Many industry experts see the threat to Canada’s economy as a wake-up call for national competitiveness, arguing to keep up the momentum following the long-awaited completion of two massive pipelines across British Columbia over the last 18 months. Both of which took more than a decade to build amidst political turmoil, regulatory hurdles, activist opposition and huge cost overruns. On May 1, 2024, the Trans Mountain pipeline expansion (TMX) started delivering crude oil to the West Coast, providing a much-needed outlet for Alberta’s growing oil production. Several months before that, TC Energy finished work on the 670-kilometre Coastal Gaslink pipeline, which provides the first
direct path for Canadian natural gas to reach international markets when the LNG Canada export terminal in Kitimat begins operating later this year. TMX and Coastal GasLink provide enormous benefits for the Canadian economy, but neither are sufficient to meet the long- term growth of oil and gas production in Western Canada. MORE OIL PIPELINE CAPACITY NEEDED SOON TMX added 590,000 barrels per day of pipeline capacity, nearly tripling the volume of crude reaching the West Coast where it can be shipped to international markets.
In less than a year, the extra capacity has enabled Canadian oil production to reach all-time highs of more than five million barrels per day. More oil reaching tidewater has also shrunk the traditional discount on Alberta’s heavy oil, generating an extra $10 billion in revenues, while crude oil exports to Asia have surged from $49 million in 2023 to $3.6 billion in 2024, according to ATB analyst Mark Parsons. With oil production continuing to grow, the need for more pipeline space could return as soon as next year, according to analysts and major pipeline operators. Even shortly after TMX began operation, S&P Global analysts Celina Hwang and Kevin Birn warned that “by early 2026,
we forecast the need for further export capacity to ensure that the system remains balanced on pipeline economics.” Pipeline owners are hoping to get ahead of another oil glut, with plans to expand existing systems already underway. Trans Mountain vice-president Jason Balasch told Reuters the company is
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By working together across North America and supporting the free flow of energy throughout the continent, we can achieve energy security, affordability and reliability more effectively than any country could achieve on its own ”
108 SPOTLIGHT ON BUSINESS MAGAZINE • VOL 25 ISSUE 1
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