A recent report by TD Economics suggests that a proposed new oil pipeline to the West Coast could have a positive impact on Canada and Alberta’s economies, although the projected benefits may be overstated. 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 government bodies, may be overly optimistic. They propose more conservative figures of a 0.3% national GDP growth and a 2% increase for Alberta.
Despite the potential for lower-than-expected impacts, the economists highlight that the pipeline project could still significantly contribute to economic growth, especially when coupled with enhanced market access and export diversification.
Alberta has submitted its application for the pipeline project, which is expected to transport up to a million barrels of oil per day. The development and operation of the pipeline would be overseen by the Crown-owned Trans Mountain Corp, with an estimated cost ranging from $35 billion to $44 billion. Currently, 90% of the funding is anticipated to come from federal and provincial governments, while Pembina Pipeline Corp. is set to hold a 10% stake.
The proposed pipeline route, running to a port south of Vancouver and mirroring the existing Trans Mountain line, could increase Canada’s oil exports by 20% and more than double the current volume shipped to Asia via tankers. This expansion aims to capitalize on Asian markets’ interest in diversifying oil sources away from the Middle East.
However, the TD report notes potential challenges, such as a projected plateau in Asian oil demand due to factors like the rise of electric vehicles and cleaner energy initiatives. Additionally, Canadian oil faces competition from discounted alternatives like Russian crude.
The Alberta government anticipates that the pipeline will receive national importance designation in the upcoming months, with construction potentially commencing by late 2027.