{"id":907791,"date":"2026-09-24T11:40:11","date_gmt":"2026-09-24T11:40:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/907791\/"},"modified":"2026-09-24T11:40:11","modified_gmt":"2026-09-24T11:40:11","slug":"oil-sector-questions-economics-of-albertas-west-coast-pipeline","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/907791\/","title":{"rendered":"Oil sector questions economics of Alberta\u2019s West Coast pipeline"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

An oil sands mining facility near Fort McKay, Alta. With the private sector largely unwilling to participate in the West Coast pipeline project, the fiscal risk should not be shifted to taxpayers, Ian Sanderson, a senior analyst with the Pembina Institute, says.ED JONES\/Getty Images<\/p>\n

Ottawa is set to decide on whether to designate a new pipeline from Alberta to the West Coast as a project of national importance amid concerns about oil producers\u2019 appetite to fill the line and if long-term demand justifies the expenditure.<\/p>\n

The decision is expected next week, and coincides with a major push by the federal government to diversify exports away from the United States and soothe tensions with Alberta, which is holding a separation referendum on Oct. 19. <\/p>\n

If the pipeline gets the designation giving it a fast track through the regulatory approval process, oil producers would have to consider major new investments to boost production to fill the proposed 1,250-kilometre conduit<\/a>. <\/p>\n

To do that, they would need to rely on promised new financial and regulatory frameworks from Ottawa and Alberta to enable substantial development, and would have to get moving on building a massive carbon-capture project, which Ottawa has tied firmly<\/a> to the pipeline\u2019s future. <\/p>\n

Backers say a new, one-million-barrel-a-day West Coast line would boost Alberta\u2019s ability to get its crude to higher-priced world markets and funnel billions more dollars in royalties into provincial and federal coffers. <\/p>\n

Ottawa reviewing its approach to selling Trans Mountain pipeline<\/a><\/p>\n

It would reduce Canada\u2019s reliance on the U.S. market, too, where more than 85 per cent of the country\u2019s oil goes \u2013 an attractive prospect given the countries\u2019 fractious trade relationship. <\/p>\n

But the plan is contentious. <\/p>\n

Critics cite potential effects on marine life off the coast and fauna and flora along the route, the risk of an oil spill and broader climate concerns. <\/p>\n

There are economic risks for taxpayers, too. The pipeline would cost anywhere from $35-billion to $43-billion, according to the province<\/a>, and federally owned Trans Mountain Corp. and the Alberta Petroleum Marketing Commission, a provincial Crown corporation, would handle 90 per cent of the planning and construction. Pembina Corp. has agreed to take a 10-per-cent interest and contribute to the design.<\/p>\n

With billions of dollars at stake and an Alberta referendum on the horizon, Ottawa\u2019s decision whether to designate the pipeline a project of national importance on Oct. 1 is significant. <\/p>\n

Taxpayers and trade<\/p>\n

Ian Sanderson, a senior analyst with the Pembina Institute, an environmental think tank that is unrelated to Pembina Corp., said the main challenge facing Alberta producers is not a dearth of export capacity. Instead, it\u2019s uncertainty around future demand, prices and the economics of long-term oil infrastructure. <\/p>\n

With the private sector largely unwilling to participate in the project, the fiscal risk should not be shifted to taxpayers, Mr. Sanderson said in an interview. Instead, public dollars should go to other sectors to diversify the economy; a pipeline would only add trading partners and increase Canada\u2019s exposure to \u201ca pretty volatile sector,\u201d he said. <\/p>\n<\/p>\n

But Randy Ollenberger, an oil and gas analyst with Bank of of Montreal, said that a new pipeline is a crucial strategic investment needed to access growing markets in Asia and reduce Canada\u2019s exposure to rising Venezuelan production. <\/p>\n

\u201cWe can debate how quickly Venezuelan production is going to grow and what level of investment is required, but I would argue that the genie is out of the bottle,\u201d Mr. Ollenberger said.<\/p>\n

Oil shipments from the South American country to the United States have quadrupled in the last year and could be considerably higher five years from now, he said. \u201cAt that point, we may be facing some pretty significant competition from Venezuela.\u201d<\/p>\n

Canada should hedge its bets and pursue economies that are still seeing growing demand for oil, he said.<\/p>\n

Supply and demand<\/p>\n

New infrastructure that redirects exports from the U.S. to higher-value global markets will be crucial to the goal of becoming an energy superpower, according to a report from the Canadian Chamber of Commerce and PwC. <\/p>\n

The near-term challenge is not an absence of demand or commercial interest, \u201cbut the cost and time required to build sufficient infrastructure and bring additional export capacity online,\u201d the report said.<\/p>\n

Existing pipeline capacity from Western Canada is roughly 5.2 million barrels a day (b\/d), according to a report this month by Mr. Ollenberger and his colleagues. Current plans to increase capacity on the Enbridge Mainline and Trans Mountain systems are set to add around 500,000 b\/d, and South Bow\u2019s proposed Prairie Connector project a further 550,000 barrels. <\/p>\n

The BMO report reckons oil sands producers will increase their combined output by about 865,000 barrels of crude a day by 2030. That translates to roughly 1.2 million more barrels of blended supply (crude that has been mixed with lighter hydrocarbons to make it thinner and easier to transport by pipeline). <\/p>\n

\u201cThis would effectively absorb most of the proposed incremental pipeline capacity and could leave industry growth constrained once again without further takeaway expansions,\u201d the report said.<\/p>\n

Opinion: Canada is building a new pipeline through our lands \u2013 before honouring its promise on the last one<\/a><\/p>\n

The increased production required to fill a new West Coast pipeline would increase Canada\u2019s overall greenhouse gas emissions. Those from oil and gas production grew by 16 per cent between 2000 and 2024, largely owing to a 67-per-cent increase in output, according to Natural Resources Canada. <\/p>\n

From a financial perspective, though, the investments oil companies would make to boost production would drive significant economic growth, Mr. Ollenberger said. <\/p>\n

Yet the Pembina Institute\u2019s Mr. Sanderson is not convinced that projected supply growth justifies a new West Coast line when it\u2019s considered alongside global demand. <\/p>\n

The International Energy Agency, for example, has forecast that demand growth for oil around the world will likely slow in the coming years as economies move to alternative fuels. Spending billions on a new pipeline, then, is \u201ca lot of money to be investing in fossil fuels,\u201d Mr. Sanderson said. <\/p>\n

Other reports point to a longer runway for oil, including an analysis from S&P Global this month, which said that no primary energy source will be completely transitioned out in the foreseeable future.<\/p>\n

That said, there has been little stated appetite from oil companies to make massive investments in new sites to boost production; they have largely committed to expanding existing projects and making them more effective. <\/p>\n

But Mr. Ollenberger said industry balance sheets are the strongest they\u2019ve ever been. In the near future, he suspects oil companies are more likely to offer a kind of \u201chybrid model\u201d that offers both growth and cash returns to shareholders.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: An oil sands mining facility near Fort McKay, Alta. With the private sector…\n","protected":false},"author":2,"featured_media":907792,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-907791","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/907791","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=907791"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/907791\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/907792"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=907791"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=907791"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=907791"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}