March 2025, South Bow received approval from PHMSA to lift the pressure restriction on the affected segment to 72% of the specified minimum yield strength of the pipeline. The affected segment includes the section of the pipeline where the Milepost 14 incident occurred.