Mark Carney and Danielle Smith Forge New Pipeline Agreement

The proposed oil pipeline from Alberta to northern British Columbia has taken a significant step forward, with Prime Minister Mark Carney and Alberta Premier Danielle Smith signing a preliminary agreement aimed at making the project a reality. This deal comes amid a push for new energy initiatives, including nuclear power and carbon capture projects, as both leaders seek private investment to fund the pipeline, which is expected to cost billions.

During a recent event in Calgary, Carney emphasized the need for private sector involvement, playfully urging the audience, “If you know of one in the room, come see us afterwards.” This comment highlights the urgency for a company willing to take on the financial commitment necessary for such a large-scale endeavor.

Details of the Agreement and Federal Support

The agreement signed on March 15, 2024, lays the groundwork for a new oil export pipeline while also encouraging the development of advanced technologies. The federal government has offered exemptions to certain environmental regulations, including the British Columbia tanker ban and limits on oilpatch emissions. This flexibility paves the way for Smith to advance her pipeline initiative, which she has advocated for throughout her political career.

Carney’s reception in Calgary was markedly different from that of his predecessor, Justin Trudeau, whose environmental policies had previously drawn criticism from the province. At the Calgary Chamber of Commerce, Carney received multiple standing ovations, indicating a shift in sentiment among energy executives.

Deborah Yedlin, president of the Calgary Chamber of Commerce, reflected on this change, noting that “none of us would have taken that bet” a year ago regarding the likelihood of Alberta’s premier convincing the prime minister to relax major environmental laws. The current atmosphere suggests a newfound collaboration between provincial and federal authorities.

The Challenge of Securing Investment

Despite the progress, the pipeline project faces significant challenges. Notably, there is currently no designated route or name for the pipeline, and the lack of a private proponent willing to invest remains a critical hurdle. The Alberta government is working with a technical advisory group that includes major pipeline companies like Enbridge, South Bow, and Trans Mountain, although their participation is not guaranteed.

Financial concerns also loom large. The Trans Mountain Pipeline Expansion project saw its costs escalate from an initial estimate of $7.3 billion to over $34 billion, creating apprehension among potential investors. Randy Ollenberger, managing director at BMO Capital Markets, noted that no private sponsor would want to undertake the project without assurances regarding cost overruns.

In contrast, Mark Scholz, president of the Canadian Association of Energy Contractors, expressed optimism. “I think you’re going to find proponents interested in moving forward,” he said, indicating that the substantial financial incentives might attract private investment.

Future Implications and Indigenous Concerns

The Pathways Alliance, a consortium of oilsands companies aiming for net-zero emissions, has its own set of challenges, including potential opposition from Indigenous communities. Chief Kelsey Jacko of Cold Lake First Nations has voiced concerns about the safety of carbon capture technologies, emphasizing the importance of including affected communities in discussions. “It’s frustrating when people are having talks and we’re absent from the table,” Jacko stated.

Despite these hurdles, experts believe that the federal support outlined in the agreement could facilitate the Pathways project, which aims to capture emissions from oilsands facilities and transport them for underground storage. Michael Bernstein, CEO of the climate think tank Clean Prosperity, suggested that the language around carbon pricing in the memorandum of understanding should provide the necessary assurances for business investments.

As the process unfolds, the success of this pipeline project hinges on securing private investment and navigating regulatory and community challenges. The coming months will be crucial in determining whether Alberta’s ambitions for a new oil pipeline can be realized, marking a significant chapter in Canada’s energy landscape.