Alberta Premier Danielle Smith is particularly hopeful for a new oil pipeline. She wants it to eventually connect to the Port of Prince Rupert, on the northern coast of British Columbia. This new pipeline would increase the province’s ability to export oil to Asian markets. During the announcement, Premier Smith emphasized that the new project did not have to be immediately included on the province’s list of major projects. That provides us with plenty of time to invest in thoughtful planning and building.
Furthermore, existing pipeline capacity for taking oil out of Alberta is already scheduled to reach full capacity by 2027. This creates a dangerous new demand for an additional oil pipeline. Smith’s proposal is a notable change in direction. It’s intended to ensure that Alberta’s oil keeps pumping their way into global markets, particularly in Asia, where demand is booming. So far, no one has made any moves to start the lengthy and complicated process to propose the construction of such a second West Coast oil pipeline.
Mark Maki, the chief executive of Trans Mountain’s operator, stressed the significance of this timeline. He said that there’s plenty of room to test out market dynamics and do appropriate routing and design work.
“That gives you time to evaluate market, do your routing work, your design, and all the rest on a new pipeline.” – Mark Maki
Maki went into more detail about the possible gains from a more methodical approach.
“That would be a pretty reasonable way to go at this. It doesn’t need to be on the major projects list tomorrow necessarily, but it gives you time to do the work, to have a really good project to put on the list.” – Mark Maki
It’s in this context that the expanded Trans Mountain oil pipeline began operating this past May 2024. Recently expanded to 890,000 barrels per day capacity, in fact, during the first half of 2024, it shipped an astounding 730,000 barrels per day. Even with this expansion, industry experts argue that much more pipeline infrastructure will be needed to handle expected production increases.
At least one analyst expects oil pipeline production to continue increasing. In fact, companies are running to small-scale projects aimed at optimizing their current networks and maximizing throughput. Beyond these changes, this new generation of retooled networks is poised to deliver the industry years’ worth of additional operational capacity.
The new construction wouldn’t touch the original, currently operating Trans Mountain pipeline. As such, private sector companies are increasingly seen as the appropriate lead in this country’s pursuit of new, innovative infrastructure. The federal government is still committed, but hasn’t yet named who, or even what entity, will lead the charge on these efforts. This would be a significant shift — most notably, former Bank of Canada Governor Mark Carney has called for greater private sector participation in constructing new pipelines.
Economically, Trans Mountain is about to have the most meaningful impact. By the end of this year, it will have paid back $1.25 billion to Ottawa in interest payments, fees and dividends. The direct financial return found in the report highlights the need to create a stable and profitable oil export network for Canada.
Maki warned against the assumption that simply increasing pipeline capacity should be enough and pointed to the danger in operating systems at full capacity.
“If the system is entirely full — we’re entirely full and everybody’s entirely full — that’s when the differential blows out,” – Mark Maki
