Today was supposed to be a day off of the Blog. That is why I wrote one on Wednesday to celebrate Canada Day after all. So I could have the afternoon off, enjoy a long leisurely lunch with a friend I haven’t seen in ages and sit around wearing my boots and hat on this, the first day of Stampede.
BUT NO!
Instead, I have to deal with late breaking news and, like everyone else, give my two cents – actually let’s make that two dollars because with inflation these projects and takes are suddenly eye-wateringly expensive.
Remember when we had the MOU and I made fun of it because it was just a MOU? Well now it is much more than that.
That’s because on “Canada Strong Thursday” (feel free to eye-roll on that one), on the second day of our 159th year, Mark Carney, together with BC Premier David Eby and Alberta Premiere Danielle Smith announced or rolled-out more than $60 billion (???) in capital investment into the energy sector, complete with public-private partnerships, projected indigenous equity participation, buy-in from federal and provincial governments, non-contested (so far) routes, emissions management, production increases and, yes, a northern coast tanker ban.
Folks, the MOU has spoken.
WE HAVE A PIPELINE (project announcement)!!!!
Look, I know it’s early and things could derail faster than you can say “indigenous consultation”, but for the time being, please allow me and all of us to bask in the momentary glory that is a LIBERAL federal government buying into a bitumen pipeline from separatism threatening Alberta through the BC interior to the oil-hating NDP coast.
That is, as they say, something.
The details from a very busy day are as follows:
Canada–British Columbia Cooperative Prosperity Agreement (CBCCPA)
This was the morning portion in which before meeting the President of the Philippines, Prime Minister Carney and BC Premier Eby signed a broad bilateral agreement to accelerate major energy, trade, and infrastructure projects in British Columbia while providing environmental protections and economic benefits.
Key elements include:
- Accelerated LNG projects: Faster permitting, financing, and construction for LNG Canada Phase 2, Ksi Lisims LNG, Cedar LNG, and Woodfibre LNG to boost exports.
- North Coast Transmission Line: Up to $3.9 billion in federal support for Phases 1 and 2. This clean electricity project could create $10 billion in economic activity, reduce emissions by up to 3 million tonnes annually, and serve as the backbone for a clean-energy corridor (including potential links to Yukon and Alberta for power reliability)
- $500 million federal investment in Red Chris Mine expansion (critical minerals/copper, with major emissions cuts)
- Up to $3 billion for the George Massey Tunnel Replacement (improves trade and commuting in the Lower Mainland)
- Upgrades to Port of Vancouver–Roberts Bank Trade Corridor and support for ports in Prince Rupert and Stewart.
- $250 million Whales Initiative (protecting Southern Resident Killer Whales and coastal ecosystems),
- strengthened Oceans Protection Plan, and
- a National Carbon Credit Framework.
- The federal government committed to maintaining the North Coast tanker ban.
- BC also agreed to engage in good faith on routing and permitting for any federally approved interprovincial pipeline and not to challenge it in court. In return, BC receives fair compensation for impacts and other economic benefits (e.g., royalties or funds).
Then it was Alberta’s turn
The West Coast Oil Pipeline Proposal & Pathways Carbon Capture Project (WCOPP&PCCP)
At a news conference yesterday evening (prior to Sneak a Peek – Stampede always takes priority) Prime Minister Carney and Premier Danielle Smith announced that Alberta had formally submitted its proposal for a new West Coast Oil Pipeline to the federal Major Projects Office (MPO) for designation as a Project of National Interest (PoNI).
- 1 million barrels per day of oil/bitumen to global (primarily Asian) markets.
- 1200 miles from Bruderheim, Alberta (near Edmonton) to a deep-water terminal on BC’s south coast (Vancouver/Lower Mainland area). It would largely follow the existing Trans Mountain pipeline corridor.
- Fully respects the Oil Tanker Moratorium Act (aligning with the maintained North Coast tanker ban). It is structured as a public-private partnership.
- Led by Trans Mountain Corporation (TMC, federally owned).
- Pembina Pipeline Corporation as private-sector partner/investor contributing expertise and capital.
- Canada and Alberta as equal partners (Alberta via the Alberta Petroleum Marketing Commission).
- Meaningful equity stake and co-ownership opportunities for Indigenous communities, with consultations beginning immediately.
- Cost estimate is roughly $35–44 billion (is that a lot?).
Also…
As part of the same announcement, the federal and Alberta governments reached an agreement with the Oil Sands Alliance to advance one of the world’s largest CCS projects – the Pathways carbon capture project. It aims for 16 million tonnes of annual CO₂ emissions reductions, supporting lower-carbon-intensity oil exports.
Costs for this project had been preliminarily estimated at $16 billion, but since we are juicing everything, why don’t we round up to a cool $20 billion.
If the pipeline makes it past the MPO (not the MOU) to a PoNI it would be subject to streamlined federal reviews and in a fever dream fantasy world could conceivably start preliminary construction in 2027.
What this all means:
This is a really big deal.
Like them or not – the Federal government has come through for Western Canada by facilitating this. This is a big win politically for both David Eby and Danielle Smith and, most importantly, a massive economic boost for both provinces. And a shot in the credibility arm for the Feds and Mark Carney.
Political posturing aside, it is not unreasonable to be skeptical about the pipeline and whether with an optimistic start date of 2032 it will even be necessary given the changing energy landscape (I believe it will, others don’t). There are many uncertainties to be considered.
Such as… we know where it starts but we don’t know where it ends. Presumably Roberts Bank where the VLCC’s can operate instead of in Burnaby where tanker sizes are constrained. But there are whales there (hint – there are always whales). This complicates things. But that is what planning, reviews, consultations and engineering are for.
The route, that basically follows TM and TMX (can we call this TMXX? TMXL?) is known as are the first nations along the way. Consultation will be fraught and accommodations plentiful, but we know the landscape now and can pre-plan. The geography has already been solved and without a once in 500 years weather event should be more navigable than when TMX was built. Knock on wood we can skip the whole pandemic part as well.
The private sector partner – Pembina Pipelines – is a massive win, but they aren’t a major partner just yet which shows that there is still some derisking that needs to happen from both the Feds and the province to attract more capital. On the other hand, as a Crown, TMC can borrow at pretty skoocum rates so maybe the front end doesn’t require said partner and their pesky concepts like “hurdle rates” and “IRRs” and “cost containment”.
I can’t really speak to the cost. $34-$44 billion feels a bit like a number pulled out of the air to be honest. At 1200 miles that is at minimum $30 million per mile which is about 50% higher than the high end of typical estimates. But then again TMX blew those estimates out of the water. That said, there were so many reasons KXL went that far off the rails and presumably the company has learned some lessons and won’t be doing so much extra work. Maybe there is an estimate in there about the terminal that is running things up. That said, the detail hasn’t been provided to the great unwashed masses.
On the jobs and economy front this is a monster. Especially when combined with the potential KXL reboot that we seem to have stopped talking about. These projects combined with an expected FID on Phase 2 of LNG Canada are going to keep the energy infrastructure economy humming for the next 10 years. And as a former client once famously told me: “There aren’t enough contractors and people in Western Canada to staff all these projects at the same time – it’s going to be a feeding frenzy across the country.”
Lastly, we’s a gonna hafta grow some serious production to feed this beast. I am moderately confident this can be done but as the last 11 years have shown us, prices are fickle and no one is (currently) beating down the door to boil the oil sands even further. Let’s not forget the other potential demands on Canadian production – TMX optimization for call it 250,000 barrels; KXL redux at 500,000 barrels and Enbridge debottlenecking for an added 300,000. That’s close to 2 million barrels of NEW production from the oilsands. Where is that going to come from? Does Murray Edwards have the $70 to $100 billion lying around? Does the Middle East get a say?
So yeah, there is uncertainty but there is uncertainty in everything.
Notwithstanding all that…
This is a BIG WIN and a BIG DEAL.
It’s OK to treat it as such and do a little victory lap before we all get back to work.
The next deadline comes in the fall (conveniently prior to Albertans going to the polls to decide the “very fate of Canada”) when the MOU that became a Proposal gets the thumbs up or down at the MPO on whether it is going to be a PoNI.
Me? I want a pony.
We should all want a pony.
