Canada takes a page from the Saudi oil playbook
XLE•Canada plans to fast-track approvals for the Pacific Link pipeline, a proposed 1-million-barrel-per-day route to the west coast estimated to cost C$35.2 billion to C$43.7 billion. The move aims to diversify oil exports, about 90% of which currently go to the United States.
1. A new export route
Canada is looking to expand fossil fuel production and exports as tariff tensions with the United States and disruptions to Middle East energy flows highlight the risks of relying on one market or route. Prime Minister Mark Carney announced that Canada will fast-track approvals for the Pacific Link pipeline, which would connect Alberta’s oil hub to the west coast and carry 1 million barrels per day.
2. Cost and capacity
The proposed pipeline would broadly follow the route of the Trans Mountain system, which carries 890,000 barrels per day, and would double Canada’s west-coast export capacity. The government estimates the project will cost C$35.2 billion to C$43.7 billion, with taxpayers expected to shoulder most of the bill. Energy Minister Tim Hodgson said the government expects construction to begin next September.
3. Diversification goals
The United States accounts for roughly 90% of Canada’s oil exports. Hodgson said Canada does not intend to trade less with the United States, but to trade more with other countries. He said Canadian oil production could increase by 2 million to 2.5 million barrels per day over the next five to seven years, while LNG exports could reach 50 million metric tons annually by 2030, from around 14 million today. Commodity Context founder Rory Johnston forecasts more modest annual oil production growth of 100,000 to 150,000 barrels per day over the next decade.
