Canada and Alberta Reach Deal for New West Coast Oil Pipeline with Majority Government Ownership

The federal government and Alberta reached a deal to build a new oil pipeline to Canada's West Coast. The project is estimated to cost between $35.2 billion and $43.7 billion. The federal and Alberta governments will remain majority owners.

Prime Minister Mark Carney had previously promised in a memorandum of understanding with Alberta that the pipeline would be privately financed. Calgary-based Pembina Pipeline Corporation agreed to take a 10 percent stake. The company has not invested or pledged any capital for construction.

Alberta Premier Danielle Smith stated the pipeline would carry more than one million barrels of oil per day to Asian markets and double oilsands production. The pipeline is scheduled to begin construction no earlier than 2027 and be completed by 2034. Chinese electric vehicle exports reached an all-time high in May, up 49 percent from the previous year.

More than half of new cars sold in China are now electric. The International Energy Agency states that global oil demand will peak around 2030 under current climate policies and that oil demand as a fuel in China has already plateaued. Canadian oil and gas production increased by more than 47 percent from 2012 to 2023.

No new large-scale oilsands expansion has occurred since the 2014 oil price crash. "What we're seeing here is that we've got a pipeline that is being built for political reasons rather than economic reasons," said Chris Severson-Baker, executive director of the Pembina Institute.

Emilia Belliveau, energy transition program manager for Environmental Defence, said evidence shows the decline in global oil demand will happen even more quickly by the time the pipeline could come online.