The Alberta government has set an ambitious timeline for the potential construction of a new West Coast oil pipeline, according to analysts at CIBC World Markets. The province plans to submit a proposal to the federal major projects office by July 1, aiming for it to be designated a project of national interest by Oct. 1 and to commence construction as early as Sept. 1, 2027. It is projected that oil could start flowing around 2033 or 2034, as per a provincial official.
CIBC analysts Robert Catellier and Rogan Anantharajah noted in a recent industry update that while they appreciate the sense of urgency, they view these timelines as optimistic and based on best-case scenarios. The Alberta government announced these targets after finalizing an agreement with Ottawa on increasing the market price of carbon to $130 a tonne by 2040.
The remaining agreement to be resolved involves the funding of the multibillion-dollar Pathways carbon capture project by the province, federal government, and industry consortium represented by the Oil Sands Alliance. This project is a prerequisite for the pipeline, and vice versa.
Although no private-sector entity has come forward to bear the risks and costs, the Alberta government is leading the pipeline application process. Top pipeline executives are providing technical advice on the proposal, including routing options. A national-interest designation would expedite the approval process through the federal major projects office.
The objective of the pipeline is to transport up to one million barrels of oilsands crude per day to the West Coast, significantly increasing the volumes that can reach Asian markets compared to the existing Trans Mountain pipeline. The Alberta government favors a northern port option due to its shorter shipping distance to Asia.
Negotiations with British Columbia, consultations with Indigenous groups, and clarity on the oil tanker loading ban on the northern B.C. coast are still pending. B.C. Premier David Eby, coastal First Nations, and environmental organizations have reiterated their opposition to any potential changes to the tanker ban covering ecologically sensitive areas.
ATB Financial’s chief economist, Mark Parsons, believes that the defined construction timelines for the pipeline are a positive signal that should exert pressure to move the project forward. ATB estimates that Pathways and the planned pipeline expansions could boost Canada’s real GDP by 1.1% and Alberta’s by 5.1% between 2027 and 2035 if implemented, representing a significant economic upside.