The Keystone Pipeline System

The TC Energy pipeline system carrying Canadian heavy crude to U.S. refineries — and the decade-long political battle over its cancelled XL expansion

The Keystone pipeline system is one of the most consequential pieces of North American oil infrastructure built in the past two decades. Operated by TC Energy (formerly TransCanada), the system carries Canadian heavy crude from Alberta to U.S. refining markets through several phases of construction completed between 2010 and 2017. Current Keystone system capacity is approximately 600,000 barrels per day, providing one of the principal routes by which Western Canadian Select (WCS) heavy crude reaches U.S. Gulf Coast complex refineries.

Keystone is also one of the most politically contentious pieces of energy infrastructure in modern North American history. The proposed Keystone XL expansion was the subject of intense political battle across more than a decade, becoming a symbol of broader climate policy debate and ultimately being cancelled in 2021 after the Biden administration revoked its presidential permit. Understanding the Keystone system requires understanding both the operational pipeline that actually exists and the cancelled expansion whose absence has continued to constrain Canadian crude export economics.

The Existing Keystone System

The operational Keystone system consists of several segments built and commissioned across multiple phases:

Keystone Phase 1. Commissioned in 2010, runs from Hardisty, Alberta, southeast through Saskatchewan and Manitoba, then south through North Dakota, South Dakota, Nebraska, Kansas, and Missouri to Patoka, Illinois (with onward connections to U.S. Midwest refineries) and to Cushing, Oklahoma. Initial capacity approximately 590,000 barrels per day.

Keystone Phase 2 (Cushing Extension). Commissioned in 2011, extended the system south from Steele City, Nebraska to Cushing, Oklahoma — bringing Canadian crude directly to the NYMEX WTI delivery hub.

Keystone Phase 3 (Gulf Coast Project). Commissioned in 2014, extended the system further south from Cushing, Oklahoma to refineries in Nederland, Texas and Houston, Texas on the U.S. Gulf Coast. Capacity approximately 700,000 barrels per day on the Gulf Coast segment.

The system as operated provides direct pipeline connectivity from the Hardisty hub (the principal WCS pricing point) to both U.S. Midwest and U.S. Gulf Coast refining destinations, integrating Canadian production with the largest single concentration of complex heavy-sour refining capacity in the world.

Operational History and the 2022 Spill

Keystone operations have generally been reliable but have included several notable incidents:

2017 Amherst spill. A spill of approximately 5,000 barrels in South Dakota.

2022 Mill Creek (Kansas) spill. The largest single Keystone incident, with approximately 14,000 barrels released into a creek in Washington County, Kansas. The spill required extended shutdown of the affected pipeline segment for cleanup and required regulatory investigation. The incident reignited debates about pipeline safety standards and accelerated some regulatory scrutiny.

Periodic smaller incidents. Multiple smaller spills across the system's operating history have required regulatory reporting and response.

The overall safety record has been broadly consistent with industry norms for crude pipelines but has been the subject of intense political attention given the broader controversy around Canadian oil sands infrastructure.

The Keystone XL Saga

The Keystone XL pipeline project was proposed in 2008 as a major expansion to the Keystone system. The project would have added approximately 830,000 barrels per day of capacity through a new line from Hardisty, Alberta directly to Steele City, Nebraska, bypassing the existing Keystone northern route through a shorter and more efficient routing. Combined with the existing southern Keystone capacity to the Gulf Coast, the expansion would have substantially increased Canadian heavy crude export capacity.

The political history of Keystone XL became one of the more important episodes in U.S. climate policy:

2008-2012 Obama initial review. The project required a U.S. presidential permit for the cross-border segment. The initial review process extended across years and became increasingly politically contentious.

2015 Obama denial. President Obama denied the cross-border permit, with the denial framed substantially around climate policy considerations.

2017 Trump approval. President Trump reversed the denial and approved the cross-border permit shortly after taking office.

2017-2020 construction starts and judicial challenges. TC Energy commenced construction in stages while continuing to face legal challenges from environmental groups and various states.

January 2021 Biden revocation. President Biden revoked the cross-border permit on his first day in office.

June 2021 project cancellation. TC Energy formally cancelled the Keystone XL project, ending more than 13 years of development effort.

The cancellation eliminated approximately 830,000 barrels per day of planned additional Canadian-to-U.S. heavy crude capacity. The strategic implications were substantial:

The TMX Alternative

The Trans Mountain Expansion (TMX) commissioned in May 2024 has substantially substituted for the lost Keystone XL capacity. TMX added 590,000 barrels per day of capacity from Edmonton, Alberta to the Westridge Marine Terminal in Burnaby, British Columbia, providing tidewater access for Canadian heavy crude for the first time at meaningful scale.

The TMX route is strategically different from Keystone XL — providing Pacific export access rather than U.S. Gulf Coast access — but addresses the same underlying constraint of insufficient Canadian crude takeaway capacity. The combination of existing Keystone and TMX now provides Canadian heavy crude with substantially more diversified export options than would have existed under either alternative alone.

For more on the TMX impact, see our TMX page.

Commercial Role in WCS Pricing

The Keystone system is one of the principal infrastructure factors affecting Western Canadian Select pricing dynamics. Specifically:

For deeper coverage of these pricing dynamics, see our WCS page.

The Future of Keystone

The Keystone system continues to operate as a major component of North American crude infrastructure. Several factors will affect its longer-term trajectory:

U.S. refinery demand. Gulf Coast and Midwest complex refining demand for heavy sour crude will determine pipeline utilization.

Canadian production growth. Continued Alberta production growth supports continued Keystone demand.

TMX competition. Some incremental Canadian production now flows to Pacific markets via TMX rather than to U.S. markets via Keystone.

Mexican Maya availability. Competing heavy crude supply from Mexico affects U.S. Gulf Coast demand for Canadian alternatives.

Venezuelan flow recovery. Any expansion of Venezuelan crude availability would similarly compete with Canadian supply.

Climate and emissions policy. Long-term policy on Canadian oil sands production affects upstream growth that drives pipeline demand.

The pipeline is unlikely to be expanded in the foreseeable future given the Keystone XL cancellation precedent and broader political environment. Operational continuity at current capacity is the expected baseline.

The Keystone Pipeline System in One Sentence

The Keystone pipeline system is the TC Energy-operated infrastructure carrying approximately 600,000 barrels per day of Canadian heavy crude from Hardisty, Alberta to U.S. Midwest and Gulf Coast refineries — built in stages between 2010 and 2014 and forever marked by the political battle over its cancelled Keystone XL expansion, the most prominent climate-policy infrastructure controversy of the past decade and a half.

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