Asian and Middle Eastern capital is lining up behind Alberta’s latest export push. Premier Danielle Smith says investors, including sovereign wealth funds, are prepared to take 15% to 30% minority stakes in a proposed 1-million-barrel-per-day pipeline aimed at Asian markets.
The plan centers on moving oil sands crude to the northwest coast of British Columbia, with Prince Rupert now favored over Kitimat as the terminal site. The objective is straightforward: break Canada’s near-total dependence on the U.S., which still absorbs roughly 95% to 97% of Alberta’s crude exports.
For Edmonton, the pipeline is a direct response to chronic transport bottlenecks that have long capped production growth and discounted Canadian crude.
But the political barrier is just as clear. Indigenous leaders along B.C.’s coast remain firmly opposed to lifting the tanker ban, calling it non-negotiable, setting up a familiar standoff between market access and local consent.
The 2019 Oil Tanker Moratorium Act bans vessels carrying over 12,500 metric tons of crude or persistent oil from stopping, loading, or unloading at ports along British Columbia’s northern coast, specifically protecting areas from Northern Vancouver Island to the Alaska border. The Act intends to protect fragile marine ecosystems and the Great Bear Rainforest. The project’s feasibility also depends on ongoing negotiations regarding carbon pricing, with negotiations between Alberta and the federal government on an industrial carbon tax and the Pathways Alliance carbon capture project expected to miss an April 1 deadline.
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A recent study by ATB Financial and Studio.Energy found that expanding Canadian oil pipeline capacity could boost export capacity by an additional 1.5 million barrels per day, add an average of $31.4 billion annually to Canada’s real GDP between 2027 and 2035 (~1.1% of GDP) and support 112,000 extra Canadian jobs. The joint study by Studio.Energy and ATB Economics revealed that increased capacity to the West Coast allows for better access to Asian-Pacific markets, reducing reliance on U.S. routes and strengthening economic security.
The proposed pipeline could do much of the heavy lifting for Canada’s oil export ambitions thanks to its massive capacity, comparable to the famous BTC pipeline, with a throughput capacity of 1.2 million barrels per day (bpd). The Baku-Tbilisi-Ceyhan (BTC) pipeline is a 1,768-kilometer (1,099-mile) crude oil pipeline that serves as a primary energy corridor linking the landlocked Caspian Sea to the Mediterranean. It originates at the Sangachal Terminal near Baku, Azerbaijan, traverses Georgia via Tbilisi, and terminates at the Ceyhan Marine Terminal on Turkey’s southeastern coast.
The Iran conflict has positioned Canada as a potentially reliable, low-risk oil and natural gas supplier for its allies, potentially boosting its energy exports. According to Eric Nuttall, senior portfolio manager at Toronto-based Ninepoint Partners, the Middle East conflict is a “massive opportunity” for Canada, which can position itself as a stable and secure supplier of oil.
Nuttall argues that Canada is uniquely positioned as a stable and secure energy supplier with decades of inventory in the oil sands and the Clearwater formation. The Clearwater Formation in Alberta, Canada, holds vast, high-viscosity heavy oil and bitumen reserves, with estimated in-place volumes exceeding 70 billion barrels in the Cold Lake area alone. Production is expected to grow, with estimates that it could hit nearly 400,000 bbl/d by 2031. The war has also accelerated calls to ramp up Canada’s LNG export capabilities, with companies like ARC Resources (OTCPK:AETUF) and TC Energy (NYSE:TRP) looking to benefit.
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Unfortunately, limited pipeline capacity coupled with long regulatory approvals for infrastructure threaten to hinder Canada’s ability to fill the global supply gap. Major Canadian oil pipeline projects have historically faced significant political and regulatory hurdles, resulting in several high-profile cancellations and delays. U.S. President Joe Biden famously revoked the permit for the cross-border permit for TC Energy’s Keystone XL project in 2021 on his first day in office. The project was designed to carry oil from Alberta to Texas, with a capacity of 830,000 barrels per day.
Indeed, the Trans Mountain Expansion (TMX) stands as the only major recent expansion project to reach completion in Canada after becoming operational in May 2024. TMX was similarly plagued by legal challenges from First Nations and environmental groups, leading the federal government to purchase it from Kinder Morgan (NYSE:KMI) for $4.5 billion in 2018 to ensure its completion. Massive cost overruns also threatened to derail the project after final construction costs surged from an initial estimate of $5.4 billion to nearly $35 billion.
Prime Minister Mark Carney’s government is working to streamline Canada’s byzantine energy regulatory hurdles, and has pledged to come up with an efficient approval process that will attract the private sector. Carney has proposed creating “energy corridors” to facilitate project development and has encouraged provinces to create agreements to allow regional assessments to substitute for federal reviews. The Carney government is focused on attracting private capital, and has doubled the Indigenous Loan Guarantee Program to $10 billion in a bid to support Indigenous ownership of major resource projects.
By Alex Kimani for Oilprice.com
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