A recent report from TD Economics suggests that a proposed new oil pipeline to the West Coast could have a positive impact on Canada and Alberta’s gross domestic product, although the projected benefits may be more modest than what the governments anticipate. The analysis indicates a potential 0.6% increase in the national economy by the 2040s and a 3.5% boost to Alberta’s economy.
Economists Marc Ercolao and Likeleli Seitlheko caution that these estimates, provided by project proponents and governments with vested interests, may be somewhat optimistic. They propose more conservative figures of a 0.3% national growth and a 2% provincial growth instead.
Even with lower realized impacts, the economists believe that the pipeline project would still make a significant contribution to economic growth, especially when considering improved market access and export diversification. Alberta has submitted its application for the pipeline, which is expected to transport up to a million barrels per day, to the federal major projects office for approval.
The pipeline, to be developed by Crown-owned Trans Mountain Corp., is estimated to cost between $35 billion and $44 billion. Currently, 90% of the funding is set to come from federal and provincial governments, with Pembina Pipeline Corp. holding a 10% stake. The pipeline is planned to run to a port south of Vancouver, increasing Canada’s oil exports by 20% and expanding shipments to Asia beyond current levels.
The TD report underscores the importance of accessing Asian markets for Alberta’s oil exports, noting that diversifying supply sources away from the Middle East is a strategic move. However, the economists caution that Asia’s oil demand may plateau in the future due to factors like increased electric vehicle adoption and a shift towards cleaner energy sources.
The Alberta government anticipates that the pipeline will be designated as a national project in the fall, with construction potentially commencing by late 2027.