A gas pipeline in southern Alberta in October, 2025.Todd Korol/The Globe and Mail
The federal government is eyeing a new oil pipeline route in southern British Columbia that some in Ottawa believe would face fewer environmental hurdles and less resistance from Indigenous groups than the northern route Alberta is proposing, two federal sources say.
Prime Minister Mark Carney and Alberta Premier Danielle Smith signed an memorandum of understanding in November, with the goals of unlocking Alberta’s energy sector and diversifying export markets in the face of U.S. President Donald Trump’s trade war. The agreement laid the conditions for construction of a new oil conduit to the Pacific.
A new pipeline could carry an additional one million barrels a day destined for Asian markets and help fulfill the Prime Minister’s promise to turn Canada into an energy superpower.
The MOU doesn’t say what path the pipeline will take. Ms. Smith has talked up a northern route that would carry Alberta oil to the Port of Prince Rupert, B.C. Her government is expected to propose such a route to Ottawa’s Major Projects Office this summer. An Alberta government source said the province expects that the federal government will designate the pipeline a project of national importance in the fall.
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But the two federal sources say Ottawa leans instead toward a route that would run through the province’s south to the port of Vancouver. That pipeline could either run alongside the Trans Mountain pipeline or follow another path. In either case, the sources said, it would require a new terminal for loading oil onto tankers.
Alberta prefers a northern route for two main reasons. First, Prince Rupert is North America’s closest port to Asia by up to three days sailing – around 36 hours closer to Shanghai than Vancouver.
It’s also the continent’s deepest port, which would enable access for the large crude carriers that are favoured for transporting oil to Asia. The massive tankers can transport about two million barrels of the dense, heavy crude that comes from Alberta’s oil sands.
The Vancouver Fraser Port Authority is planning to dredge the waters to deepen the channel in the Second Narrows waterway at Burrard Inlet. This will allow Aframax-class oil tankers at the Westridge Marine Terminal to operate at full capacity.
Ms. Smith has not ruled out a southern route, despite her concerns about capacity at the Vancouver port.
Carolyn Svonkin, communications director for Natural Resources Minister Tim Hodgson, said Ottawa is not tipping the balance in favour of any particular new pipeline route.
“Determination of a potential route and other project elements will be guided through the application and review process,” she said in a statement. “The federal government’s role, beginning upon the receipt of the project proposal via the MPO, will be to evaluate the project submitted by Alberta against the five criteria in the Building Canada Act.”
Those criteria are strengthening Canada’s security, providing economic benefits, advancing the interests of Indigenous communities, respecting climate change and ensuring any project has a high likelihood of “successful execution.”
The sources said a northern route has several disadvantages, including the difficulty of getting Indigenous buy-in, the cost of building in rough terrain, the ecological impact and need to lift the federal ban on oil tankers stopping, loading or unloading on B.C.’s north coast. The ban stretches from the northern tip of Vancouver Island to the Alaska border, including around Haida Gwaii.
On the flip side, building a new pipeline next to the existing Trans Mountain system – while it’s in operation – will present a raft of engineering and safety challenges, the Alberta source said.
B.C. Premier David Eby is also vehemently opposed to the northern route, as are many First Nations living in the region.
The Globe and Mail is not naming the three sources, as they were not authorized to discuss the matter.
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Alberta’s pursuit of a new oil pipeline to the West Coast is on a separate track from last year’s energy MOU, though a related one, one of the federal sources said.
Ottawa and Edmonton reached agreement on two of four provisions that were to be finalized by April 1: streamlining environmental impact assessments and cutting methane emissions by 75 per cent from 2014 levels by 2035.
But other two objectives in the MOU, involving the thorny issues of carbon pricing and a CO2-capture project in the oil sands, remain unresolved.
The federal source said Ottawa and Alberta negotiators are meeting almost daily to reach a deal on industrial carbon pricing and a massive carbon pipeline system.
The sticking point is the trajectory of moving from the current carbon price of $20 a tonne to an eventual $130 a tonne that was laid out in the MOU. Once the timelines are reached on carbon pricing, the official said, the multibillion-dollar Pathways carbon storage project should be attainable.
The Pathways project, which involves six of Alberta’s biggest energy companies, aims to decarbonize the oil sands through carbon-capture technology.
While companies such as Enbridge and South Bow are pursuing more pipeline capacity to connect the Alberta oil sands to U.S. refiners, the sector has long pushed for more pipeline access to the Pacific coast so it can diversify its customer base and get a better price for its product.
And it seems major oil companies have the appetite to boost production to fill a new line. Calgary-based players such as Cenovus and Suncor have recently reported various production records, and have plans to further increase barrels.
The hankering to expand is helped by two major factors, said Mike Verney, executive vice-president at reserve evaluation firm McDaniel & Associates: the high price environment and a global focus on energy security amid the fuel crisis being caused by the Iran war.
“The major companies – Cenovus, Suncor, Imperial – they’re all now talking more materially about big expansions,” Mr. Verney said in a recent interview.
“There was this idea six, 12 months ago about, ‘Where’s all this growth going to come from?’ There’s now a much clearer path that’s been outlined by a lot of companies.”
Cenovus chief executive Jon McKenzie said along with a new pipeline, Canada requires policies to ensure that industry can grow production to fill the line.
The world is looking for barrels of oil from Canada, particularly with global supplies currently in tatters, he said. “We just need to find a way to get ourselves unstuck as a country.”