Beyond the politics, which are good for all involved, is another export pipeline a good idea? 

Key Points: 

  • Pipeline battles are good politics for everyone, not just Premier Smith. The NDP government of David Eby can now make its own credible pro-development argument, unlike a decade ago. 
  • Lacking a clear private sector proponent, a new pipeline faces significant barriers, and there are other major projects that should be the priority.
  • There are risks to expanding pipeline capacity if production doesn't keep pace. WCS prices could revert to deeper discounts if production and demand don't keep pace with capacity.

Thus far, there has been minimal conflict around Prime Minister Carney’s push to develop projects in the national interest, so there’s almost a palpable sigh of relief that Canada can drive itself into yet another pipeline-related intellectual cul-de-sac. 

Certainly, pipeline conflict is good for Smith, who faces a leadership review at the end of November and who faces a daily separatist threat from within her caucus. Conflict on this is also arguably good for David Eby, who faces a provincial convention of his own in mid-November. Eby now has a coherent pro-development reply from the BC NDP, unequivocally welcoming investment in phase two of LNG, a new north coast dam, several hundred megawatts of renewables and energy storage, and massive new critical minerals mines.  

But beyond the politics, is there an economic rationale for a headlong rush into yet another export pipeline, either south or west from Alberta?  

The Resource Development Landscape

First, and most obviously, there's no private sector proponent for new pipeline infrastructure. There is, however, a proponent for a much larger project – the Pathways Alliance carbon capture and storage project in the Canadian oil sands. 

Pathways qualifies as a massive new project of national significance. The consortium of six major oil sands companies has proposed a $16.5 billion carbon capture and storage network that would capture CO₂ from more than 20 oil sands facilities and transport it 400 kilometres by pipeline to the Cold Lake area for permanent underground storage. 

According to Canada's Major Projects Office, the project represents $16.5 billion in GDP, $12.2 billion in labour income, and between 18,500 and 43,000 jobs annually. The project aims to reduce net CO₂ emissions by 4.2 million tonnes per year by 2030 and 62 million tonnes per year by 2050. This project is real, it's waiting, and it's massive. 

But what if another export pipeline, Keystone XL in particular,  just serves to drive the price of bitumen lower for longer?  

Before TMX, oil sands production sold to US refineries at steep discounts. Western Canadian Select (WCS) often traded $20 per barrel below global benchmarks. TMX's impact is measurable, creating over $5 billion in additional provincial revenues and a 1.9% GDP increase in its first operational year. Federal tax revenues also increased through improved corporate income. 

Market projections raise questions about additional pipeline capacity. The Canada Energy Regulator and S&P Global project Alberta oil sands production will reach approximately 3.7 million barrels per day by 2030. This reflects output from currently producing mines and SAGD operations. Production then plateaus or declines as facilities age.  

The Canada Energy Regulator's climate scenarios show varying outcomes based on policy stringency. Under mid-range climate action scenarios, oil sands production remains relatively stable through 2050 but faces increasing competition from lower-cost producers.  

Under accelerated climate action scenarios, production could fall to 2.3 million barrels per day by 2050. Low-cost and low-carbon producers would increasingly capture demand. Even in higher-growth scenarios, strong private sector sponsorship signals are limited. New pipeline capacity risks outpacing credible production growth. 

An overbuilt export system creates problems. WCS prices could revert to deeper discounts if production and demand don't keep pace with capacity, reducing returns to provincial and federal governments and landing us all right back to where we were 15 years ago

Danielle Smith’s proposal is not just that the public sector bear the risk of another export pipeline. There is no guarantee that export capacity will meet the same market conditions as TMX’s expansion. 

Finally, the actual barrier to a new west coast pipeline is worth discussing. Canada could repeal the tanker ban, make it legal to dump bitumen straight into the water supply, and pass legislation declaring climate change a hoax. None of this would amend the constitution, and Section 35 requires significant Indigenous consultation. We’ve been through this before, and BC Nations are only more ready to push back against a west coast pipeline than they were two decades ago when Northern Gateway 1.0 was successfully challenged.  

Keystone XL does not face these barriers, but it may tank the price of WCS. Not a great tradeoff.   

British Columbia's Pragmatic Shift 

Conservatives would love nothing more than to freeze the 2012 BC NDP in amber, but times have changed.  

The NDP under Premier Eby has adopted a more pragmatic resource development posture. The BC bogeymen of John Horgan’s more fragile minority government that relied on Green Party support is almost a decade behind us. BC now supports a proposal to dredge Burrard Inlet to accommodate larger tankers for takeaway capacity from TMX. The government has called for filling the existing TMX pipeline capacity and would likely be neutral on another expansion of TMX, if a requirement west coast egress to reach Asian markets were demonstrated. 

The shift extends beyond oil. BC has facilitated significant mining projects, LNG Canada's terminal expansion in Kitimat is moving forward, and a new North Coast hydro dam is under development.  

All these projects have Indigenous participation and equity stake. The significant political consensus that has been achieved with BC First Nations, in the context of no treaties or modern-day arrangements, cannot be overstated. It can, however, be undone with careless federal overreach for a pipeline that could wipe out the significant economic gains Alberta and Canada now enjoy.  

 

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