{"id":918959,"date":"2026-10-03T10:44:12","date_gmt":"2026-10-03T10:44:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/918959\/"},"modified":"2026-10-03T10:44:12","modified_gmt":"2026-10-03T10:44:12","slug":"oil-industry-faces-major-spending-hikes-to-fill-planned-pipeline-expansions","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/918959\/","title":{"rendered":"Oil industry faces major spending hikes to fill planned pipeline expansions"},"content":{"rendered":"

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

An oil pump jack in southern Alberta, October, 2025.Todd Korol\/The Globe and Mail<\/p>\n

Oil sands producers that have struggled with tight export pipeline capacity now face the prospect of spending billions of dollars to boost production if the West Coast pipeline proposal, newly designated as a project of national interest<\/a>, gets built. <\/p>\n

Companies such as Suncor Energy Inc. SU-T<\/a>, Canadian Natural Resources Ltd. CNQ-T<\/a> and Cenovus Energy Inc. CVE-T<\/a> will be forced to weigh the costs of new projects to increase production against the impact on their balance sheets. Those sheets, in recent years, have been strengthened with high crude prices, helping to fuel gains in company shares.<\/p>\n

Ottawa bestowed its national interest listing on the newly renamed Pacific Link pipeline<\/a> on Thursday, a designation that allows for an accelerated path through the regulatory process and makes construction more likely. If built, it would carry one million barrels of oil a day from Bruderheim, Alta., to Delta, B.C. <\/p>\n

But other proposals to increase pipeline capacity have emerged over the past 12 months, offering increases in shipments to the coast, as well as markets in the United States. Combined, those projects would allow an extra 940,000 barrels of oil<\/a> a day.<\/p>\n

Opinion: Is it really a good idea for the government to subsidize a pipeline?<\/a><\/p>\n

They include South Bow Corp.\u2019s proposed Prairie Connector, and capacity expansions on the Trans Mountain and Enbridge Mainline systems.<\/p>\n

Add Pacific Link, and that\u2019s close to two million extra barrels a day that Alberta\u2019s oil sector would need to produce to fill all of the conduits.<\/p>\n

Major investors in the largest oil sands companies have reaped the rewards of the sector\u2019s financial strength as companies slashed debt and bought back stock. To increase output, they have largely concentrated on expanding existing facilities and making them more efficient, rather than breaking the bank on new greenfield projects.<\/p>\n

Investors would likely welcome production-growth rates of 3 to 5 per cent annually, said Menno Hulshof, an analyst at TD Cowen. But a return to the overheated growth rates of 2003 to 2008 is unlikely, he said. At that time, cost overruns were commonplace as the industry developed multiple projects at pace, driving up labour and materials costs. <\/p>\n

But oil companies are set to get something of a helping hand come November, when the federal and Alberta governments are due to unveil a suite of regulations and financial incentives aimed specifically at boosting production. <\/p>\n

Campbell Clark: Mark Carney moved his pipeline politics a long way in a short time<\/a><\/p>\n

Among them is a new royalty structure for greenfield oil sands projects, Alberta Premier Danielle Smith has said.<\/p>\n

On Thursday, Prime Minister Mark Carney said the mega deduction he announced last month<\/a> was also a drawcard to lure investment to the oil sands. The permanent tax deduction will allow companies to immediately write off the full cost of acquiring or building a wide range of new business assets.<\/p>\n

The new policies \u2013 details of which are slated to be shared on Nov. 15 \u2013 stem from a July agreement between Alberta, Ottawa and the five largest oil sands companies in the country. The memorandum of understanding committed to push forward<\/a> the massive Pathways carbon capture project in Alberta\u2019s north.<\/p>\n

TD Cowen said in a report issued earlier this year that Pathways could actually restrict growth by \u201cintroducing policy-sensitive carbon costs into already capital-intensive decisions\u201d and does not guarantee customers will pay any more for the lower-carbon barrels. <\/p>\n

The real test for Pacific Link\u2019s commercial viability will come during an open season slated for the spring. During an open season, the proponent of a pipeline project reaches out to oil producers, asking them to commit to transporting a certain number of barrels on the new line when it\u2019s complete.<\/p>\n

Natural Resources Minister Tim Hodgson recently sat with leaders of the largest energy companies from Europe, Japan, Korea, Malaysia and China, and said that every one expressed a desire to buy more Canadian crude from the West Coast. <\/p>\n

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

\u201cThe open season is yet to happen,\u201d for Pacific Link, he said, \u201cbut when you look at the tea leaves, I would say it looks quite like quite a compelling proposition,\u201d he said in an interview this week. <\/p>\n

However, investors in Canadian energy producers are likely to get the most benefit from having the option of more pipeline capacity in the future, more than a multibillion-dollar pipeline actually moving forward, according to research from Queen\u2019s University\u2019s Institute of Sustainable Finance.<\/p>\n

Seventy energy-company stocks rallied for three days after Ottawa and Alberta signed the implementation agreement for Pacific Link on May 15, adding $34-billion in market value for investors before any confirmation that the project made economic sense. <\/p>\n

Given uncertainties in long-term oil demand and expectations for new capacity added on to other pipeline systems, it would make sense to delay a final investment decision for Pacific Link to late 2028 or early 2029, University of Calgary business professor Yrjo Koskinen, one of the report\u2019s authors, said in an interview.<\/p>\n

\u201cWe really have to think about the conditions after 2035. It doesn\u2019t matter what the demand is right now. We need more information, especially about the energy transition, how China is behaving and how India is behaving,\u201d Prof. Koskinen said.<\/p>\n

The other wild cards are how quickly oil supplies from the Middle East will recover, and what U.S. energy policy will look like after President Donald Trump vacates the White House, he said.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: An oil pump jack in southern Alberta, October, 2025.Todd Korol\/The Globe and Mail…\n","protected":false},"author":2,"featured_media":918960,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[901,888,902,879,877,903,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,44,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-918959","post","type-post","status-publish","format-standard","has-post-thumbnail","category-canada","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","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-news","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\/918959","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=918959"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/918959\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/918960"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=918959"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=918959"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=918959"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}