A recent report from TD Economics suggests that a proposed new oil pipeline to the West Coast could have positive economic impacts on Canada and Alberta, although the projected benefits may be more modest than what government estimates indicate. The analysis foresees a 0.6% increase in the national GDP by the 2040s and a 3.5% rise in Alberta’s GDP.
Economists Marc Ercolao and Likeleli Seitlheko caution that these figures, provided by project proponents and governments, may be overly optimistic due to their vested interests in advancing development. Taking a more conservative stance, they suggest that the actual impact could be closer to a 0.3% national boost and a two percent provincial increase.
Despite potential discrepancies in the forecasts, Ercolao and Seitlheko emphasize that the pipeline project would still make a significant contribution to economic growth, especially when considering the benefits of enhanced market access and export diversification.
Alberta recently submitted an application for the construction of the pipeline, which is expected to transport up to a million barrels per day to the West Coast. The project, overseen by Crown-owned Trans Mountain Corp., carries an estimated cost ranging from $35 billion to $44 billion. The majority of the funding, around 90%, is set to be provided by the federal and provincial governments, with Pembina Pipeline Corp. holding an initial 10% stake.
The proposed pipeline, following a route similar to the existing Trans Mountain line to a port south of Vancouver, is anticipated to increase Canada’s oil exports by 20% and significantly boost shipments to Asia. The goal of expanding exports to the Pacific region is a central aspect of Alberta’s pipeline strategy.
While there are positive prospects for Canadian oil in the Asian market, the TD economists caution that factors like evolving energy trends, such as the rise of electric vehicles and cleaner energy sources, could impact long-term demand. Additionally, competition from other oil producers, such as Russia, could pose challenges for Canadian heavy crude in the global market.
The Alberta government aims for the pipeline to be recognized as a project of national significance by the fall, with potential construction commencement as early as late 2027.
