The Canadian province of Alberta, where the national oil production is concentrated, has sent documents to central authorities for the construction of a pipeline to the west coast, facing the Pacific Ocean: the infrastructure should therefore promote exports to Asia and allow Canada to reduce its economic dependence on the United States, the main market for its crude oil.
THE OIL RELATIONSHIP BETWEEN CANADA AND THE UNITED STATES
Canada has the third-largest crude oil reserves in the world and is the main supplier to the United States, representing alone more than half of total American imports. Although the United States is the largest oil producer in the world, it continues to import crude from abroad for its refineries: this is because U.S. shale oil is of the “light” variety, thus not very suitable to be processed by Gulf refineries, which for historical reasons were designed to process “heavy” and viscous qualities, like those extracted – precisely – from Alberta’s oil sands.
Last year, the United States recorded a trade deficit of 48 billion dollars with Canada, mainly caused by oil imports. This imbalance in the trade balance is one of the reasons behind Washington’s decision to not automatically renew the USMCA, the free trade agreement with Canada and Mexico.
WHAT WE KNOW ABOUT CANADA’S NEW PIPELINE
The new pipeline that will connect Alberta’s oil fields to the coast of British Columbia will be over a thousand kilometers long and have a capacity of one million barrels of crude oil per day. Work is expected to start in September 2027 and conclude in 2035.
The pipeline will follow the same route as the Trans Mountain (another pipeline connecting Alberta to the country’s west coast, upgraded in May 2024) and will be built by Trans Mountain Corporation together with Pembina Pipeline.
Prime Minister Mark Carney, in very poor relations with U.S. President Donald Trump – ideological distance on free trade and more is involved – and eager to transform Canada into an “energy superpower,” described the infrastructure as a “once-in-a-lifetime opportunity” that “will determine our future.”
BETWEEN DOMESTIC AND FOREIGN POLICY
Currently, Canada sends almost all its oil to the United States. Not only that: dependence on the U.S. market is much deeper, since three-quarters of Canadian exported goods and services are sold there.
Prime Minister Carney intends to rebalance this situation because he no longer perceives the United States as a fully reliable ally: President Donald Trump, besides threatening tariffs despite the existence of a free trade treaty, has repeatedly said that Canada should become the fifty-first American state.
However, the pipeline is not only useful for foreign policy purposes but also for domestic politics. In Alberta, there is a separatist movement that has gained considerable momentum in recent years: it was fueled by the environmental policies of former Prime Minister Justin Trudeau, which penalized Alberta’s oil & gas industry and created popular discontent. Carney is trying to mend the rift between the province and the central government in Ottawa, also because at the end of May Alberta’s premier called a referendum – to be held in October – asking residents whether to hold a second binding referendum on independence from Canada.
NOT ONLY OIL: CANADA ALSO FOCUSES ON LIQUEFIED GAS
Carney said the new westward pipeline will become “a gateway to the fastest-growing markets in the world” – that is, Asian markets, where there is demand for fossil fuels to fuel economic development and to replace coal – and will allow Canada to receive over 140 billion dollars in foreign direct investment.
Besides oil, Carney also said that Canada will “more than triple” its liquefied gas production thanks to the construction of five new terminals within a decade. The country will also invest about 7 billion dollars to modernize the port of Vancouver, in British Columbia, also aimed at Asian markets.
In June last year, the Kitimat plant in British Columbia became operational, from which liquefied gas shipments to Asia depart: the site has an annual capacity of twelve million tons, which could become fifty million in the coming years.
