The Alberta government’s plan to kick off construction on a potential new West Coast oil pipeline faces significant challenges, according to analysts at CIBC World Markets. The province is aiming to present a proposal to the federal major projects office by July 1, have it classified as a project of national interest by Oct. 1, and start construction as early as Sept. 1, 2027. Oil flow could commence around 2033 or 2034, as per a provincial official.
The analysts at CIBC view the proposed timelines as optimistic and based on an ideal scenario. The Alberta government revealed these objectives following the finalization of an agreement with Ottawa on gradually increasing the market price of carbon to $130 per tonne by 2040, a key component of the energy accord signed last year.
One crucial pending agreement involves the funding of the multibillion-dollar Pathways carbon capture project, which is a prerequisite for the pipeline’s development. The Alberta government is taking the lead on the pipeline application, as no private entity has come forward to bear the risks and costs. Despite this, top pipeline executives are providing technical guidance on the proposal’s specifics, such as routing options.
The proposed pipeline aims to transport up to one million barrels of oilsands crude daily to the West Coast, substantially increasing the capacity to reach Asian markets compared to the existing Trans Mountain pipeline. The Alberta government favors a northern port option due to its proximity to Asia.
However, several issues remain unresolved, including negotiations with British Columbia, consultations with Indigenous communities, and the ban on oil tanker loading on the northern B.C. coast. B.C. Premier David Eby, along with coastal First Nations and environmental groups, have reiterated their opposition to any potential relaxation of the tanker ban.
ATB Financial’s chief economist, Mark Parsons, noted that the clarified construction timelines for the pipeline send a positive signal and could spur progress. ATB estimates that the Pathways project and expanded pipeline capacity could significantly boost Canada’s and Alberta’s real GDP between 2027 and 2035.
Overall, the Alberta government’s ambitious pipeline project faces hurdles, but if successfully executed, it could have a substantial positive impact on the region’s economy.
