The Alberta government has set an ambitious timeline for the potential construction of a new West Coast oil pipeline, but analysts caution that there are significant hurdles to overcome. According to a recent report from CIBC World Markets, the province aims to submit a proposal to the federal major projects office by July 1, have it designated a project of national interest by Oct. 1, and commence construction as early as Sept. 1, 2027. Oil flow could potentially begin around 2033 or 2034, as per a provincial official.
The analysts, Robert Catellier and Rogan Anantharajah, view the proposed timelines as optimistic and representing a best-case scenario. The Alberta government revealed these targets after reaching an agreement with Ottawa on increasing the market price of carbon to $130 per tonne by 2040. One remaining agreement is with a consortium of industry players on funding the multibillion-dollar Pathways carbon capture project, which is a prerequisite for the pipeline.
The Alberta government is taking the lead on the pipeline application since no private-sector entity has stepped forward to bear the risk and cost. Despite this, top pipeline executives are assisting the province with technical aspects and routing options. A national-interest designation would facilitate a rapid approval process through the federal major projects office.
The proposed pipeline aims to transport up to one million barrels of oilsands crude per day to the West Coast, significantly increasing the volume reaching Asian markets compared to the existing Trans Mountain pipeline. The Alberta government prefers a northern port option due to its closer proximity to Asia.
Challenges that remain include finalizing the Pathways agreement, negotiations with British Columbia, consultations with Indigenous communities, and clarifying the ban on oil tanker loading in northern B.C. Despite these issues, the construction timeline clarity has been seen as a positive development by ATB Financial chief economist Mark Parsons, who believes it will create pressure to move forward.
ATB estimates that the Pathways project and expanded pipeline capacity could have a substantial impact on Canada’s and Alberta’s GDP, potentially adding 1.1% to Canada’s real GDP and 5.1% to Alberta’s real GDP between 2027 and 2035. Parsons sees this as a significant boost to Alberta’s economic outlook and a positive development for Canada as a whole.