Canada, Alberta back new 1M bbl/d crude pipeline to Pacific coast

Prime Minister Mark Carney and Alberta Premier Danielle Smith agreed Thursday to support a new crude pipeline carrying 1 million barrels daily to the Pacific coast via southwest British Columbia, with a carbon-capture and storage facility required for Ottawa's endorsement.

"This is not another energy project, it's a nation-building project," Smith said at a press conference in Calgary alongside Carney. "This is not an expenditure. It's an investment for the benefit of all Canadians," Carney added.

The proposed corridor would largely follow the route of the existing Trans Mountain pipeline, which carries nearly 900,000 barrels a day across 710 miles. Canada and Alberta will hold equal partnerships in the project, with Pembina Pipeline holding a 10 percent interest and a sizable equity stake reserved for local Indigenous groups. The pipeline proposal is subject to a federal review to determine whether it qualifies as a nation-building project, which would trigger an accelerated approval process.

The agreement marks a sharp policy pivot under Carney, who has made accelerating resource projects a priority to reduce Canada's reliance on the U.S. market. Alberta is slated to hold a referendum this fall about its future within Canada, as frustration with past federal environmental policies has fueled separatist sentiment in the oil-rich province.

A nation-building bet with historical baggage

The last major Canadian pipeline to the Pacific — Trans Mountain — was abandoned by its original proponent Kinder Morgan in 2018 due to regulatory risk, forcing Ottawa to take ownership at a cost of C$34 billion. That project faced years of delays, legal challenges from Indigenous groups and British Columbia's government, and cost overruns before finally beginning commercial operations in May 2024.

Earlier Thursday, Carney struck a separate deal with British Columbia, pledging billions in federal projects and reaffirming a ban on oil-tanker traffic off the province's north coast. In return, BC agreed not to impede the new pipeline and will collect annual royalty payments from the pipeline owner. "Carney found a way to thread the needle and get widespread consensus on a west-coast pipeline. It's like Christmas in July," said Heather Exner-Pirot, a senior fellow and director of energy policy at the Macdonald-Laurier Institute.

Geopolitical calculus and market implications

Carney said this week that Canada must capitalize on its oil and gas reserves given increasing demand from countries leery of relying solely on the Middle East after the recent U.S.-Iran conflict. The pipeline would give Canadian producers access to Asian markets at a time when the U.S. — historically Canada's sole customer for crude exports — has signaled it will reject the trilateral trade agreement with Canada and Mexico "in its current form," according to the U.S. trade ambassador.

If approved, the project would effectively double Canada's Pacific coast export capacity alongside Trans Mountain, reducing the discount on Western Canadian Select crude relative to WTI that has historically resulted from pipeline constraints. Alberta Premier Smith first unveiled her intentions to champion a new pipeline in October last year, arguing that companies were reluctant to take on such a project due to regulatory risk stemming from policies implemented by Carney's predecessor, former Prime Minister Justin Trudeau.

Consultations with local Indigenous communities begin immediately, and the federal review will determine whether the project qualifies for accelerated approval as a nation-building initiative. Smith said the agreement marked a high-level accord, with more details subject to negotiation.

This article is for informational purposes only and does not constitute investment advice.