By Patti Domm
At Calgary's annual stampede this summer, Canadian Prime Minister Mark Carney donned a cowboy hat and made a Texas-sized promise.
The government in Ottawa is "highly, highly likely" to back the construction of a new oil pipeline to the West Coast as a national priority, Carney said in July. His support fits with a pledge to make Canada an energy superpower. That would give Canadian energy companies a boost, analysts say, but could complicate U.S. energy plans in the process.
The proposed pipeline would carry oil from the Alberta oil sands to British Columbia, expanding Canada's ability to send more crude to markets in Asia.
Canada has a long history of opposition to oil pipelines. Canada's one existing pipeline to the West Coast took years to build and billions of dollars in government support.
In June, the Canadian parliament authorized the government to fast-track major national projects like pipelines and other energy infrastructure. Carney would include Alberta officials' proposal for the new pipeline among those projects.
"I think they have all the ingredients to be an energy superpower, but it's very expensive, and it takes a lot of time to build out a supply chain that operates by different modes than it did before," said Erin McLaughlin, senior economist at The Conference Board.
"The advantage is they're not relying on one country to support their economy."
The U.S. by far is the largest market for Canadian energy, importing four million barrels of the 5.5 million barrels of oil Canada produces each day. That makes it the fourth-largest oil producer, behind the U.S., Russia, and Saudi Arabia.
Canada is capable of adding several million more barrels of production a day.
New infrastructure could help Canadian energy find new markets where it would command higher prices.
So far, there are no announced plans for the Alberta pipeline or its exact route, but officials have said private companies are interested.
"These nation-building projects aren't only going to be oil and gas pipelines. They're probably going to include a huge new hydro dam in Quebec, a big wind farm, maybe in Nova Scotia." said Jackie Forrest, executive director of Arc Energy Research Institute. "The government may need to give some support, but they ideally want them to be private capital projects."
A list of the new projects is expected this fall, she said.
The trade war with the U.S. and President Donald Trump's call earlier this year to make Canada the 51st state has fired up Canadian nationalism. It also ignited a new zeal among Canadians to take control of the marketing and exploitation of their own energy resources.
Any new pipeline risks being mired in political wrangling and opposed by environmentalists and the indigenous population. Yet, in a recent Environics Research survey, 73% of Canadians said they support oil pipelines.
The government-owned Trans Mountain pipeline is now the only pipeline to the West Coast. Following an expansion in 2024, it carries about 890,000 barrels a day from Alberta to Vancouver for export to Asia and the U.S. and is capable of adding more volume.
Meanwhile, there is a moratorium on tanker traffic to other parts of western Canada, north of Vancouver.
That policy is contentious, said Forrest. Carney's support for the new pipeline suggests he will put his weight behind changing the moratorium, Forrest said. "No one's going to build a pipeline until that gets removed."
Canada is also expanding gas exports. Its first shipments of liquefied natural gas were launched by Shell-led LNG Canada from the West Coast last month. According to Forrest, Canada has a current capacity for 1.8 billion cubic feet a day of LNG, and that should grow to seven bcf a day by 2030. Other early stage proposals would export LNG through the subarctic waters of the Hudson Bay.
Imports of Canadian energy have helped the U.S. become the world's largest energy exporter. The U.S. exported an average 3.3 million barrels a day of crude oil over the past four weeks, about 800,000 barrels lower than this time last year, according to the Energy Information Administration data.
"The U.S. has developed energy independence, but around that there's a lot of complexity. We import a lot of crude, and we export crude products. It isn't so simple to say that we're the biggest producer of oil in the world," said Daniel Pickering, chief investment officer at Pickering Energy Partners.
It could take five years for Canada to expand its export markets, Pickering said. If it succeeds, the U.S. could ultimately receive less Canadian oil and end up paying more for Canadian energy. West Canadian Select crude sells for about $10 a barrel less than U.S. West Texas Intermediate. That differential was even wider before Canada began exporting oil to Asia through the Trans Mountain pipeline.
U.S. refiners that process Canadian crude could suffer. The majority of Canadian oil imports currently head to refineries in the Midwest.
"Prices will be stronger in western Canada, so Canadian producers of oil and gas will be a winner," Forrest said. A lack of pipeline capacity has limited their production growth. The new project makes "Canada a more desirable place for upstream investment," she said.
Canadian producers include Canadian Natural Resources, Suncor Energy, Imperial Oil, and Cenovus. Enbridge is the largest pipeline company, operating the main pipeline that goes south to the U.S.
Becoming an energy superpower will require Canada to answer difficult questions. How much should it spend on fossil fuel production when economies may need less of it in the future?
"That is the crux of the debate here," said Forrest. "But there's a growing consensus that oil demand won't come down that quickly."
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August 06, 2025 13:57 ET (17:57 GMT)
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