For all the talk of whether Canada needs a new oil pipeline, there’s one thing missing: a company wanting to build it.
In June, Alberta Premier Danielle Smith said there was “no proponent” and no proposal on the table by any company, but pledged, “There will be soon.”
So far, that has yet to materialize.
The federal government is opening the Major Projects Office in Calgary with the mission of identifying critical infrastructure projects and fast-tracking their development. The initial list of what Ottawa considers to be nation-building projects is expected to be released later this week.
The Alberta government is keen to see a new pipeline on that list, especially as Prime Minister Mark Carney has said it’s “highly, highly likely” that such a proposal makes the cut.
Alberta’s Minister of Energy and Minerals Brian Jean says he is encouraged by Ottawa’s eagerness to help speed along the development of a major new export pipeline from Alberta to the B.C. coast.
“I’m glad to see they recognize the need for that pipeline, the demand for that pipeline and the reality of that pipeline getting to tidewater would be so good for B.C., for Alberta and truly good for Canada,” said Jean, who spoke with Canada’s Minister of Energy and Natural Resources Tim Hodgson about the issue on Friday morning.
Currently, none of the major pipeline companies have announced such a project or publicly expressed a desire to develop a big new oil pipeline in Western Canada.
The absence of a pipeline proposal is, in some ways, understandable, considering their cost, complexity and the history of failed and troubled projects over the last few decades.
Only a small handful of companies have the experience, capacity and deep pockets to develop and construct an export pipeline, and they would need to be willing to commit tens of billions of dollars and possibly a decade of time to pursue such a venture.
The recent Trans Mountain expansion underscores the struggles developers can face, such as frequent delays, massive cost overruns and repeated protests. Ottawa had to rescue it from failure.
“I would hope that we’ve got companies who are doing their due diligence and are going to put forward projects. But, of course, at this point we don’t know,” said Grant Sprague, a former deputy minister for energy in Alberta.
‘A lot of reasons why proponents aren’t coming forward’
Developing a pipeline project is a complicated process, he said, considering the work needed to plan the exact route, talk to dozens of local communities, and evaluate whether oil producers would sign contracts to actually use the pipeline.
“It’s not a 15-minute conversation and we are off to the races. There needs to be that real due diligence done and people need to be confident,” he said.
“I don’t care if it’s a road, transmission lines or a pipeline, people along the route want to have their input.”
The whole point of the Major Projects Office is to cut down on the time it takes federal regulators to assess infrastructure proposals, in hopes of fulfilling Carney’s election night pledge to “build, baby, build.”
That could include a variety of projects from ports and nuclear power plants to new mines and pipelines.
Oil production in Alberta continues to grow and set new records. Export pipelines could fill up by 2030, according to some forecasts.
At the same time, oil prices have been relatively weak compared to the average over the last five years.
“It’s not the world of 2010 or 2004 or 2005 when everybody in the world wanted to build a new project in the oilsands and they’re just clamouring for pipeline space,” said Andrew Leach, an energy and environmental economist and a professor at the University of Alberta.
“You have a lot of reasons why proponents aren’t coming forward.”
Continued interest in oil
In the face of U.S. tariffs, the federal government has a growing desire to kick-start the economy and diversify trading partners.
“The prime minister has to be looking at developing new markets for Canadian products, including oil,” said Warren Mabee, director of the Institute for Energy and Environmental Policy at Queen’s University.
Oil has been a huge money-maker for the country, said Mabee, which is why there is interest by some politicians to build another pipeline. One report pegged the financial benefits of the Trans Mountain expansion pipeline at more than $12 billion to industry and government during the first year of operation.
“The world may change quite a bit over the next 50 years, but right now people want oil and people are willing to pay quite a bit for it,” he said.
Still, the construction of a new pipeline would raise questions about whether the country is serious about transitioning to cleaner energy, Mabee said.
Companies may also be discouraged from proposing a new pipeline, he said, knowing how much opposition there could be, such as the protests against the Trans Mountain expansion and Coastal GasLink, a natural gas pipeline in B.C.
“Another project following hot on the heels [of these pipelines] is very likely to face quite a bit of pushback from those groups,” he said.
