After years of antagonism between the federal government and Alberta over additional outlets for crude, Canada and the oil-producing province are finally on the same page regarding Canadian,/ oil exports.

It took a major geopolitical and trade shift from Canada’s long-term ally and top trade partner, the United States, to have the federal government of Canada support a new oil pipeline from Alberta to the Canadian West Coast. The pipeline is expected to boost Canadian oil exports to Asia, the world’s driver of global oil demand growth, by shipping about 1 million barrels per day (bpd) of crude from Alberta to the West Coast.

Canada’s Strategic Shift

Canada seeks to diversify its trade and economic relations in the face of tariffs from the Trump Administration and continued threats of additional tariffs that have soured the relations between the two closest allies and trade partners in North America.

The government led by Prime Minister Mark Carney wants to make Canada an energy superpower. This includes moving more of Alberta’s crude out of the country on tankers to Asia. Increased seaborne shipments to the world’s most important oil-consuming region is also a way for Canada to diversify its oil export markets, dominated by the U.S. with over 95% of all Canadian oil exports.

The expanded Trans Mountain route is currently the only pipeline shipping Alberta’s landlocked crude for exports on tankers from the West Coast.

Alberta has long called for additional outlets to the British Columbia coast to monetize the growing crude supply in the province.

The province’s oil production hit a new record-high in 2025, with average daily production up by 166,000 bpd, or 4.2%, compared to 2024. Alberta produced 4.1 million bpd last year, 84% of which was from the oil sands.

TMX, whose nameplate capacity was tripled to 890,000 bpd from 300,000 bpd before the expansion, was the key driver of Alberta’s record oil production while enabling more oil exports from Alberta to Asia.

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The value of Alberta’s oil exports to Asia went from zero before the expanded pipeline began operations to over US$804 million, or C$1.1 billion, as of October 2025, according to data from ATB Economics.

“Enhancements to the existing pipeline system and filling TMX to capacity will facilitate additional production in 2026,” ATB Economics said, expecting oil and gas exports to grow by about 2% both this year and in 2027.

“At some point, though, without a new pipeline in place, a lack of pipeline capacity will once again act as a constraint on output growth, possibly as soon as 2028,” analysts at ATB Economics said.

The strained U.S.-Canada relations have prompted Carney’s federal government to support a new oil pipeline west, while TMX looks to boost crude flows within its existing capacity.

Trans Mountain Corporation this week moved to boost oil flows via the pipeline by 10%, seeking approval to use drag-reducing agents (DRA) to increase volumes.

Federal government-owned TMX’s application to the Canada Energy Regulator says that “The DRA Project will not result in incremental vessel traffic at the Westridge Marine Terminal beyond what was assessed during the reconsideration process for the Trans Mountain Expansion Project.”

Commenting on the news, Alberta’s Premier Danielle Smith said “Alberta is happy to see TMX working on increasing oil exports by 10%.”

“The world needs our energy exports, notably Asian markets. We will continue pushing for more export capacity, including a new pipeline to the Canadian northwest coast,” Smith added.

As early as July, Canada’s PM Carney said that a new oil pipeline to Canada’s Pacific coast is highly likely to make it to the federal government’s list of projects of national interest.

Carney visited China last month and signed a strategic energy and trade cooperation agreement in a major policy shift that hailed “a new era” in bilateral relations.

Alberta’s New Oil Pipeline Plan

Even before that, the governments of Canada and Alberta in November signed an agreement to increase oil exports to Asian markets, address investment uncertainty holding back Alberta’s energy economy, and reduce emissions.

This agreement lays out the path forward for an Indigenous co-owned pipeline to Asian markets, with both governments supporting its approval and construction. Provisionally named West Coast Oil Pipeline, the project is now in the stage in which a technical advisory group is doing preliminary assessment work on the potential routes. Alberta’s government expects to submit by July 2026 the project to Canada’s federal Major Projects Office for designation as a project of national interest.

Currently, Alberta is considering five ports on the West Coast, Premier Smith told Bloomberg News in an interview this week.

So far it appears that northwest British Columbia, with the port of Prince Rupert, holds more advantages compared to other locations.

“Maybe it makes more sense to take it up to an area where there’s less congestion and it might allow for additional export of other items, if you end up with a 24-hour a day operation on more high-value products like that,” Smith told Bloomberg.

At any rate, a new pipeline will have to eventually include potentially difficult negotiations with First Nations and the provincial government of British Columbia. However, this time around, both Alberta and the federal government are backing a new oil pipeline that would boost Canadian oil exports and make them less dependent on the U.S.

By Tsvetana Paraskova for Oilprice.com

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