South Bow, the Keystone successor, will pay $70M including a $26.9M civil penalty. The 2022 Kansas spill was one of the decade's largest inland U.S. oil disasters, releasing 13,000 barrels of diluted bitumen.
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The company that now owns the Keystone pipeline will pay nearly $70 million to settle federal and state claims over a 2022 rupture that dumped more than 13,000 barrels of heavy crude into Kansas waterways, according to a U.S. district court filing on July 10.
South Bow LP and South Bow Infrastructure Operations Inc., the Canada-based firms that took over the pipeline after a 2024 spinoff from TC Energy, agreed to the consent decree. TC Energy owned the 36-inch line when the accident happened.
The settlement includes a $26.9 million civil penalty for violations of the Clean Water Act, $3 million for additional restoration projects in Kansas, and $40 million for pipeline integrity upgrades, automated leak detection, and measures to prevent future spills, the filing said. The decree is subject to a 30-day public comment period before taking effect.
December 2022's rupture was one of the largest inland U.S. oil spills in a decade. TC Energy spent nearly $500 million on cleanup. The pipeline carried diluted bitumen, a thick petroleum crude.
The rupture came from stress on the pipeline that went undetected over years, said a report by RSI Pipeline Solutions, an Ohio engineering consultant hired by TC Energy to investigate. The firm pointed to lapses in oversight during the pipeline's 2010 construction and gaps in TC Energy's standards and administrative controls as the root cause.
Cleanup involved up to 800 federal, state, and contractor personnel, TC Energy said. Vacuum trucks pulled oil from creeks. Two earthen dams built downstream contained the spill.
A South Bow spokesperson said the company launched its response before receiving formal orders from regulators and completed a "comprehensive environmental remediation" in February 2024. Since the spill, South Bow has inspected more than 12,000 miles of pipeline and excavated 400 line sections for monitoring and repairs, she said. "This work reflects our ongoing commitment to continuously strengthening pipeline integrity," she added.
The incident had a "massive impact" on Kansas, said Ryan A. Kriegshauser, the U.S. Attorney in Kansas. "We are happy that this settlement will mitigate that damage," he said.
South Bow has plans to expand its cross-border crude system from Canada. In a joint venture with Houston-based Bridger Pipeline, the company wants to build a new section called Prairie Connector from Guernsey, Wyoming, to Cushing, Oklahoma, a major oil hub.
President Donald Trump signed a presidential permit for the route on April 30. The line would carry up to 550,000 barrels per day of Canadian crude into U.S. markets. It follows a different route than the Keystone XL pipeline that former President Joe Biden cancelled in 2021.
South Bow has not publicly disclosed the project cost. ATB Cormark Capital Markets estimated it at $2 billion to $3 billion with a two- to three-year construction schedule. The final investment decision is expected in mid-2027.
CEO Bevin Wirzba said construction will not start until the firm has "complete durability" guarantees – legal assurances that a future U.S. administration cannot revoke the permit in 2029.
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