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Alberta has formally proposed an oil pipeline to the southwest coast of British Columbia for tanker export to Asian markets, in partnership with federally-owned Trans Mountain Corp. and Calgary-based Pembina Pipeline Corp. acting as the private proponent.
Premier Danielle Smith announced the province’s submission to the federal Major Projects Office in Calgary in a joint press conference with Prime Minister Mark Carney on Thursday evening.
The estimated cost of the project, according to the Alberta government’s submission, would be $35.2 billion to $43.7 billion, including contingencies. It expects the approximately 1,200- to 1,250-kilometre pipeline project to be completed between 2032 and 2034.
Despite long suggesting a possible northern route for the new bitumen pipeline, the two main routing options proposed will run between Bruderheim, Alta., northeast of Edmonton, to Roberts Bank Terminal in Delta, B.C., using a similar corridor to the existing Trans Mountain pipeline. One route is referred to as the “original corridor” in the submission, while the other is called the “optimized corridor.”
For the “original corridor,” roughly 92 per cent of the route would be within 100 metres of existing infrastructure or land that’s already been “disturbed.” For the optimized option, that number drops to 82 per cent.
“We’ve agreed … that the best route for a new pipeline is one that goes through one that already exists south through the Trans Mountain Corridor to our Pacific Coast, the gateway to the world’s fastest growing markets,” Carney said.
Smith said the southern route had key advantages given that it would be roughly along an existing pipeline route, including established relationships with Indigenous communities and less time to get oil to market.
“The West Coast oil pipeline will transport more than one million barrels of oil per day to Canada’s West Coast and strengthen access to growing Asian markets, helping to meet Alberta’s goal to double oil production to eight million barrels per day over the next 10 to 15 years.”
Prime Minister Mark Carney and Alberta Premier Danielle Smith discuss details of the proposed 1 million-barrel-a-day pipeline to B.C.
The announcement comes the same day Ottawa signed a multibillion-dollar memorandum of understanding with British Columbia, which included a commitment from the federal government to keep the North Coast oil tanker ban in place.
The moratorium has prohibited oil tanker traffic off the waters of northern British Columbia for years in order to protect environmentally sensitive coastlines.
The Alberta government said it chose to propose a path near the Trans Mountain pipeline to limit “new land disturbance and impacts on the environment, wildlife and nearby communities.”
In its submission, the province said it anticipates the project would pass through the traditional territories of approximately 90 to 125 Indigenous communities. And the corridor would cross about nine to 11 First Nations reserves in B.C.
The document also says the project is planned on an accelerated timeline, with early work beginning as soon as October 2027. That early work would include finalizing routes, engaging with Indigenous groups, securing permits and preparing construction sites.
Alberta’s submission touts the creation of thousands of jobs for its residents as well as British Columbia’s, with as many as 140,000 during its peak construction period in the early 2030s, and about 50,000 during ongoing operations.
While no oil producers have committed to utilizing the potential pipeline as of yet, Smith told reporters that discussions continue with the Oil Sands Alliance — a group of five major companies.
As for who foots the bill, Smith said detailed funding and the cost for taxpayers “remains to be negotiated.”
Pembina Pipeline said it will hold a 10 per cent economic interest in the project once construction begins. The company said it will have an opportunity to increase its stake in the project by another 10 per cent once the pipeline is operational.
In a statement, Pembina said it will have full discretion over any final investment decision for its interest and will not risk any of its own capital before those choices are made.
The benefit of diversifying, according to one analyst
Most of the oil transported by the project is expected to go to Asian markets, with potential destinations including China, India, South Korea and Japan, according to the submission.
Among its economic benefits, the province says the project could narrow the price gap between Canadian heavy crude oil and benchmark U.S. oil by $3 US a barrel.
Energy analyst and economist Peter Tertzakian said diversifying to the West Coast and into global markets would lessen the impact of the differential, referring to the price gap between WTI and the Canadian price of oil, Western Canada Select.
The reason that Canada has experienced periods of wider differentials over the past 10 to 15 years, Tertzakian said, is because production exceeded shipping capacity, leaving the country “hostage” to a handful of American refineries.
“By diversifying … we are much less susceptible to potential — either artificial or otherwise —backups in our oil production, and therefore shield ourselves from these debilitating differentials,” he said.
But for Chris Severson-Baker, executive director of the Pembina Institute, a non-partisan clean energy think tank (different from Pembina Pipeline), Ottawa and Alberta’s announcement is too risky for a world where the “market for oil is evaporating quite quickly,” moving instead towards electrification.
“After a whole year of both levels of government saying we were going to hold out for a private proponent of the pipeline, we have another almost 100-per-cent-funded-by-taxpayer pipeline,” he said. “So, except for that 10 per cent that Pembina Pipeline would take on, this is a taxpayer-owned pipeline.”
“If we tie up a lot of taxpayer money in oil and gas infrastructure, then we’re going to have a harder time finding the money that we need to invest in the national electrification strategy,” Severson-Baker added.
Some experts optimistic, others skeptical
Given the new details, Al Salazar, head of macro oil and gas research at Enverus, told CBC News that the pipeline “feels a little bit more doable” than it did at the start of the year.
“I think it’s remarkably optimistic,” he said. “I think certainly the northern route was … more desirable, but from a regulatory perspective, if you’re parallel along with TMX, that should be easier. And the fact that they said it’s going from Bruderheim to a VLCC [Very Large Crude Carrier]-compatible port, that seems like it checks off a lot of boxes.”
Still, the question of which producers will actually commit to moving their oil through the pipeline lingers after Thursday’s announcement.
For Dennis McConaghy, that question is top of mind, and he told CBC News he isn’t finding himself moved from a position of skepticism.
The former TransCanada pipeline executive and author of Dysfunction: Canada after Keystone XL, describes his career as “actually conceiving these projects and bringing them to fruition” — even if, like in the case of Keystone, they don’t always reach the finish line.
“All those projects had both the private financing available to them, they had bona fide entities — whether they were refiners or producers — that had the financial capacity to make long-term commitments to make those projects financeable. That isn’t evident as yet,” he said.
‘Anxiety’ over any new pipeline: Eby
In a press conference in Vancouver on Thursday morning, B.C. Premier David Eby, who has been staunchly opposed to the pipeline proposal, said his province does not have the authority to stop a new pipeline, and confirmed it will not fight it in court.
He added that the province will ensure it fulfils its “constitutional obligations in good faith.”
Announcing a multibillion-dollar deal alongside Prime Minister Mark Carney that includes a commitment from Ottawa to keep the North Coast oil tanker ban in place, B.C. Premier David Eby said ‘we do not have the authority to stop a new pipeline.’ This comes as Alberta is set to unveil more details on its proposed pipeline to B.C.’s West Coast Thursday.
“The fact that that tanker ban is uplifted, respected and committed to again by the federal government in this agreement is a significant win for British Columbia,” Eby said.
“We have anxiety about the impact of any new pipeline project, period, on British Columbia’s coast. Which is why, in this agreement, there are very clear safeguards in place around spill protection, around British Columbia’s participation.”
The Ottawa-B.C. agreement states the two parties will negotiate a legally binding framework that ensures the province will receive economic benefits through the project, potentially including an annual royalty payment from the pipeline operator to B.C., and an environmental liability and emergency response fund held in trust that B.C. and First Nations could access.
The federal government will also support the Roberts Bank Terminal 2 expansion in Delta, B.C., a project which will expand the port’s shipping capacity by 50 per cent.
Pathways project is a go
Ottawa’s support for a West Coast pipeline is linked to building the Pathways carbon capture and storage project to offset some of the emissions from increased oil production.
Pathways is a project long proposed by the Oil Sands Alliance (formerly the Pathways Alliance).
On Thursday, Carney said his government, the Alberta government and the Oil Sands Alliance have agreed on the terms to launch the Pathways project. He said the agreement will result in 16 million tonnes of emissions reductions per year.
Next steps
Now that the pipeline proposal is in, the Major Projects Office will review the application, and it has until Oct. 1 to designate it as a project of national interest.
Post review, the office may decline the project altogether, refer it to other relevant federal departments or agencies, or identify areas for further engagement by the office, according to its website.
The Major Projects Office was established last August to help fast-track infrastructure that was deemed in Canada’s national interest.
